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): November 1, 1996
MLCC Mortgage Investors, Inc.
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(Exact name of registrant as specified in its character)
Delaware
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(State or other jurisdiction of incorporation or organization)
33-84894 59-3247986
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(Commission File Number) (IRS Employer Identification No.)
MLCC Mortgage Investors, Inc.
4802 Deer Lake Drive East
Jacksonville, FL 32246
Attention: General Counsel
________________________________________________________________
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: 904-928-6000
Not applicable
_________________________________________________________________
(Former name or former address, if changed since last report)
Item 5. Other Events.
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Filing of Pooling and Servicing Agreement
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On November 1, 1996, MLCC Mortgage Investors, Inc. (the "Seller")
entered into a Pooling and Servicing Agreement dated as of November 1, 1996
(the "Pooling and Servicing Agreement"), by and among the Seller, as seller,
Merrill Lynch Credit Corporation, as servicer (the "Servicer"), and Bankers
Trust Company of California N.A., as trustee (the "Trustee"). The Pooling
and Servicing Agreement is annexed hereto as Exhibit 4.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
The following are filed herewith. The exhibit numbers
correspond with Item 601(b) of Regulations S-K.
Exhibit No. Description
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4 Pooling and Servicing Agreement
SIGNATURES
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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.
MLCC MORTGAGE INVESTORS, INC.
By: /s/ Laurel A. Davis
------------------------
Laurel A. Davis
Its: Assistant Vice President
Dated: December 10, 1996
EXHIBIT INDEX
Exhibit No. Page
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4 6
EXHIBIT 4
______________________________________________________________________
MERRILL LYNCH CREDIT CORPORATION,
as Servicer
MLCC MORTGAGE INVESTORS, INC.,
as Transferor
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
_______________________
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1996
______________________
ML Revolving Home Equity Loan Asset Backed Certificates
Series 1996-2
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TABLE OF CONTENTS
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Page
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ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . . . 26
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . 27
Section 2.02. Acceptance by Trustee; Retransfer
of Mortgage Loans; Substitution of
Eligible Substitute Mortgage Loans. . . . . . . . . . . . 32
Section 2.03. Representations and Warranties
Regarding the Servicer . . . . . . . . . . . . . . . . . . 35
Section 2.04. Representations and Warranties of the Servicer
Regarding the Mortgage Loans; Repurchase
and Substitution Obligations . . . . . . . . . . . . . . . 37
Section 2.05. Execution and Authentication
of Certificates . . . . . . . . . . . . . . . . . . . . . 41
Section 2.06. Retransfers of Mortgage Loans
at Election of the Transferor . . . . . . . . . . . . . . 41
Section 2.07. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.08. Covenants of the Transferor . . . . . . . . . . . . . . . 44
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. MLCC to Act as Servicer . . . . . . . . . . . . . . . . . 45
Section 3.02. Collection of Certain Mortgage Loan
Payments; Mortgage Loan Payment Record . . . . . . . . . . 47
Section 3.03. Permitted Debits to the Mortgage Loan
Payment Record . . . . . . . . . . . . . . . . . . . . . . 49
Section 3.04. Hazard Insurance Policies; Property
Protection Expenses . . . . . . . . . . . . . . . . . . . 50
Section 3.05. Mortgagor Transfers of
Mortgaged Properties . . . . . . . . . . . . . . . . . . . 52
Section 3.06. Realization Upon Defaulted
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.07. Trustee to Cooperate . . . . . . . . . . . . . . . . . . . 54
Section 3.08. Servicing Compensation; Payment
of Certain Expenses by Servicer . . . . . . . . . . . . . 55
Section 3.09. Annual Statement as to Compliance . . . . . . . . . . . . 56
Section 3.10. Annual Independent Public
Accountants' Servicing Report . . . . . . . . . . . . . . 56
Section 3.11. Access to Certain Documentation
and Information Regarding the
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 57
Section 3.12. Maintenance of Certain Servicing Policies . . . . . . . . 57
Section 3.13. Reports to the Securities and Exchange
Commission . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 3.14. Information Required by the Internal Revenue Service
Generally and Reports of
Foreclosures and Abandonments of
Mortgaged Property . . . . . . . . . . . . . . . . . . . . 58
Section 3.15. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 58
Section 3.16. Further Assurances . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IV
Servicing Certificate; Certificate Account Deposit
Section 4.01. Servicing Certificate . . . . . . . . . . . . . . . . . . 60
Section 4.02. Certificate Account . . . . . . . . . . . . . . . . . . . 63
Section 4.03. Payments Under Support Agreement . . . . . . . . . . . . . 64
Section 4.04. The Certificate Insurance Policy . . . . . . . . . . . . . 64
ARTICLE V
Payments and Statements to
Certificateholders
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.02. Certain Calculations by the Trustee . . . . . . . . . . . 70
Section 5.03. Statements to Certificateholders . . . . . . . . . . . . . 70
Section 5.04. Rights of Certificateholders . . . . . . . . . . . . . . . 72
ARTICLE VI
The Certificates
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . 73
Section 6.02. Registration of Transfer and
Exchange of Certificates; Registrar . . . . . . . . . . . 74
Section 6.03. Mutilated, Destroyed, Lost
or Stolen Certificates . . . . . . . . . . . . . . . . . . 76
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 77
Section 6.05. Restrictions on Transfer
of Transferor Certificates . . . . . . . . . . . . . . . . 77
Section 6.06. Actions of Certificateholders . . . . . . . . . . . . . . 79
ARTICLE VII
The Servicer and the Transferor
Section 7.01. Liability of the Servicer . . . . . . . . . . . . . . . . 80
Section 7.02. Merger or Consolidation of,
or Assumption of the Obligations
of, the Servicer or Transferor . . . . . . . . . . . . . . 80
Section 7.03. Limitation on Liability of
the Servicer and Others . . . . . . . . . . . . . . . . . 81
Section 7.04. Servicer Not to Resign . . . . . . . . . . . . . . . . . . 81
Section 7.05. Limitation on Liability of Certain Persons . . . . . . . . 82
Section 7.06. Liability of Transferor . . . . . . . . . . . . . . . . . 83
Section 7.07. Transferor May Own Certificates . . . . . . . . . . . . . 83
ARTICLE VIII
Default
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . 85
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . . . . 87
Section 8.03. Notification to Certificateholders . . . . . . . . . . . . 88
Section 8.04. Waiver of Past Events of Default . . . . . . . . . . . . . 88
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 90
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . . . 91
Section 9.03. Trustee Not Liable for Certificates
or Mortgage Loans . . . . . . . . . . . . . . . . . . . . 93
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . . . . 93
Section 9.05. Servicer to Pay Trustee's Fees and Expenses . . . . . . . 93
Section 9.06. Eligibility Requirements for Trustee . . . . . . . . . . . 94
Section 9.07. Resignation or Removal of Trustee . . . . . . . . . . . . 94
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . 96
Section 9.09. Merger or Consolidation of Trustee . . . . . . . . . . . . 96
Section 9.10. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . . . . . . . . . 96
Section 9.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 98
Section 9.12. Streit Act . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE X
Termination
Section 10.01. Termination . . . . . . . . . . . . . . . . . . . . . . . 100
Section 10.02. Termination by Certificate Insurer . . . . . . . . . . . 102
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events . . . . . . . . . . . . . . . . 103
Section 11.02. Additional Rights Upon an Insolvency Event . . . . . . . 105
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 12.02. Recordation of Agreement . . . . . . . . . . . . . . . . 108
Section 12.03. Limitation on Rights of Certificateholders . . . . . . . 108
Section 12.04. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . 109
Section 12.05. The Certificate Insurer. . . . . . . . . . . . . . . . . 109
Section 12.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.08. Severability of Provisions . . . . . . . . . . . . . . . 110
Section 12.09. Assignment . . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.10. Certificates Nonassessable and Fully Paid . . . . . . . . 111
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.12. Effect of Headings and Table of Contents . . . . . . . . 111
Section 12.13. Third Party Beneficiary . . . . . . . . . . . . . . . . . 111
Section 12.14. Merger and Integration . . . . . . . . . . . . . . . . . 112
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
EXHIBIT A - Form of Face of Investor Certificate . . . . . . . A-1
EXHIBIT B - Form of Face of Transferor Certificate . . . . . . S-1
EXHIBIT C - Form of Reverse of Investor Certificate . . . . . . C-1
EXHIBIT D - Form of Reverse of Transferor Certificate . . . . . D-1
EXHIBIT E - Form of Notice for Certificate
Insurance Policy . . . . . . . . . . . . . . . . E-1
EXHIBIT F - Mortgage Loan Schedule . . . . . . . . . . . . . . F-1
THIS POOLING AND SERVICING AGREEMENT, dated as of November 1, 1996,
between MERRILL LYNCH CREDIT CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, MLCC MORTGAGE INVESTORS,
INC., a corporation organized and existing under the laws of the State of
Delaware, and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee,
W I T N E S S E T H T H A T:
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In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions.
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Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified
in this Article.
Accelerated Principal Distribution Amount: As to any Distribution
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Date, the amount, if any, required to reduce the Certificate Principal
Balance (after giving effect to the distribution of all other amounts
actually distributed on the Investor Certificates on such Distribution
Date) until the Invested Amount (immediately following such Distribution
Date) exceeds the Certificate Principal Balance (as so reduced) by the
amount, if any, equal to (x) the Required Amount minus (y) the Transferor
Subordinated Amount.
Accrual Period: As to any Distribution Date other than the first
--------------
Distribution Date, the period beginning on the preceding Distribution Date
and ending on the day preceding such Distribution Date, and, in the case
of the first Distribution Date, the period beginning on November 25, 1996
and ending on the day preceding the first Distribution Date.
Additional Balance: As to any Mortgage Loan and day, the unpaid
------------------
balance of any principal advanced to the related Mortgagor after the date
as of which the related Cut-off Date Trust Balance is calculated.
Aggregate Investor Loss Amount: With respect to any Distribution
------------------------------
Date, the total of the Investor Loss Amounts for prior Distribution Dates
(other than Investor Loss Amounts that were reallocated on prior
Distribution Dates to the Transferor pursuant to Section 5.01(c)(ii)).
Agreement: This Pooling and Servicing Agreement and all amendments
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hereof and supplements hereto.
Alternate Certificate Rate: As to any Accrual Period, the weighted
--------------------------
average of the Net Loan Rates applicable to the Mortgage Loans included in
the Trust Fund during the Collection Period preceding the related
Distribution Date, weighted on the basis of the monthly average Trust
Balances of such Mortgage Loans during such Collection Period as
determined by the Servicer in accordance with its normal servicing
procedures, less the Premium Percentage for the related Distribution Date.
Alternative Principal Payment: As to any Distribution Date, the
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amount (but not less than zero) equal to the aggregate amount of Trust
Principal Collections received during the related Collection Period minus
the total Additional Balances created during such Collection Period.
Appraised Value: As to any Mortgaged Property and time referred to
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herein, the appraised value of the Mortgaged Property based upon the
appraisal made by or on behalf of the Transferor at such time.
Assignment of Retained Rights: As defined in Section 2.01(f).
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Available Distribution Amount: As to any Distribution Date, the
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aggregate of the amounts on deposit in the Certificate Account on such
Distribution Date described in clauses (i) - (vi), inclusive, of Section
4.01.
BIF: The Bank Insurance Fund, as from time to time constituted,
---
created under the Financial Institutions Reform, Recovery and Enhancement
Act of 1989, or if at any time after the execution of this instrument the
Bank Insurance Fund is not existing and performing duties now assigned to
it, the body performing such duties on such date.
Book-Entry Certificate: Any Investor Certificate registered in the
----------------------
name of the Depository or its nominee ownership of which is reflected on
the books of the Depository or on the books of a Person maintaining an
account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
------------
a day on which national banks in the States of New York, Florida or
California are required or authorized by law to be closed.
Certificate: Any Investor Certificate or a Transferor Certificate.
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Certificate Account: The trust account or accounts created and
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maintained with the Trustee pursuant to Section 4.02 and which shall be an
Eligible Account and shall be entitled "Bankers Trust Company of
California, N.A., in trust for the benefit of the registered holders of
the ML Revolving Home Equity Loan Asset Backed Certificates, Series
1996-2".
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 Investor
Certificate registered in the name of the Transferor or the Servicer or
any affiliate of either shall be deemed not to be outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary
to effect any such consent has been obtained.
Certificate Formula Interest: As to any Distribution Date, interest
----------------------------
at the Certificate Rate for the related Accrual Period on the Certificate
Principal Balance on the first day of such Accrual Period (after giving
effect to any distribution of principal made on the first day of such
Accrual Period).
Certificate Insurance Policy: The certificate insurance policy
----------------------------
number AB0088BE dated as of the Closing Date, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Investor
Certificates.
Certificate Insurer: AMBAC Indemnity Corporation, or its successor in
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interest.
Certificate Interest Collections: As to any Distribution Date, an
--------------------------------
amount equal to the Floating Allocation Percentage of the aggregate amount
of Trust Interest Collections for the related Collection Period.
Certificate Owner: With respect to an Investor Certificate, the
-----------------
person who is the beneficial owner of a Book-Entry Certificate.
Certificate Principal Balance: As of any Distribution Date, (i) the
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Original Certificate Principal Balance minus (ii) the aggregate amount
actually distributed as principal on the Investor Certificates on previous
Distribution Dates.
Certificate Register and Certificate Registrar: The register
----------------------------------------------
maintained and the registrar appointed pursuant to Section 6.02.
Certificate Rate: As to the initial Distribution Date, LIBOR
----------------
determined as of November 21, 1996 plus 0.17%. As to any subsequent
Distribution Date, LIBOR plus 0.17%; provided, however, that in the event
the Alternate Certificate Rate is less than LIBOR for such Distribution
Date plus the applicable percentage specified above, the Certificate Rate
for such Distribution Date shall be the Alternate Certificate Rate.
Closing Date: November 25, 1996.
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Code: The Internal Revenue Code of 1986, as the same may be amended
----
from time to time (or any successor statute thereto).
Collection Period: As to any Distribution Date and collections other
-----------------
than scheduled payments of Interest Collections and scheduled and
unscheduled payments of Principal Collections by Mortgagors, the calendar
month preceding the month in which such Distribution Date occurs. As to
such Interest Collections and Principal Collections and any Distribution
Date, the period from and including the 17th day of the month preceding
the month in which such Distribution Date occurs to and including the 16th
day of the month in which such Distribution Date occurs.
Combined Loan-to-Value Ratio: As of any date and Mortgage Loan, the
----------------------------
fraction, expressed as a percentage, the numerator of which is the sum of
(i) the Credit Limit and (ii) the unpaid principal balance of any related
senior mortgage loan or loans as of such date and the denominator of which
is generally the lesser of the Appraised Value or the sales price of the
Mortgaged Property, as applicable, as of the date of the appraisal and/or
purchase contract for the Mortgaged Property, as applicable, used by or on
behalf of MLCC to underwrite such Mortgage Loan.
Common Mortgage Loan Interests: The Common Mortgage Loans and, to
------------------------------
the extent provided in subsection 2.01(a), the related Loan Agreements,
Mortgages and other Mortgage File documents.
Common Mortgage Loans: Such of the Mortgage Loans, certain of the
---------------------
balances of which were sold and assigned to Trust 1991, Trust 1993, Trust
1994-1, Trust 1994-2, Trust 1995-1 or Trust 1995-2 pursuant to the Trust
1991 Pooling and Servicing Agreement, the Trust 1993 Pooling and
Servicing Agreement, the Trust 1994-1 Pooling and Servicing
Agreement, the Trust 1994-2 Pooling and Servicing Agreement,
the Trust 1995-1 Pooling and Servicing Agreement, and the Trust
1995-2 Pooling and Servicing Agreement, respectively, until such balances
are reduced to zero.
Corporate Trust Office: The principal office of the Trustee in
----------------------
California, at which at any particular time its trust shall administer
this Agreement, which office at the date of the execution of this
Agreement is located at 3 Park Plaza, 16th Floor, Irvine, California
92614, Attention: ML Revolving Home Equity Loan Asset Backed
Certificates, Series 1996-2; Facsimile: (714) 253-7577.
Credit Limit: As to any Mortgage Loan, the maximum Loan Balance
------------
permitted under the terms of the related Loan Agreement.
Cut-off Date: With respect to each Initial Mortgage Loan, November
------------
1, 1996 and, with respect to any Eligible Substitute Mortgage Loan, the
day on which each such Mortgage Loan is transferred to the Trust.
Cut-off Date Pool Balance: The aggregate of the Cut-off Date Trust
-------------------------
Balances of the Initial Mortgage Loans.
Cut-off Date Trust Balance: As to any Mortgage Loan, the unpaid
--------------------------
principal balance thereof (which may be $0) transferred and assigned to
the Trust as of the applicable Cut-off Date (excluding, in the case of any
Common Mortgage Loan, the portion thereof owned by one or more Prior
Trusts).
Defective Mortgage Loan: Any Mortgage Loan which is required to be
-----------------------
repurchased or replaced by the Servicer pursuant to Sections 2.02, 2.04 or
3.01.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is Cede & Co., as the registered Holder of
one or more Certificates evidencing the Certificate Principal Balance.
The Depository shall at all times be a "clearing corporation" as defined
in Section 8-102(3) of the Uniform Commercial Code of the State of New
York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: The 17th day (or, if such 17th day is not a
------------------
Business Day, the Business Day immediately preceding such
17th day) of the month in which the related Distribution Date occurs.
Dissolution Distribution Date: The date on which the proceeds from
-----------------------------
the sale, disposition or liquidation of the Trust Balance of the Mortgage
Loans are received and distributed to Certificateholders pursuant to
Article XI hereof.
Distribution Date: The 25th day of each month beginning in the month
-----------------
following the month of the initial issuance of the Certificates (or, if
such 25th day is not a Business Day, the Business Day immediately
following).
Eligible Account: One or more accounts:
----------------
(i) that are maintained with a depository institution or trust
company whose long-term and short-term unsecured debt
obligations (or, in the case of a depository institution or
trust company that is the principal subsidiary of a bank holding
company, the debt obligations of such holding company) at the
time of deposit therein have been rated by each Rating Agency in
its highest rating categories;
(ii) that are maintained with a depository institution or trust
company the long-term unsecured debt obligations of which have
been rated Baa3 or higher by Moody's, and the deposits in which
are fully insured by the Federal Deposit Insurance Corporation
acting through either the BIF or the SAIF;
(iii) that are segregated trust accounts maintained with the corporate
trust department of a depository institution or trust company,
acting in its fiduciary capacity, which has a short-term deposit
rating of P-1 by Moody's and A-1+ by Standard & Poor's; or
(iv) such other accounts that are acceptable to each Rating Agency
and the Certificate Insurer, as evidenced by a letter from each
Rating Agency and the Certificate Insurer to the Trustee,
without reduction or withdrawal of the rating of the Investor
Certificates.
The depository institution or trust company with which the Eligible
Account is maintained shall be organized under the laws of the United
States or any state thereof, have a net worth in excess of $100,000,000
and deposits insured to the full extent permitted by law by the Federal
Deposit Insurance Corporation and be subject to supervision and
examination by federal or state banking authorities. An Eligible Account
may bear interest, and may include, if otherwise qualified by this
definition, an account maintained with the Trustee.
Eligible Substitute Mortgage Loan: A Mortgage Loan to be substituted
---------------------------------
by the Servicer for a Defective Mortgage Loan pursuant to Section 2.02,
2.04 or 3.01, which on the date of such substitution shall:
(i) have a Trust Balance not substantially greater than and not less
than the Trust Balance of the Defective Mortgage Loan;
(ii) have a Loan Rate of not less than the Loan Rate of the Defective
Mortgage Loan and not more than 500 basis points in excess
thereof;
(iii) have a Loan Rate based on the same index as that of the
Defective Mortgage Loan;
(iv) have a Margin that is not less than the Margin for the Defective
Mortgage Loan, or more than 100 basis points higher than the
Margin for the Defective Mortgage Loan;
(v) have a maximum Loan Rate and a minimum Loan Rate, if any, that
are not lower than the maximum Loan Rate and minimum Loan Rate,
respectively, of the Defective Mortgage Loan;
(vi) have a remaining term to maturity not more than six months
earlier and not more than six months later than the remaining
term to maturity of the Defective Mortgage Loan, and in no case
later than March 1, 2006;
(vii) comply with the representations and warranties set forth in
Section 2.04 (which representations and warranties shall be
deemed to be made as of the date of substitution);
(viii) have a Combined Loan-to-Value Ratio that is not greater than the
Combined Loan-to-Value Ratio of the Defective Mortgage Loan as
of the date of origination of the Defective Mortgage Loan;
(ix) have a Mortgage in a lien position at least equal to the lien
position of the Mortgage securing the Defective Mortgage Loan;
and
(x) be secured by a Mortgaged Property that is subject to the same
use (owner-occupied, second home or rental property) and that
has the same structural characteristics (attached or detached)
as the Mortgaged Property securing the Defective Mortgage Loan,
provided, however, that in the case of clause (x), an owner-occupied,
detached Mortgaged Property will satisfy the requirements of clause (x) in
all cases.
Event of Default: As defined in Section 8.01.
----------------
Fixed Allocation Percentage: With respect to any date, the greater
---------------------------
of (i) 98% and (ii) the percentage equivalent (but not in excess of 100%)
of a fraction, the numerator of which is the Invested Amount and the
denominator of which is the Pool Balance as of the end of such day.
Floating Allocation Percentage: As to any Distribution Date, the
------------------------------
percentage equivalent of a fraction, the numerator of which is the
Invested Amount at the close of business on the preceding Distribution
Date (or at the Closing Date in the case of the first Distribution Date)
and the denominator of which is the Pool Balance, calculated as of the
first day of the month preceding the month in which such Distribution Date
occurs.
Indirect Parent: Merrill Lynch & Co., Inc., a Delaware corporation,
---------------
or its successor in interest.
Initial Mortgage Loans: The mortgage loans (including the rights to
----------------------
receive payments thereunder) transferred and assigned to the Trustee on
the Closing Date pursuant to Section 2.01, together with the related Loan
Agreements and other Mortgage File documents and the rights thereunder
conveyed to the Trustee on the Closing Date pursuant to Section 2.01.
Insurance Agreement: The Insurance and Indemnity Agreement dated as
-------------------
of the Closing Date, among the Servicer, the Transferor, the Trustee and
the Certificate Insurer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
------------------
insurance policy covering a Mortgage Loan or the related Mortgaged
Property net of any component thereof covering any expenses incurred by or
on behalf of the Transferor or the Servicer in connection with obtaining
such Insurance Proceeds.
Insured Amount: As defined in the Certificate Insurance Policy.
--------------
Insured Payment: With respect to any Distribution Date, the Insured
---------------
Amount for such Distribution Date paid to the Trustee by the Certificate
Insurer.
Interest Collections: As to any payment on a Mortgage Loan made by
--------------------
or on behalf of the related Mortgagor for the related Collection Period,
the portion thereof allocable to accrued interest for the related Interest
Period in accordance with the terms of the related Loan Agreement (net of
interest at the Servicing Fee Rate on the Loan Balance for each day during
such Interest Period), including Net Liquidation Proceeds allocable to
interest on such Mortgage Loan.
Interest Period: As to any payment of interest on a Mortgage Loan,
---------------
the period during which the interest covered by such payment accrued and
which, for any Distribution Date, is the month preceding the month in
which such Distribution Date occurs.
Invested Amount: With respect to any date, an amount equal to the
---------------
Original Invested Amount minus the sum of (i) the total of Trust Principal
Collections previously distributed to Investor Certificateholders pursuant
to Section 5.01(b) and (ii) the Aggregate Investor Loss Amount.
Investor Certificate: Any one of the Certificates signed and
--------------------
countersigned by the Trustee substantially in the form set forth in
Exhibits A and C hereto.
Investor Certificate Distribution Amount: As to any Distribution
----------------------------------------
Date, the sum of all amounts to be distributed to the Investor
Certificateholders pursuant to Article V and Article XI hereof.
Investor Certificateholder: The Holder of an Investor Certificate.
--------------------------
Investor Loss Amount: With respect to any Distribution Date, the
--------------------
amount equal to the product of (i) the Floating Allocation Percentage and
(ii) the aggregate of the Liquidation Loss Amounts for such Distribution
Date.
Investor Loss Reduction Amount: With respect to any Distribution
------------------------------
Date, the portion, if any, of the Investor Loss Amount for such
Distribution Date and all prior Distribution Dates that has not been (i)
paid to Investor Certificateholders from Certificate Interest Collections
pursuant to Section 5.01(a), (ii) paid to Investor Certificateholders from
Trust Interest Collections and Trust Principal Collections allocable to
the Transferor pursuant to Section 5.01(c)(i), (iii) reallocated to the
Transferor pursuant to Section 5.01(c)(ii), or (iv) paid to Investor
Certificateholders from Insured Payments pursuant to Section 5.01(d).
Late Payment Rate: For any Distribution Date, the rate of interest,
-----------------
as it is publicly announced by Citibank, N.A. at its principal office in
New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank,
N.A.) plus 2%. The Late Payment Rate shall be computed on the basis of a
year of 365 days calculating the actual number of days elapsed. In no
event shall the Late Payment Rate exceed the maximum rate permissible
under any applicable law limiting interest rates.
LIBOR: As to any Distribution Date as follows:
-----
(i) the arithmetic mean (rounded, if necessary, to the nearest
one sixteenth of a percent, with one thirty-second of a percent
rounded upwards) of the offered rates for United States dollar
deposits for one month which appear on the Reuters Screen LIBO Page
(as defined below) as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the immediately preceding Distribution Date (as
of November 21, 1996 in the case of the initial Distribution Date);
provided that at least two such offered rates appear on the Reuters
Screen LIBO Page on such date. If fewer than two offered rates
appear, LIBOR will be determined on such date as described in clause
(ii) below. "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuter Monitor Money Rates Service (or such
other page as may replace the LIBO page on that service for the
purpose of displaying London inter-bank offered rates of major
banks).
(ii) If on such date fewer than two offered rates appear on the
Reuters Screen LIBO Page as described in clause (i) above, the
Trustee will request the principal London office of each of four
reference banks (which shall be National Westminster Bank Plc, Bank
of Tokyo Trust Co., Llyods Bank Plc, and Bankers Trust Co., so long
as each such bank is engaged in transactions in the London inter-bank
market) ("Reference Banks") to provide the Trustee with its offered
quotation for United States dollar deposits for one month to prime
banks in the London inter-bank market as of 11:00 A.M., London time,
on such date. If at least two Reference Banks provide the Trustee
with such offered quotations, then LIBOR on such date will be the
arithmetic mean (rounded, if necessary, to the nearest one sixteenth
of a percent, with one thirty-second of a percent rounded upwards) of
all such quotations. If on such date fewer than two of the Reference
Banks provide the Trustee with such an offered quotation, LIBOR on
such date will be the arithmetic mean (rounded, if necessary, to the
nearest one sixteenth of a percent, with one thirty-second of a
percent rounded upwards) of the offered per annum rates which one or
more leading banks in The City of New York selected by the Trustee
(after consultation with the Servicer) are quoting as of 11:00 A.M.,
New York City time, on such date to leading European banks for United
States dollar deposits for one month, provided, however, that if such
banks are not quoting as described above, LIBOR will be the LIBOR
applicable to the immediately preceding Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
------------------
(ii) a day on which banking institutions in the States of New York or
California or in the City of London, England are required or authorized by
law to be closed.
Liquidated Mortgage Loan: As to any Distribution Date, any
------------------------
Mortgage Loan which was not previously a Liquidated Mortgage Loan, was in
default during the related Collection Period and with respect to which the
Servicer has determined that all Liquidation Proceeds which the Servicer
expects to recover from or on account of such Mortage Loan have been
recovered.
Liquidation Expenses: Expenses which are incurred by the Servicer in
--------------------
connection with the liquidation of any defaulted Mortgage Loan and not
recovered under any insurance policy or from the related Mortgagor,
including, without limitation, legal fees and expenses, real estate
brokerage commissions, any unreimbursed amount expended by the Servicer
pursuant to Section 3.06 with respect to such Mortgage Loan (including,
without limitation, amounts advanced to correct defaults on any mortgage
loan which is prior to such defaulted Mortgage Loan) and any related and
previously unreimbursed Property Protection Expenses.
Liquidation Loss Amount: With respect to any Distribution Date and
-----------------------
any Mortgage Loan that becomes a Liquidated Mortgage Loan during the
related Collection Period, the unrecovered Trust Balance thereof at the
end of such Collection Period, after giving effect to the Net Trust
Liquidation Proceeds applied in reduction of such Trust Balance in
accordance with the related Loan Agreement and this Agreement.
Liquidation Proceeds: Cash or funds (including Insurance Proceeds)
--------------------
received in connection with the liquidation of any defaulted Mortgage
Loan, whether through trustee's sale, foreclosure sale or otherwise.
Loan Agreement: As to any Mortgage Loan, the Credit Agreement, Note
--------------
or other instrument pursuant to which the Servicer agrees to make
revolving credit loans to a Mortgagor or a Mortgagor agrees to repay such
loans on the terms and conditions provided in such instrument.
Loan Balance: As to any Mortgage Loan and day, the principal balance
------------
of such Mortgage Loan upon which interest accrued for such day was
calculated.
Loan Rate: As to any Mortgage Loan and day, the rate of interest
---------
applicable to the calculation of interest for such day on the Loan
Balance.
Managed Amortization Period: The period from the first Distribution
---------------------------
Date to and including the earlier of (i) the Distribution Date in November
2001 and (ii) the day as of which a Rapid Amortization Event occurs.
Margin: As to any Mortgage Loan, the spread over the applicable
------
index, as specified in the related Loan Agreement.
Maximum Principal Payment: As to any Distribution Date, an amount
-------------------------
equal to the Fixed Allocation Percentage of the aggregate amount of Trust
Principal Collections received during the related Collection Period.
Minimum Monthly Payment: As to any Mortgage Loan and any month, the
-----------------------
minimum amount required to be paid by the related Mortgagor pursuant to
the related Loan Agreement.
Minimum Transferor Interest: As to any date, an amount equal to the
---------------------------
lesser of (i) 5% of the Pool Balance on such date and (ii) the Original
Transferor Certificate Principal Balance.
Monthly Advance: As to any Distribution Date, the aggregate of the
---------------
advances made by the Servicer on such Distribution Date pursuant to
Section 4.02, the amount of any such Monthly Advance being equal to the
excess of:
(i) the total amount of accrued interest (adjusted to interest at
the related Net Loan Rate) and principal due (including
principal due by reason of default or acceleration) on the Trust
Balances of the Mortgage Loans for the related Interest Period,
over
(ii) the total amount of interest (adjusted to interest at the
related Net Loan Rate) and principal collected on the Trust
Balances of the Mortgage Loans for the related Collection Period
as of the Determination Date,
minus any amounts with respect to installments of interest and principal
on the Trust Balances of the Mortgage Loans which (x) were delinquent as
of the end of the related Collection Period, (y) were not the subject of a
previous Monthly Advance and (z) are determined by the Servicer to be
Nonrecoverable Advances.
Monthly Advance Reimbursement Amount: As to any Distribution Date,
------------------------------------
the aggregate of the Monthly Advances which have not been reimbursed (or
deemed to have been reimbursed) to the Servicer through either (i)
withdrawals from the Certificate Account on or before such Distribution
Date pursuant to the second paragraph of Section 4.02 or (ii) debits to
the Mortgage Loan Payment Record pursuant to clause (ii) of Section 3.03.
Moody's: Moody's Investors Service, Inc. or its successor in
-------
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
--------
first, second or more junior lien on an estate in fee simple interest in
real property securing a Mortgage Loan or creating a first, second or more
junior lien on a leasehold interest insofar as such leasehold interest
exceeds the term of the related mortgage by five years.
Mortgage File: The mortgage documents listed in Section 2.01
-------------
pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Payment Record: With respect to the Trust, the record
----------------------------
maintained by the Servicer pursuant to Section 3.02(b).
Mortgage Loan Schedule: As of any date, the schedule of Mortgage
----------------------
Loans included in the Trust Fund on such date. The initial schedule of
Mortgage Loans as of the Cut-off Date is attached hereto as Exhibit F and
sets forth as to each Initial Mortgage Loan (i) the Cut-off Date Trust
Balance, (ii) the Credit Limit, (iii) the stated maturity upon which any
outstanding Loan Balance is due and payable, (iv) the identification
number, (v) the state and zip code of the related Mortgaged Property, and
(vi) whether such loan is a Common Mortgage Loan. The Mortgage Loan
Schedule will be amended from time to time to reflect the removal of any
Mortgage Loans from the Trust and/or the conveyance of any Eligible
Substitute Mortgage Loans to the Trust, and when so amended shall include
the information set forth above with respect to each Eligible Substitute
Mortgage Loan as of its related Cut-off Date.
Mortgage Loan Seller: Merrill Lynch Credit Corporation, a Delaware
--------------------
corporation, or its successor in interest, as assignor of the Trust
Balances of the Mortgage Loans to the Transferor.
Mortgage Loan With Title Insurance: Each of the following Mortgage
----------------------------------
Loans:
(i) Mortgage Loans originated before February 1, 1994;
(ii) Mortgage Loans originated after February 1, 1994 in which (a)
the Credit Limit was over $1,000,000, or (b) the Mortgage Loan
was being used for a purchase money first mortgage transaction;
and
(iii) Any other Mortgage Loan for which the Mortgage Loan Transferor
required title insurance to be obtained.
Mortgage Loans: Such of the mortgage loans for which balances are
--------------
transferred and assigned to the Trustee pursuant to Section 2.01 as from
time to time are held as a part of the Trust Fund, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule. Any reference in
this Agreement (including, without limitation, any reference in subsection
2.01(a)) to a Mortgage Loan sold and assigned to, or repurchased or
purchased from, the Trust Fund or as constituting part of the Trust Fund
shall mean such Mortgage Loan to the extent of the related balance owned
by the Trust Fund. Any defaulted Mortgage Loan in respect of which the
Servicer has not yet received all Liquidation Proceeds that it expects to
receive shall continue to be a part of the Trust Fund. All proceeds of
any such defaulted Mortgage Loan shall be credited to the Mortgage Loan
Payment Record to the same extent as proceeds of Mortgage Loans which are
not defaulted.
Mortgaged Property: The underlying property securing a Mortgage
------------------
Loan.
Mortgagor: The obligor under a Loan Agreement.
---------
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
------------------------
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: As to any Mortgage Loan and day, the Loan Rate less
-------------
the Servicing Fee Rate.
Net Trust Liquidation Proceeds: As to any Liquidated Mortgage Loan,
------------------------------
(i) the lesser of (x) Net Liquidation Proceeds and (y) the Trust Balance
of such Mortgage Loan at the time of liquidation, together with accrued
and unpaid interest thereon at the Net Loan Rate from the last day on
which interest was paid in full on such Mortgage Loan to the end of the
Collection Period in which such Mortgage Loan became a Liquidated Mortgage
Loan, minus (ii) any amount which may be retained by the Servicer on
account of any unreimbursed Monthly Advances under clause (iii) of Section
3.03.
Nonrecoverable Advance: Any portion of a Monthly Advance previously
----------------------
made or proposed to be made in respect of a Mortgage Loan which has not
been previously reimbursed to the Servicer and which, in the good faith
judgment of the Servicer, will not or, in the case of a proposed Monthly
Advance, would not be ultimately recoverable from Net Trust Liquidation
Proceeds or other recoveries in respect of the related Mortgage Loan. The
determination by the Servicer that it has made a Nonrecoverable Advance or
that any proposed advance, if made, would constitute a Nonrecoverable Ad-
vance, shall be evidenced by a certificate of a Servicing Officer deliv-
ered to the Trustee and detailing the reasons for such determination.
Officer's Certificate: A certificate signed by the Chairman of the
---------------------
Board, the President, a Senior Vice President, a Vice President or an
Assistant Vice President of the Transferor or the Servicer, as the case
may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the
------------------
Trustee and the Certificate Insurer, who may be internal counsel for the
Transferor or the Servicer.
Original Certificate Principal Balance: $276,159,000.
--------------------------------------
Original Invested Amount: $276,159,000.
------------------------
Original Transferor Certificate Principal Balance: $5,636,208.
-------------------------------------------------
Overcollateralization Amount: As of any date of determination, the
----------------------------
amount, if any, by which the Invested Amount exceeds the Certificate
Principal Balance.
Ownership Interest: With respect to any Certificate, any ownership
------------------
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
Percentage Interest: As to any Investor Certificate, the percentage
-------------------
interest evidenced thereby in distributions required to be made thereon,
such percentage interest being equal to the percentage obtained by
dividing the initial principal denomination of such Investor Certificate
by the Original Certificate Principal Balance.
Permitted Investments: One or more of the following (excluding any
---------------------
callable investments purchased at a premium):
(i) obligations of, or guaranteed as to timely principal and
interest by, the United States or any agency or instrumentality
thereof when such obligations are backed by the full faith and
credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition
thereof, provided that the short-term unsecured obligations of
the party agreeing to repurchase such obligations are at the
time rated by each Rating Agency in one of its two highest
short-term rating categories and the short-term debt obligations
of the party agreeing to repurchase shall be rated Prime-1 or
better by Moody's and A-1+ by Standard & Poor's;
(iii) certificates of deposit, demand and time deposits and bankers'
acceptances (which, if Moody's is a Rating Agency, shall each
have an original maturity of not more than 90 days and, in the
case of bankers' acceptances, shall in no event have an original
maturity of more than 365 days) of any U.S. depository
institution or trust company incorporated under the laws of the
United States or any state; provided that the short-term debt
obligations of such depository institution or trust company (or,
if the only Rating Agency is Standard & Poor's, in the case of
the principal depository institution in a depository institution
holding company, debt obligations of the depository institution
holding company) at the date of acquisition thereof have been
rated by each Rating Agency in its highest short-term rating
category; provided that if Moody's is a Rating Agency, the
short-term obligations of such depository institution or trust
company shall be rated Prime-1 or better;
(iv) commercial paper (having original maturities of not more than
270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in its highest
short-term rating category;
(v) investments in money market mutual funds registered under the
Investment Company Act of 1940 that are rated by each Rating
Agency in its highest rating category; provided that if Standard
& Poor's is a Rating Agency, the rating of such money market
funds shall be AAAm or AAAm-G; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will not
result in a reduction in the then current rating or ratings of
the Investor Certificates without taking into account the
Certificate Insurance Policy, as evidenced by a letter to such
effect from such Rating Agency.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: As to any date, the aggregate of the Trust Balances of
------------
all Mortgage Loans as of such date.
Pool Factor: As to any Distribution Date, the percentage, carried to
-----------
six places, obtained by dividing the Certificate Principal Balance for
such Distribution Date (before taking into account any distributions of
principal to be made on such Distribution Date) by the Original
Certificate Principal Balance.
Preference Amount: As defined in the Certificate Insurance Policy.
-----------------
Premium Amount: As to any Distribution Date other than the first
--------------
Distribution Date, the product of (x) the Premium Percentage and (y) the
Certificate Principal Balance for such Distribution Date (before taking
into account any distributions of principal to be made on such
Distribution Date). As to the first Distribution Date, the amount
determined in accordance with the preceding sentence minus $10,000.
Premium Percentage: As defined in the Certificate Insurance Policy.
------------------
Principal Collections: As to any Mortgage Loan and Collection
---------------------
Period, all amounts (other than Insurance Proceeds and Liquidation
Proceeds) received from or on behalf of the related Mortgagor during such
Collection Period which, at the time of receipt, were applied in reduction
of the Loan Balance in accordance with the terms of the related Loan
Agreement.
Prior Trust: Any of Trust 1991, Trust 1993, Trust 1994-1, Trust
-----------
1994-2, Trust 1995-1 and Trust 1995-2.
Prior Trust Pooling and Servicing Agreement: Any of the Trust 1991
-------------------------------------------
Pooling and Servicing Agreement, the Trust 1993 Pooling and Servicing
Agreement, the Trust 1994-1 Pooling and Servicing Agreement, the Trust
1994-2 Pooling and Servicing Agreement, the Trust 1995-1 Pooling and Ser-
vicing Agreement or the Trust 1995-2 Pooling and Servicing Agreement.
Prior Trust Trustee: Any of the Trust 1991 Trustee, the Trust 1993
-------------------
Trustee, the Trust 1994-1 Trustee, the Trust 1994-2 Trustee, the Trust
1995-1 Trustee and the Trust 1995-2.
Property Protection Expenses: Expenses paid or incurred by or for
----------------------------
the account of the Servicer in connection with the preservation or
protection of a Mortgaged Property or the security of a Mortgaged Property
including (i) hazard insurance policy premiums, (ii) real estate taxes and
property repair, replacement, protection and preservation expenses, (iii)
amounts expended to cure or prevent any default with respect to any
mortgage loan senior to a Mortgage Loan, and (iv) similar expenses
reasonably paid or incurred to preserve or protect the value of such
security.
Rapid Amortization Commencement Date: The earlier of (i) the
------------------------------------
Distribution Date in December 2001 and (ii) the Distribution Date next
following the Collection Period in which a Rapid Amortization Event is
deemed to occur pursuant to Section 11.01.
Rapid Amortization Event: As defined in Section 11.01.
------------------------
Rapid Amortization Period: The period following the Managed
-------------------------
Amortization Period until the termination of the Trust pursuant to Section
10.01.
Rating Agency: Any statistical credit rating agency, or its
-------------
successor, that rated the Investor Certificates at the request of the
Transferor at the time of the initial issuance of the Investor
Certificates. If such agency or a successor is no longer in existence,
"Rating Agency" shall be such statistical credit rating agency, or other
comparable Person, designated by the Servicer, notice of which designation
shall be given to the Trustee. References herein to the highest rating
categories of a Rating Agency shall mean AAA (long-term), AAAm or AAAm-G
(money market funds) and A-1+ (short-term) in the case of Standard &
Poor's and Aaa (long-term) and P-1 (short-term) in the case of Moody's and
in the case of any other Rating Agency shall mean such equivalent ratings.
Record Date: As to any Distribution Date, the last day of the month
-----------
(or if such last day is not a Business Day, the Business Day immediately
preceding such last day) preceding the month of such Distribution Date.
Reimbursement Amount: As to any Distribution Date, the sum of (x)(i)
--------------------
all Insured Payments paid by the Certificate Insurer, but for which the
Certificate Insurer has not been reimbursed prior to such Distribution
Date pursuant to Section 5.01(a) plus (ii) interest accrued thereon,
calculated at the Late Payment Rate from the date the Trustee received
the related Insured Payments and (y)(i) any amounts then due and owing to
the Certificate Insurer under the Insurance Agreement or the Certificate
Insurance Policy plus (ii) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee and the Servicer
of the amount of any Reimbursement Amount.
Required Amount: For each Distribution Date occurring on or prior to
---------------
the 30th Distribution Date, 2% of the Cut-off Date Pool Balance. For each
Distribution Date thereafter, the lesser of (i) 2% of the Cut-off Date
Pool Balance and (ii) 4% of the Pool Balance as of such Distribution Date;
provided that in no event will the Required Amount be less than a floor
amount equal to the greater of (x) 1% of the Cut-off Date Pool Balance and
(y) 50% of the aggregate Trust Balances of all Mortgage Loans delinquent
91 days or more (including for this purpose any Mortgage Loans in
foreclosure and any Mortgage Loans with respect to which the related
Mortgaged Properties have been acquired by the Trust Fund) as of the end
of the related Collection Period. Notwithstanding the foregoing, for each
Distribution Date, if the cumulative principal losses on the Trust
Balances of the Mortgage Loans specified in item (xxxvi) of the Servicing
Certificate prepared pursuant to Section 4.01 exceed 1.25% of the Cut-off
Date Pool Balance, then the Required Amount shall be 3.75% of the Cut-off
Date Pool Balance.
Responsible Officer: When used with respect to the Trustee, the
-------------------
Chairman or Vice Chairman of the Board of Directors or Trustees, the
Chairman or Vice Chairman of the Executive or Standing Committee of the
Board of Directors or Trustees, the President, the Chairman of the
Committee on Trust Matters, any Vice President, any Assistant Vice
President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer
or Assistant Trust Officer, the Controller and any Assistant Controller or
any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and also, with
respect to a particular matter, to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
Retained Rights: As defined in Section 2.01(e).
---------------
Retransfer Date: As defined in Section 2.06.
---------------
Retransfer Notice Date: As defined in Section 2.06.
----------------------
SAIF: The Savings Association Insurance Fund, as from time to time
----
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on
such date.
Scheduled Principal Collections Payment: With respect to any
---------------------------------------
Distribution Date during the Managed Amortization Period, an amount equal
to the lesser of (i) the Maximum Principal Payment and (ii) the
Alternative Principal Payment. With respect to any Distribution Date on or
after the Rapid Amortization Commencement Date, an amount equal to the
Maximum Principal Payment.
Seriously Delinquent Mortgage Loan: As to any Distribution Date, any
----------------------------------
Mortgage Loan which (i) had not reached its stated maturity and was
delinquent in payment of interest for more than 90 days at the end of the
related Collection Period, (ii) had reached its stated maturity and was
more than 60 days delinquent at the end of the related Collection Period,
or (iii) was in default under the terms and provisions of the Loan
Agreement (other than a default related to a delinquency) as of the end of
the related Collection Period and as to which the Servicer had notified
the Mortgagor of such default, terminated the Loan Agreement and demanded
the immediate repayment of the outstanding Loan Balance.
Servicer or MLCC: Merrill Lynch Credit Corporation, a Delaware
----------------
corporation, or its successor in interest or any successor servicer
appointed as herein provided.
Servicing Certificate: A certificate completed by and executed on
---------------------
behalf of the Servicer in accordance with Section 4.01.
Servicing Fee Rate: 0.50% per annum.
------------------
Servicing Officer: Any officer of the 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 Servicer, as such list may from time to
time be amended.
Standard & Poor's: Standard & Poor's Corporation or its successor in
-----------------
interest.
Stated Maturity Date: The Distribution Date in January 2007.
--------------------
Support Agreement: The letter agreement between the Servicer and its
-----------------
Indirect Parent dated as of November 1, 1996, pursuant to which the
Indirect Parent ensures performance by the Servicer of the obligations to
repurchase certain Mortgage Loans pursuant to Section 2.02 and to deposit
certain amounts in the Certificate Account pursuant to Section 4.02.
Transfer: Any direct or indirect transfer, sale, pledge,
--------
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer Date: With respect to the Initial Mortgage Loans, the
-------------
Closing Date and with respect to any Eligible Substitute Mortgage Loan,
the date on which such Eligible Substitute Mortgage Loan is conveyed to
the Trust under the terms hereof.
Transfer Deposit Amount: As defined in Section 2.02(b).
-----------------------
Transferee: Any Person who is acquiring by Transfer any Ownership
----------
Interest in a Certificate.
Transferor: MLCC Mortgage Investors, Inc., a Delaware corporation,
----------
or its successor in interest.
Transferor Certificate: The Certificates signed and countersigned by
----------------------
the Trustee substantially in the form set forth in Exhibits B and D
hereto.
Transferor Certificate Principal Balance: As of any date of
----------------------------------------
determination, the amount equal to (i) the Pool Balance as of the end of
the day next preceding such date of determination minus (ii) the Invested
Amount as of the end of such day.
Transferor Certificateholders: The Holders of the Transferor
-----------------------------
Certificates.
Transferor Interest Collections: As to any Distribution Date, Trust
-------------------------------
Interest Collections for the related Collection Period that are not
Certificate Interest Collections.
Transferor Principal Collections: As to any Distribution Date,
--------------------------------
Trust Principal Collections for the related Collection Period minus the
amount of such Trust Principal Collections required to be distributed to
Investor Certificateholders pursuant to Section 5.01(b).
Transferor Subordinated Amount: As to any Distribution Date, the
------------------------------
least of
(i) 2% of the Cut-off Date Pool Balance minus the sum of (a) the
aggregate amount of Trust Principal Collections allocable to the
Transferor that have previously been distributed to Investor
Certificateholders pursuant to Section 5.01(c)(i) and (b) the
aggregate amount of Investor Loss Amounts that have previously
been reallocated to the Transferor pursuant to Section
5.01(c)(ii); or
(ii) the Transferor Subordinated Amount on the previous Distribution
Date; or
(iii) the Required Amount.
Trust: The trust created by this Agreement and designated "ML
-----
Revolving Home Equity Loan Trust 1996-2".
Trust 1991: The trust created by the Trust 1991 Pooling and
----------
Servicing Agreement and designated "ML Home Equity Loan Trust 1991-2".
Trust 1991 Pooling and Servicing Agreement: The Pooling and
------------------------------------------
Servicing Agreement dated as of September 1, 1991 among Merrill Lynch
Credit Corporation, as Servicer, Merrill Lynch Home Equity Acceptance,
Inc., as Seller, and Bankers Trust Company of California, N.A., as
Trustee, and all amendments thereof and supplements thereto.
Trust 1991 Trustee: The institution which executed the Trust 1991
------------------
Pooling and Servicing Agreement as Trustee, or its successors in interest,
or any successor trustee that has been appointed in accordance with the
terms of the Trust 1991 Pooling and Servicing Agreement.
Trust 1993: The trust created by the Trust 1993 Pooling and
----------
Servicing Agreement and designated "ML Home Equity Loan Trust 1993-1".
Trust 1993 Pooling and Servicing Agreement: The Pooling and
------------------------------------------
Servicing Agreement dated as of February 1, 1993 among Merrill Lynch
Credit Corporation, as Servicer, Merrill Lynch Home Equity Acceptance,
Inc., as Seller, and Bankers Trust Company of California, N.A., as
Trustee, and all amendments thereof and supplements thereto.
Trust 1993 Trustee: The institution which executed the Trust 1993
------------------
Pooling and Servicing Agreement as Trustee, or its successors in interest,
or any successor trustee that has been appointed in accordance with the
terms of the Trust 1993 Pooling and Servicing Agreement.
Trust 1994-1: The trust created by the Trust 1994-1 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1994-1".
Trust 1994-1 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of April 1, 1994 among Merrill Lynch Credit
Corporation, as Servicer, Merrill Lynch Home Equity Acceptance, Inc., as
Seller, and Bankers Trust Company of California, N.A., as Trustee, and all
amendments thereof and supplements thereto.
Trust 1994-1 Trustee: The institution which executed the Trust 1994
--------------------
1 Pooling and Servicing Agreement as Trustee, or its successors in
interest, or any successor trustee that has been appointed in accordance
with the terms of the Trust 1994-1 Pooling and Servicing Agreement.
Trust 1994-2: The trust created by the Trust 1994-2 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1994-2".
Trust 1994-2 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of September 1, 1994 among Merrill Lynch
Credit Corporation, as Servicer, MLCC Mortgage Investors, Inc., as Seller,
and Bankers Trust Company of California, N.A., as Trustee, and all
amendments thereof and supplements thereto.
Trust 1994-2 Trustee: The institution which executed the Trust 1994
--------------------
2 Pooling and Servicing Agreement as Trustee, or its successors in
interest, or any successor trustee that has been appointed in accordance
with the terms of the Trust 1994-2 Pooling and Servicing Agreement.
Trust 1995-1: The trust created by the Trust 1995-1 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1995-1".
Trust 1995-1 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of March 1, 1995 among Merrill Lynch Credit
Corporation, as Servicer, MLCC Mortgage Investors, Inc., as Seller, and
Bankers Trust Company of California, N.A., as Trustee, and all amendments
thereof and supplements thereto.
Trust 1995-1 Trustee: The institution which executed the Trust 1995
--------------------
1 Pooling and Servicing Agreement as Trustee, or its successors in
interest, or any successor trustee that has been appointed in accordance
with the terms of the Trust 1995-1 Pooling and Servicing Agreement.
Trust 1995-2: The trust created by the Trust 1995-2 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1995-2".
Trust 1995-2 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of October 1, 1995 among Merrill Lynch Credit
Corporation, as Servicer, MLCC Mortgage Investors, Inc., as Seller, and
Bankers Trust Company of California, N.A., as Trustee, and all amendments
thereof and supplements thereto.
Trust 1995-2 Trustee: The institution which executed the Trust 1995
--------------------
2 Pooling and Servicing Agreement as Trustee, or its successors in
interest, or any successor trustee that has been appointed in accordance
with the terms of the Trust 1995-2
Pooling and Servicing Agreement.
Trust Balance: As to any Mortgage Loan, other than a Liquidated
-------------
Mortgage Loan, and day, the related Cut-off Date Trust Balance, plus any
Additional Balances in respect of such Mortgage Loan arising during the
Managed Amortization Period, minus the sum of (i) all Principal
Collections credited against the Loan Balance (excluding, in the case of
any Common Mortgage Loan, any such Principal Collections applied in
reduction of the principal balance of such Common Mortgage Loan sold and
assigned to one or more of the Prior Trusts) in accordance with the
related Loan Agreement prior to such day, and (ii) any Trust Insurance
Proceeds received prior to such day in respect of such Mortgage Loan. For
purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Trust Balance equal to the Trust Balance of the related Mortgage
Loan immediately prior to the final recovery of related Liquidation
Proceeds and a Trust Balance of zero thereafter.
Trust Fund: The corpus of the ML Revolving Home Equity Loan Trust
----------
1996-2, consisting of, to the extent described herein, the following:
(i) the Trust Balance of each Mortgage Loan (including any
Additional Balance arising during the Managed Amortization
Period under such Mortgage Loan subsequent to the related Cut-
off Date), all payments of interest and of principal thereon,
from whatever source derived, received on or with respect to
such Mortgage Loan on and after the applicable Cut-off Date and
allocable to such Trust Balance (but not including all accrued
interest and principal due on or with respect to such Mortgage
Loan for Interest Periods prior to the related Cut-off Date);
(ii) such assets as shall from time to time be identified as
deposited in the Certificate Account in accordance with this
Agreement;
(iii) the interest of the Certificateholders to the extent of the
Trust Balances of the Mortgage Loans and interest accrued
thereon in (x) property which secured a Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure,
(y) any insurance policies related to the Mortgage Loans,
including hazard insurance policies, and (z) the related
Mortgage, Loan Agreement and other Mortgage File documents for
each Mortgage Loan;
(iv) the benefit of the Support Agreement and the Certificate
Insurance Policy; and
(v) the proceeds of each of the foregoing.
Trust Insurance Proceeds: As to any Mortgage Loan and Collection
------------------------
Period, an amount equal to the lesser of (i) Insurance Proceeds paid to
the Servicer during such Collection Period (reduced by any related
expenses of the Servicer in collecting such proceeds), which (x) are not
Liquidation Proceeds, (y) are not applied to the restoration or repair of
the related Mortgaged Property or released to the related Mortgagor in
accordance with the normal servicing procedures of the Servicer and (z)
will be applied by the Servicer in reduction of the Loan Balance of such
Mortgage Loan and (ii) the Trust Balance of such Mortgage Loan at the end
of such Collection Period, together with accrued and unpaid interest
thereon at the Net Loan Rate from the last day on which interest was paid
in full on such Mortgage Loan to the end of such Collection Period.
Trust Interest Collections: As to any payment on a Mortgage Loan
--------------------------
made by or on behalf of the related Mortgagor for the related Collection
Period, the lesser of (i) the portion thereof allocable to accrued
interest for the related Interest Period in accordance with the terms of
the related Loan Agreement (net of interest at the Servicing Fee Rate on
the Loan Balance for each day during such Interest Period) and (ii)
accrued interest at the Net Loan Rate on the Trust Balance for each day
during such Interest Period.
Trust Principal Collections: As to any Mortgage Loan and Collection
---------------------------
Period, the sum of (i) all amounts (other than Insurance Proceeds and
Liquidation Proceeds) received from or on behalf of the
related Mortgagor during such Collection Period which, at the
time of receipt, were applied in reduction of the Loan Balance in
accordance with the terms of the related Loan Agreement (other than, in
the case of any Common Mortgage Loan, any such principal collections
applied in reduction of the principal balance of such Common Mortgage Loan
sold and assigned to any Prior Trust), (ii) the principal portion of any
Net Trust Liquidation Proceeds and Trust Insurance Proceeds and (iii) the
principal portion of any Transfer Deposit Amount.
Trustee: The institution executing this Agreement as Trustee, or its
-------
successor in interest, or any successor trustee that has been appointed in
accordance with the terms of this Agreement.
Unpaid Certificate Interest Shortfall: As to any Distribution Date,
-------------------------------------
the aggregate amount, if any, of Certificate Formula Interest that was
accrued in respect of one or more prior Distribution Dates and has not
previously been distributed to Investor Certificateholders.
Section 1.02. Interest Calculations.
---------------------
All calculations of interest hereunder that are made in respect of
the Loan Balance, Trust Balance or Additional Balance of a Mortgage Loan,
including calculations of interest at the Servicing Fee Rate, shall be
made on a daily basis using a 365 day year. All calculations of interest
on the Investor Certificates shall be made on the basis of the actual
number of days in an Accrual Period and a year assumed to consist of 360
days.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans.
----------------------------
(a) In consideration of the Trustee's delivery to or upon the order
of the Transferor of the Certificates in an aggregate amount equal to the
Cut-off Date Pool Balance, the Transferor does hereby transfer, assign,
set over and otherwise convey to the Trustee without recourse (except as
provided herein) all the right, title and interest of the Transferor in
and to (i)(A) the Cut-off Date Trust Balance of each Mortgage Loan,
including any Additional Balance arising during the Managed Amortization
Period under each Mortgage Loan subsequent to the related Cut-off Date and
assigned and transfered to the Trustee hereunder, all payments of interest
and principal thereon, from whatever source derived, which are received on
or with respect to each Mortgage Loan on or after the Cut-off Date and are
allocable to the Trust Balance (but not including all accrued interest and
principal due on or with respect to the Mortgage Loans for Interest
Periods prior to the Cut-off Date), (B) the Certificate Account, and (C)
the Certificate Insurance Policy, (ii) to the extent of the Trust Balances
of the Mortgage Loans and interest accrued thereon, as provided in this
Agreement, (A) any Mortgaged Properties converted to ownership through
foreclosure or deed in lieu or otherwise, (B) any insurance policies
related to the Mortgage Loans, and (C) the related Mortgages, Loan
Agreements and other Mortgage File documents for the Mortgage Loans; and
(iii) the proceeds of each of the foregoing.
The Transferor and the Trustee acknowledge that the Prior Trusts have
rights, interests, power and authority with respect to the Common Mortgage
Loans and the related Loan Agreements, Mortgages and other Mortgage File
documents to the extent provided in the Prior Trust Pooling and Servicing
Agreements. The Servicer acknowledges that, pursuant to the terms of the
Loan Agreements, amounts received from or on behalf of the Mortgagor of a
Common Mortgage Loan which, at the time of receipt, are treated as
principal collections pursuant to the related Loan Agreement, will be
applied in reduction of the principal balance of such Common Mortgage Loan
sold to one or more of the Prior Trusts as provided in the Prior Trust
Pooling and Servicing Agreements before such collections may be applied as
Principal Collections under this Agreement.
Notwithstanding the characterization of the Investor Certificates as
debt for federal, state and local income and franchise tax purposes, the
parties hereto intend to treat the transfer of the Mortgage Loans as
provided herein as a sale for non-tax purposes from the Mortgage Loan
Seller to the Transferor and from the Transferor to the Trust of all of
their right, title and interest in and to the Mortgage Loans and other
property described above. In the event the transaction set forth herein
is deemed not to be a sale for the purposes described in the preceding
sentence, the Mortgage Loan Seller and the Transferor hereby grant to the
Trustee a first priority security interest in all of the Mortgage Loan
Seller's and the Transferor's right, title and interest in and to the (i)
Mortgage Loans identified on the Mortgage Loan Schedule on the Cut-off
Date, (ii) Mortgage Loans added to the Mortgage Loan Schedule from time to
time, (iii) all property included in the Trust Fund, (iv) and all proceeds
of any of the foregoing; and this Agreement shall constitute a security
agreement under applicable law.
In connection with such assignment, transfer and conveyance of the
Trust Fund, as promptly as practicable but in no event later than 10 days
following the Closing Date, (i) the Mortgage Loan Seller will file in the
appropriate office in the State in which the principal place of business
of the Mortgage Loan Seller is located a UCC-1 financing statement
executed by the Mortgage Loan Seller as debtor, naming the Transferor as
secured party and listing as collateral the Mortgage Loans identified on
the Mortgage Loan Schedule and all property constituting the Trust Fund,
and (ii) the Transferor will file in the appropriate office in the State
in which the principal place of business of the Transferor is located a
UCC-1 financing statement executed by the Transferor as debtor, naming the
Trustee as secured party and listing as collateral the Mortgage Loans
identified on the Mortgage Loan Schedule and all property constituting the
Trust Fund. In connection with such filings, the Mortgage Loan Seller and
the Transferor agree that they shall each cause to be filed all necessary
continuation statements thereof and to take or cause to be taken such
actions and execute such documents as are necessary to perfect and protect
the Certificateholders' interests in the Mortgage Loans and the proceeds
thereof allocable thereto.
(b) In connection with the foregoing assignment, transfer and
conveyance by the Transferor, the Servicer acknowledges that it is holding
as custodian for the Trustee or the applicable Prior Trustee the following
documents or instruments with respect to each Mortgage Loan so assigned
and transferred (other than Mortgage Loans which have been prepaid in full
on or after the Cut-off Date and prior to the date of the execution of
this Agreement):
(i) The original Loan Agreement;
(ii) The related Mortgage with evidence of recording indicated
thereon; and
(iii) As to each Mortgage Loan With Title Insurance, evidence of
such insurance (to the extent such evidence is included in
the related Mortgage File).
Except as hereinafter provided, the Servicer shall be entitled to
maintain possession of all of the foregoing documents and instruments and
shall not be required to deliver any of them to the Trustee. In the
event, however, that possession of any of such documents or instruments is
required by any person (including the Trustee) acting as successor
servicer pursuant to Section 7.04 in order to carry out the duties of
Servicer hereunder, then such successor shall be entitled to request
delivery of such documents or instruments by the Servicer and to retain
such documents or instruments for as long as necessary for servicing pur-
poses. Any such documents or instruments shall be returned to the
Servicer (unless returned to the related Mortgagor in connection with the
payment in full of the related Mortgage Loan) when possession thereof is
no longer required.
(c) The Servicer further confirms to the Trustee that it has caused
the portions of its records relating to the Mortgage Loans to be clearly
and unambiguously marked to indicate that the Trust Balances of such
Mortgage Loans (to the extent provided herein) have been assigned and
transferred to the Trustee and constitute part of the Trust Fund in
accordance with the terms of the trust created hereunder.
(d) The Servicer's right to maintain possession of the documents
enumerated above shall continue so long as the long term unsecured debt of
the Indirect Parent is assigned ratings of at least A- by Standard and
Poor's and A3 by Moody's. At such time as the long term unsecured debt of
the Indirect Parent does not satisfy the above referenced criteria, as
promptly as practicable but in no event more than 90 days following the
happening of such event (or 120 days upon the receipt by the Trustee from
the Servicer of a letter from each Rating Agency that such longer period
(without taking into account the Certificate Insurance Policy) will not
result in a reduction in or withdrawal of any rating of the Investor
Certificates), the Servicer shall at the expense of the Servicer (i)
prepare assignments in recordable form to the Trustee of each Mortgage
Loan (which may be a blanket assignment) and (ii) deliver the related
Mortgage Files to the Trustee to be held by the Trustee in trust, upon the
terms herein set forth, for the use and benefit of all present and future
Certificateholders and the Trustee shall retain possession thereof except
to the extent the Servicer requires any Mortgage Files for normal
servicing as contemplated by Section 3.07; provided, however, that such
preparation of assignments and delivery of related Mortgage Files shall
not be required in the case of any Common Mortgage Loan for which the
Servicer has so prepared an assignment and delivered the related Mortgage
File to the related Prior Trustee. In the event the Servicer fails to
deliver the Mortgage Files to the Trustee within such 90 day period or, if
applicable, 120 day period, the Trustee shall give written notice pursuant
to the Support Agreement to the Indirect Parent of the Servicer's failure
to deliver the Mortgage Files.
Within 60 days following delivery of the Mortgage Files to the
Trustee, it will review or cause to be reviewed each Mortgage File to
ascertain that all required documents set forth in this Section 2.01 have
been executed and received, and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule and in so doing the Trustee
may rely on the purported due execution and genuineness of any signature
thereon. If within such 60 day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule, the Trustee shall promptly notify the Servicer,
which shall have a period of 30 days after such notice within which to
correct or cure any such defect. Upon the completion of the review by the
Trustee of each Mortgage File within such 60 day period and, if necessary,
the correction or cure of any defect by the Servicer within such 30 day
period, the Servicer will submit such assignments of the Mortgage Loans
for recording in the appropriate public offices for real property records
within seven (7) days of the completion of such review and necessary
correction and instruct the recording offices to return the original
recorded assignments to the Trustee. Within 30 days following receipt by
the Trustee of the recorded assignment the Trustee shall review or cause
to be reviewed such assignment to confirm the information specified above
with respect to the other documents. The Trustee shall notify the
Servicer of any defect in such assignment based on such review. The
Servicer shall have a period of 30 days following such notice to correct
or cure such defect.
If the Servicer fails to record an assignment of a Mortgage Loan as
herein provided, the Trustee shall prepare and file or cause to be
prepared and filed, at the expense of the Servicer, such assignments in
the appropriate real property or other records and the Servicer hereby
appoints the Trustee as its attorney-in-fact with full power and authority
acting in its stead for the purpose of such preparation and filing.
(e) On the Closing Date the Transferor shall deliver the Certificate
Insurance Policy to the Trustee.
(f) Bankers Trust Company of California, N.A., as the Prior Trust
Trustee or successor trustee for each of the Prior Trusts, hereby
acknowledges that the Mortgage Loan Seller has previously reserved and
retained certain rights, interests, power and authority (the "Retained
Rights") with respect to the Common Mortgage Loan Interests to the extent
of the Mortgage Loan Seller's interest in the Common Mortgage Loan
Interests not sold to the Prior Trusts, all as set forth more fully in the
Prior Trust Pooling and Servicing Agreements. Without limiting the
generality of the foregoing, the Retained Rights include the right of the
Mortgage Loan Seller to certain balances arising under the related Common
Mortgage Loans, together with payments of principal and interest, from
whatever source derived, allocable to such balances, as provided in the
Prior Trust Pooling and Servicing Agreements. The Mortgage Loan Seller
hereby notifies the Prior Trust Trustees that certain of the Retained
Rights are being assigned to the Trustee pursuant to, and to the extent
provided in, this Agreement (the "Assignment of Retained Rights").
Bankers Trust Company of California, N.A., as the Prior Trust Trustee
or successor trustee for each of the Prior Trusts, hereby acknowledges
receipt of (i) a copy of this Agreement, (ii) notice of the Assignment of
Retained Rights as set forth in this Section 2.01(f), (iii) notice of the
transfer and assignment to the Trustee of the Common Mortgage Loan
Interests and related rights (including, without limitation, payments on
the Common Mortgage Loans) as evidenced by this Section 2.01(f), and (iv)
notice of the Trustee's first priority perfected security interest in the
Common Mortgage Loan Interests and related rights (including, without
limitation, payments on the Common Mortgage Loans) as evidenced by, and to
the extent provided in, this Agreement.
Not later than the end of the 90 day period or, if applicable, 120
day period specified in Section 2.01(d), the Servicer shall deliver the
Mortgage File for each Common Mortgage Loan to the Prior Trust Trustee
with the most senior rights thereto. Each of the Prior Trust Trustees
hereby agrees to act for the Trust Fund as a bailee that has received
notification of the Trust Fund's interest in the Common Mortgage Loans to
the extent of the Trust Balances at such time as the Prior Trust Trustees
take possession of the Loan Agreements or any of the other Mortgage File
documents with respect to the Common Mortgage Loans. Further, each of the
Prior Trust Trustees agrees that if the Loan Agreement or any of the other
Mortgage File documents with respect to any Common Mortgage Loan
that may be held by it in its capacity as trustee are no longer
required to be held by it in such capacity (by reason of payment
of the balance of such Common Mortgage Loan owned by such
Prior Trust or for any other reason that under the related
Prior Trust Pooling and Servicing Agreement permits or requires release of
the related Mortgage File to the Transferor), and the Trust Balance of
such Common Mortgage Loan is then owned by the Trust Fund, the Prior Trust
Trustee shall promptly transfer possession of all such Mortgage File
documents to the Prior Trust Trustee, if any, with the then most senior
rights to the related Mortgage File for such Common Mortgage Loan and if
there is no such trustee, then to the Trustee or to any successor Trustee.
Each of the Prior Trust Trustees hereby acknowledges and confirms that its
right, title and interest in any mortgage loan and any property related to
such mortgage loan conveyed to it pursuant to Section 2.01(a) of the
applicable Prior Trust Pooling and Servicing Agreement, is limited to the
"trust balance" (as defined in the applicable Prior Trust Pooling and
Servicing Agreement), if any, of any such mortgage loan plus accrued
interest, if any, thereon.
Nothing in this Section 2.01(f) shall be deemed to affect the right
or obligation of a Prior Trust Trustee to release the Mortgage File of any
Common Mortgage Loan to the servicer of the related Prior Trust or to the
Servicer to the extent permitted or required by the applicable Prior Trust
Pooling and Servicing Agreement.
Section 2.02. Acceptance by Trustee; Retransfer
---------------------------------
of Mortgage Loans; Substitution of
----------------------------------
Eligible Substitute Mortgage Loans.
----------------------------------
(a) The Trustee acknowledges the assignment and transfer of the Loan
Agreements and the Mortgages pursuant to Section 2.01, and declares that
it will hold the Trust Fund in trust, upon the terms herein set forth, for
the use and benefit of all present and future Certificateholders and the
Certificate Insurer.
(b) If the time to correct or cure any defect of which the Trustee
has notified the Servicer following any review by the Trustee of the
Mortgage Files pursuant to Section 2.01 has expired without any correction
or cure or if any loss that materially and adversely affects the interests
of the Certificateholders is incurred in respect of any Mortgage Loan as a
result of (i) a defect in any document constituting a part of a Mortgage
File or (ii) the Servicer's retention of such Mortgage File, then on the
Business Day next preceding the Distribution Date in the month following
the Collection Period in which the time to correct or cure such defect
expired or such loss occurred, deposit in the Certificate Account the
Transfer Deposit Amount, if any, and upon satisfaction of the applicable
conditions described herein, all right, title and interest of the Trust in
and to such Mortgage Loan shall be deemed to be retransferred, reassigned
and otherwise reconveyed, without recourse, representation or warranty, to
the Transferor on such Business Day and the Trust Balance of such Mortgage
Loan shall be deducted from the Pool Balance; provided, however, that
interest accrued on the Trust Balance of such Mortgage Loan to the end of
the related Interest Period shall be the property of the Trust. The
Servicer shall determine if the removal of such Trust Balance from the
Pool Balance in accordance with the preceding sentence would cause the
Transferor Certificate Principal Balance to be less than the Minimum
Transferor Interest ("Transfer Deficiency"), in which event the Servicer
shall deliver written notice of such deficiency to the Trustee and the
Transferor, and within five Business Days after the Business Day of such
retransfer the Servicer shall either (i) substitute an Eligible Substitute
Mortgage Loan or (ii) deposit into the Certificate Account an amount (the
"Transfer Deposit Amount") in immediately available funds equal to the
Transfer Deficiency or a combination of both (i) and (ii) above. Such
reduction or substitution and the actual payment of any Transfer Deposit
Amount, if any, shall be deemed to be payment in full for such Mortgage
Loan.
Upon receipt of any Eligible Substitute Mortgage Loan or of written
notification signed by a Servicing Officer to the effect that the Transfer
Deposit Amount in respect of a Defective Mortgage Loan has been deposited
into the Certificate Account or, if the Transferor Certificate Principal
Balance is not reduced below the Minimum Transferor Interest as a result
of the deemed retransfer of a Defective Mortgage Loan, then as promptly as
practicable following such deemed transfer, the Trustee shall execute and
deliver such instrument of transfer or assignment presented to it by the
Servicer, in each case without recourse, as shall be necessary to vest in
the Servicer or the Transferor, as the case may be, legal and beneficial
ownership of such repurchased or removed Mortgage Loan (including any
property acquired in respect thereof and any insurance policy or Insurance
Proceeds with respect thereto). Notwithstanding the preceding sentence,
the Trustee shall not be required to execute and deliver such instrument
of transfer and assignment if the Mortgage Loan is required to be retained
for the use and benefit of a Prior Trust pursuant to a Prior Trust Pooling
and Servicing Agreement. It is understood and agreed that the obligation
of the Transferor and the Servicer to accept a transfer of a Defective
Mortgage Loan and to either convey an Eligible Substitute Mortgage Loan or
to make a deposit of any related Transfer Deposit Amount into the
Certificate Account shall constitute the sole remedy respecting such
defect available to Certificateholders, the Trustee or the Certificate
Insurer, and such obligation on the part of the Servicer shall survive any
resignation or termination of the Servicer pursuant to Section 7.04 or
8.01.
Notwithstanding the foregoing, if any Eligible Substitute Mortgage
Loans conveyed to the Trust are Common Mortgage Loans, the Servicer shall
be required to deliver to, and deposit with, the Trustee with respect to
such Common Mortgage Loans an Officer's Certificate identifying the
Eligible Substitute Mortgage Loans with respect to which such documents or
instruments previously were delivered and deposited pursuant to a Prior
Trust Pooling and Servicing Agreement. The documents or instruments
identified in such Officer's Certificate shall be considered to be part of
the Mortgage Files for all purposes of this Agreement and shall be subject
to the provisions of Section 2.01(e).
Notwithstanding any other provision of this Section 2.02(b), a re-
transfer of a Defective Mortgage Loan to the Servicer pursuant to this
Section that would cause the Transferor Certificate Principal Balance to
be less than the Minimum Transferor Interest shall not occur if either the
Transferor fails to convey an Eligible Substitute Mortgage Loan or to
deposit into the Certificate Account any related Transfer Deposit Amount
required by this Section 2.02(b) with respect to the transfer of such
Defective Mortgage Loan.
(c) For any Collection Period during which the Servicer substitutes
one or more Eligible Substitute Mortgage Loans, the Servicer shall
determine the Transfer Deposit Amount which shall be deposited into the
Certificate Account on the Business Day next preceding the Distribution
Date occurring in the month following such Collection Period. All amounts
received in respect of the Eligible Substitute Mortgage Loan or Loans
during the Collection Period in which the circumstances giving rise to the
relevant substitution occur shall not be a part of the Trust Fund and
shall not be deposited by the Servicer into the Certificate Account. All
amounts received by the Servicer in respect of any Mortgage Loan so
removed from the Trust Fund during the Collection Period in which the
circumstances giving rise to such substitution occur shall be deposited by
the Servicer into the Certificate Account. Upon the substitution of an
Eligible Substitute Mortgage Loan or Loans, such Mortgage Loans shall be
subject to the terms of this Agreement in all respects, and the Servicer
shall be deemed to have entered into or made with respect to such Eligible
Substitute Mortgage Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Section 2.04. The
procedures applied by the Servicer in selecting each Eligible Substitute
Mortgage Loan shall not be adverse to the interests of the Trustee, the
Certificate Insurer and the Investor Certificateholders and shall be
comparable to the selection procedures applicable to the Mortgage Loans
conveyed hereunder as of the date of this Agreement.
The provisions of this Section 2.02(c) shall apply to (i) any removal
or retransfer of Defective Mortgage Loan or Loans, (ii) the substitution
of Eligible Substitute Mortgage Loan or Loans by the Servicer pursuant to
Section 2.04(b) and 3.01(c) or (iii) the repurchase of any Mortgage Loan
or Loans by the Servicer pursuant to Section 3.06.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section.
Section 2.03. Representations and Warranties
------------------------------
Regarding the Servicer.
----------------------
The Servicer represents and warrants to the Trustee, the Certificate
Insurer and the Investor Certificateholders that:
(i) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has the corporate power to own its assets and to transact
the business in which it is currently engaged. The Servicer is
duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it
requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the
Servicer;
(ii) The Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary
corporation action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered,
this Agreement will constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the availability of
equitable remedies;
(iii) The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization from,
or registration or declaration with, any governmental authority,
bureau or agency which consent the Servicer has not already
obtained in connection with the execution, delivery,
performance, validity or enforceability of this Agreement;
(iv) The execution, delivery and performance of this Agreement by the
Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles
of Incorporation or Bylaws of the Servicer, or constitute a
material breach of any mortgage, indenture, contract or other
agreement to which the Servicer is a party or by which the
Servicer may be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to
the knowledge of the Servicer threatened, against the Servicer
or any of its properties or with respect to this Agreement or
the Certificates which, if adversely determined, would in the
opinion of the Servicer have a material adverse effect on the
transactions contemplated by this Agreement;
(vi) On the Closing Date, the Servicer will assign and transfer all
of its right, title and interest in the Trust Balance of each
Mortgage Loan to the Transferor;
(vii) The Servicer will take all necessary actions to enforce payment
of the Mortgage Loans by the obligors thereon, including
commencing or joining as a party to proceedings; and
(viii) (a) Immediately prior to the assignment and transfer referenced
in (vi) above, the Servicer had good title to the Mortgage
Loans, is authorized to assign and transfer the Trust Balance of
each Mortgage Loan to the Transferor and (b) the Servicer and
its assignees, including the Transferor and the Trustee, have
the right to enforce payment of the Mortgage Loans against the
obligors on such Mortgage Loans.
Upon discovery by the Transferor, the Servicer or the Trustee of a breach
of any of the foregoing representations and warranties in this Section
2.03 which materially and adversely affects the interests of the Investor
Certificateholders, the party discovering such breach shall give prompt
written notice to the other parties. Within sixty (60) days of its
discovery or receipt of notice of any such breach, the Servicer shall use
all reasonable efforts to cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Servicer
----------------------------------------------
Regarding the Mortgage Loans; Repurchase and
--------------------------------------------
Substitution Obligations.
------------------------
As indicated in Section 2.03(vi), on the Closing Date the Trust
Balances of the Mortgage Loans are being assigned and transfered by the
Servicer to the Transferor. In connection with such assignment and
transfer the Servicer is making the representations and warranties in this
Section 2.04 to the Transferor. As a condition of the purchase by the
Transferor, the Transferor has required that the Servicer make such
representations and warranties directly to the Trustee, the Certificate
Insurer and the Investor Certificateholders so that the Trustee may
recover directly against the Servicer on such representations and
warranties rather than indirectly through claims by the Transferor against
the Servicer. Consequently, the Servicer represents and warrants to the
Trustee, the Certificate Insurer and the Investor Certificateholders as of
the Closing Date (unless otherwise specified) and as to each Mortgage Loan
that:
(i) The information set forth in the Mortgage Loan Schedule was true
and correct in all material respects at the date or dates
respecting which such information is furnished;
(ii) As of the Closing Date, each Mortgage is a valid lien on the
property securing the amount owed by the Mortgagor under the
Loan Agreement subject only to (a) the lien of current real
property taxes and assessments, (b) any related first, second or
third mortgage loan, which first, second or third mortgage loan
does not contain an obligatory future advance provision (except
for certain Mortgage Loans that are subordinate to mortgage
loans held by MLCC, in which case the senior lien amount is
defined as the total credit limit of the senior liens), (c)
covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally in the
area wherein the property subject to the Mortgage is located or
specifically reflected in the appraisal obtained in connection
with the origination of the related Mortgage Loan obtained by
the Transferor and (d) other matters to which like properties
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such
Mortgage;
(iii) Immediately prior to the transfer and assignment by the Servicer
to the Transferor referred to in Section 2.03(vi) hereof and the
transfer and assignment by the Transferor to the Trust Fund
referred to in Section 2.01, the Servicer and the Transferor
each had good title to each Mortgage Loan and was authorized to
transfer the Trust Balance of each Mortgage Loan to the
Transferor and to the Trust Fund, respectively;
(iv) As of the Cut-off Date, no payment of interest on or in respect
of any Mortgage Loan is more than one month past due;
(v) As of the Closing Date, to the best knowledge of the Servicer,
there is no mechanics' lien or claim for work, labor or material
affecting the premises subject to any Mortgage which is or may
be a lien prior to, or equal or coordinate with, the lien of
such Mortgage except those which are insured against by the
title insurance policy referred to in (x) below;
(vi) As of the Closing Date, to the best knowledge of the Servicer,
there is no delinquent tax or assessment lien against any
Mortgaged Property;
(vii) As of the Closing Date, to the best knowledge of the Servicer,
there is no valid offset, defense or counterclaim to any Loan
Agreement or Mortgage;
(viii) As of the Closing Date, to the best knowledge of the Servicer,
without independent investigation, the physical property subject
to each Mortgage is free of material damage, including damage by
water, flood or similar casualty, and is in good repair
(excluding any damage to the Mortgaged Property from the
presence of hazardous wastes or hazardous substances, as to
which no representation or warranty is made);
(ix) As of the origination of each Mortgage Loan and as of the
Closing Date, all requirements of federal, state or local laws,
including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal
credit opportunity and disclosure laws and the regulations
promulgated thereunder which are applicable to the origination
and servicing of the Mortgage Loans, have been complied with in
all material respects and the consummation of the transactions
herein contemplated, including, without limitation, the receipt
of interest by Certificateholders, will not violate of such laws
in any material respect;
(x) As to each Mortgage Loan With Title Insurance, a lender's title
insurance policy or binder, or other assurance of title
customary in the relevant jurisdiction therefor, was issued on
or as of the date of the recording of each such Mortgage, and
each such policy or binder is valid and remains in full force
and effect;
(xi) As of the Closing Date, the Servicer has not received a notice
of default of any first mortgage loan related to a Mortgaged
Property which has not been cured by a party other than the
Servicer;
(xii) As to most of the Mortgage Loans, the definition of "Prime Rate"
for each day set forth in the Loan Agreements is the prime rate
published for that day in The Wall Street Journal; if a prime
rate range is published, the Loan Agreements provide either that
the highest rate of that range is to be used or that the
midpoint of any prime rate range published in The Wall Street
Journal is to be used; and for the other Mortgage Loans, the
Loan Agreements provide that the "Prime Rate" for any day is the
highest prime rate (or equivalent rate) quoted for that day by
three specified banks;
(xiii) As of the Closing Date, no more than 15.27% of the Mortgage
Loans by principal balance have as Mortgagors employees or
independent contractors entitled to the reduced Loan Rates
specified in the schedules referred to in clause (xii) above;
(xiv) At the date of the execution of the related Loan Agreement, the
Combined Loan-to-Value Ratio for each of the Mortgage Loans was
not in excess of 85%, except with respect to approximately 1.88%
of the Mortgage Loans by principal balance;
(xv) Except with respect to approximately 9.27% of the Mortgage Loans
by principal balance, no Mortgage Loan was originated in a
program conducted by the Servicer in which the amount of
documentation in the underwriting process was limited in
comparison to the Servicer's normal documentation requirements;
(xvi) Approximately 86.93% of the Mortgage Loans by principal balance
were, as of their origination, the primary residences of the
related Mortgagors;
(xvii) Not more than 1.01% of the Mortgage Loans by principal balance
are secured by Mortgaged Properties located in the same zip code
area;
(xviii) Not more than 4.52% of the Mortgage Loans by principal balance
will be secured by condominiums;
(xix) Not more than 0.05% of the Mortgage Loans by principal balance
will be secured by manufactured homes within the meaning of 42
United States Code, Section 5402(6);
(xx) With respect to each Mortgage Loan originated by the Servicer,
the Servicer performed a full appraisal of the related Mortgaged
Property at the origination of such Mortgage Loan;
(xxi) No selection procedure believed by the Servicer to be adverse to
the interests of the Certificateholders was used in selecting
the Mortgage Loans for inclusion in the Trust Fund; and
(xxii) Each Mortgagor is required to maintain for the corresponding
Mortgaged Property a hazard insurance policy conforming to the
requirements of Section 3.04 and, to the best knowledge of the
Servicer, each such individual hazard insurance policy is in
effect and has not lapsed.
The representations and warranties set forth in this Section 2.04
shall survive the transfer and assignment of the Mortgage Loans to the
Trustee. Upon discovery by the Transferor, the Servicer or the Trustee of
a breach of any of the foregoing representations and warranties, without
regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Servicer as to the facts stated therein,
which materially and adversely affects the interests of the Investor
Certificateholders or the Certificate Insurer in the related Mortgage
Loan, the party discovering such breach shall give prompt written notice
to the other parties. Any breach of a representation and warranty
contained in clauses (ii)(b) and (v) - (viii), inclusive, shall not be
deemed to materially and adversely affect the interests of Investor
Certificateholders or the Certificate Insurer in the related Mortgage Loan
to the extent that such Mortgage Loan is not a delinquent or defaulted
Mortgage Loan. Within 60 days of its discovery or receipt of notice of
any such breach, the Servicer shall use all reasonable
efforts to cure such breach in all material respects. Unless at the
expiration of such 60-day period, such breach has been cured in all
material respects or otherwise does not exist or continue to exist, the
Servicer shall, not later than the Business Day next preceding the Dis-
tribution Date in the month following the related Collection Period in
which any such cure period expired, either (i) repurchase such Defective
Mortgage Loan (including any property acquired in respect thereof and any
insurance policy or Insurance Proceeds with respect thereto) or (ii)
remove such Mortgage Loan from the Trust Fund and substitute in its place
an Eligible Substitute Mortgage Loan or Loans, in either case in the same
manner and subject to the same conditions as set forth in Section 2.02.
Upon making any such repurchase or removal, the Servicer shall be entitled
to receive an instrument of assignment of the repurchased or removed
Mortgage Loan from the Trustee to the extent set forth in Section 2.02.
The obligation of the Servicer to repurchase or remove any such Defective
Mortgage Loan (or property acquired in respect thereof) shall constitute
the sole remedy against the Servicer with respect to such breach of the
foregoing representations or warranties available to Investor Certifi-
cateholders, the Trustee on behalf of Certificateholders, or the
Certificate Insurer, and such obligation on the part of the Servicer shall
survive any resignation or termination of the Servicer pursuant to Section
7.04 or 8.01.
Section 2.05. Execution and Authentication
----------------------------
of Certificates.
---------------
The Trustee has caused to be executed, countersigned and delivered to
or upon the order of the Transferor (except that the Transferor
Certificates shall be in the name of the Transferor), in exchange for the
Initial Mortgage Loans, concurrently with the transfer and assignment to
the Trustee of the Initial Mortgage Loans, Investor Certificates in
authorized denominations and the Transferor Certificates, together
evidencing the entire ownership of the Trust Fund.
Section 2.06. Retransfers of Mortgage Loans
-----------------------------
at Election of the Transferor.
-----------------------------
Subject to the conditions set forth below, the Transferor may, but
shall not be obligated to, require the retransfer of Mortgage Loans from
the Trust to the Transferor as of the end of a Collection Period (the
"Retransfer Date") during the Managed Amortization Period. On the fifth
(5th) Business Day (the "Retransfer Notice Date") prior to the Retransfer
Date designated in such notice, the Transferor shall give the Trustee a
notice of the proposed retransfer that contains a list of the Mortgage
Loans to be retransferred. Such retransfers of Mortgage Loans shall be
permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred;
(ii) On the Retransfer Notice Date the Transferor Certificate
Principal Balance (after giving effect to the removal from the
Trust of the Mortgage Loans) is at least equal to the Minimum
Transferor Interest;
(iii) The retransfer of any Mortgage Loans on any Retransfer Date
during the Managed Amortization Period shall not, in the
reasonable belief of the Servicer, cause a Rapid Amortization
Event to occur or an event which with notice or lapse of time or
both would constitute a Rapid Amortization Event;
(iv) On or before the Retransfer Date, the Servicer shall have
delivered to the Trustee a revised Mortgage Loan Schedule,
reflecting the proposed retransfer and on the Retransfer Date
the Servicer shall have caused the portions of its records
relating to the Mortgage Loans to be clearly and unambiguously
marked to show that the Mortgage Loans retransferred to the
Transferor are no longer owned by the Trust;
(v) The Transferor shall represent and warrant that no selection
procedures reasonably believed by the Transferor to be adverse
to the interests of the Investor Certificateholders or the
Certificate Insurer were utilized in selecting the Mortgage
Loans to be removed from the Trust;
(vi) In connection with the first retransfer of Mortgage Loans
pursuant to this Section 2.06, each Rating Agency shall have
received on or prior to the Retransfer Notice Date notice of
such proposed retransfer of Mortgage Loans and, prior to the
first Retransfer Date, shall have notified the Transferor in
writing that such retransfer of Mortgage Loans would not result
in a reduction or withdrawal of its then current rating of the
Investor Certificates without taking into account the
Certificate Insurance Policy;
(vii) The percentage of the Trust Balances of the Mortgage Loans
remaining in the Trust Fund (after giving effect to the proposed
retransfer) that are delinquent more than 30 days shall not
exceed by more than 0.50% the percentage (based on the average
for the three immediately preceding months) of the Trust
Balances of the Mortgage Loans in the Trust Fund (prior to
giving effect to the proposed retransfer) that are delinquent
more than 30 days; and
(viii) The Transferor shall have delivered to the Trustee and the
Certificate Insurer an Officer's Certificate certifying that the
items set forth in subparagraphs (i) through (vii), inclusive,
have been performed or are true and correct, an the case may be.
The Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters
set forth therein and shall incur no liability in so relying.
Upon receiving the requisite information from the Transferor or the
Servicer, the Servicer shall perform in a timely manner those acts
required of it as specified above. Upon satisfaction of the above
conditions, on the Retransfer Date the Trustee shall execute and deliver
to the Servicer such instruments of assignment and other documents
prepared by the Servicer as shall be reasonably necessary to retransfer
such Mortgage Loan or Loans to the Transferor. Any such retransfer of the
Trust's right, title and interest in and to Mortgage Loans shall be
without recourse, representation or warranty by the Trust to the
Transferor.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section
2.06.
Section 2.07. Tax Treatment.
-------------
It is the intention of the Transferor, the Servicer and the Investor
Certificateholders (and Certificate Owners) that the Investor Certificates
will be indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by
income. The Transferor, the Servicer, the Trustee and each Investor
Certificateholder (and Certificate Owner) by acceptance of its Investor
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest therein) agree to
treat the Investor Certificates (or beneficial interest therein), for
purposes of federal, state and local income and franchise tax, as
indebtedness secured by the Mortgage Loans and to report the transactions
contemplated by this Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Certificateholder agrees that it
will cause any Certificate Owner acquiring an interest in a Investor
Certificate through it to comply with this Agreement as to treatment as
indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by
income. Furthermore, the Trustee shall treat the Trust as a security device
only, and shall not file tax returns or obtain an employer identification
number on behalf of the Trust.
Section 2.08. Covenants of the Transferor.
---------------------------
The Transferor shall not, without the prior written consent of the
Certificate Insurer and the Trustee (which consent of the Trustee shall be
given only upon the delivery to the Trustee by the Transferor of a letter
from each Rating Agency to the effect that any of the following will not
result in a downgrading or withdrawal of its rating of the Investor
Certificates), do any of the following:
(a) dissolve or liquidate, in whole or in part, or file a petition
to take advantage of any applicable insolvency, bankruptcy or
reorganization statute;
(b) merge or consolidate with any other corporation other than a
corporation wholly-owned, directly or indirectly, by the Indirect Parent,
having a certificate of incorporation containing provisions identical to
the covenants of this Section 2.08 and executing an agreement of
assumption to perform every obligation of the Transferor hereunder; or
(c) incur any indebtedness except in connection with, or relating
to, the issuance of obligations that are rated in the highest rating
category of each Rating Agency.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. MLCC to Act as Servicer.
-----------------------
(a) The Servicer shall service and administer the Mortgage Loans in
accordance with its customary servicing procedures consistent with general
industry practice. The Servicer shall have full power and authority,
acting alone, to do any and all things in connection with such servicing
and administration which it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Servicer shall continue, and
is hereby authorized and empowered by the Trustee, to execute and deliver,
on behalf of itself, the Certificateholders and the Trustee or any of
them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged
Properties. The Trustee shall execute, at the Servicer's direction, any
special or limited powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
For purposes of this Article III, to the extent that the Servicer
determines that there are any conflicts or inconsistencies between its
servicing responsibilities set forth in this Agreement and its servicing
responsibilities as servicer of one or more Common Mortgage Loans set
forth in the Prior Trust Pooling and Servicing Agreements, the Servicer
shall use its best efforts to service the Mortgage Loans for purposes of
this Agreement in accordance with the most prudent and conservative
procedures set forth in either the Prior Trust Pooling and Servicing
Agreements or in this Agreement.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
(b) In connection with its servicing and administration of the
Mortgage Loans, the Servicer may consent to the placing or refinancing of
a lien senior to that of the Mortgage on the related Mortgaged Property.
Any such consent shall be consistent with the Servicer's then current
practice respecting comparable mortgage loans held in its own portfolio
and may be given only in the following situations:
(i) the Combined Loan-to-Value Ratio of the related Mortgage Loan
following such placing or refinancing of a senior lien does not
exceed the Combined Loan-to-Value Ratio at origination of such
Mortgage Loan; or
(ii) such placement or refinancing of an existing senior lien is in
connection with a new senior lien for which the principal
balance is limited to the sum of the unpaid principal balance of
the existing senior lien, closing costs (including all prepaid
items), points and other funds for the Mortgagor's use (which
other funds do not exceed 1% of the principal balance of the new
senior lien).
(c) In connection with its servicing and administration of the
Mortgage Loans and during a Rapid Amortization Period that did not
commence upon the occurrence of a Rapid Amortization Event, the Servicer
may increase the Credit Limit specified in the related Loan Agreement by
modifying the Loan Agreement to provide for an additional amount. The
Combined Loan-to-Value Ratio of such Mortgage Loan immediately following
such modification shall not exceed 85%.
(d) In connection with its servicing and administration of the
Mortgage Loans and at the request of a Mortgagor or at its own initiative,
the Servicer may agree to modify the Loan Agreement relating to the
Mortgage Loan of such Mortgagor or waive compliance by the Mortgagor with
any provision of such Loan Agreement. Any such modification or waiver
shall be consistent with the Servicer's then current practice respecting
comparable mortgage loans held in its own portfolio and shall not:
(i) extend the scheduled maturity date of, modify the interest rate
payable under (except as required by law or as contemplated by
the Loan Agreement), or constitute a cancellation or discharge
of the outstanding Loan Balance under, such Mortgage Loan; or
(ii) materially and adversely affect the security afforded by the
Mortgaged Property.
Any modification, waiver or change of the nature described in Section
3.02(a) shall be deemed not to violate either Section 3.01(d)(i) or (ii).
(e) In the event that:
(i) the Servicer consents to (A) the placing or refinancing of a
senior lien that does not satisfy the requirements of Section
3.01(b), (B) the modification of a Loan Agreement to provide for
an increased Credit Limit resulting in a Combined Loan-to-Value
Ratio exceeding the limitation specified in Section 3.01(c), or
(C) the modification or waiver of a Loan Agreement that does not
satisfy the requirements of Section 3.01(d), or
(ii) any loss is suffered by the Trust Fund in respect of any
Mortgage Loan as a result of a failure to file on or within 90
days subsequent to the Closing Date of the UCC-1 financing
statements referred to in Section 2.01,
then the Servicer shall, not later than the Business Day preceding the
Distribution Date in the month following the Collection Period during
which such modification, change, loss or consent occurred, either
repurchase the applicable Mortgage Loan or Loans or substitute one or more
Eligible Substitute Mortgage Loans for the applicable Mortgage Loan or
Loans.
Each repurchase or substitution shall be accomplished in the same
manner and subject to the same conditions as set forth in Section 2.02.
Upon completing any such repurchase or substitution, the Servicer shall be
entitled to receive an instrument of assignment or transfer from the
Trustee to the same extent as set forth in Section 2.02.
The Mortgage Loan Schedule shall be amended to reflect all deletions,
substitutions or additions of Mortgage Loans provided for in this Section
3.01.
(f) Notwithstanding anything to the contrary in Section 3.01(e), if
the short-term credit rating of the Indirect Parent is downgraded below A-
1/P-1, any repurchase or substitution of a Mortgage Loan pursuant to
Section 3.01(e) shall occur on the second Business Day following the date
on which the applicable modification, waiver or changes agreed to by the
Servicer are made by it.
Section 3.02. Collection of Certain Mortgage Loan
-----------------------------------
Payments; Mortgage Loan Payment Record.
--------------------------------------
(a) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this
Agreement, follow such collection procedures as it follows with respect to
mortgage loans in its servicing portfolio comparable to the Mortgage
Loans. Consistent with, and without limiting the generality of, the
foregoing, the Servicer may, in its discretion, do the following:
(i) waive any late payment charge or any assumption fees or other
fees which may be collected in the ordinary course of servicing
such Mortgage Loan,
(ii) if the Mortgagor is in default or about to be in default because
of the Mortgagor's financial condition, arrange with a Mortgagor
a schedule for the payment of interest due and unpaid for a
period of not more than 180 days after the date of the initial
uncured delinquency thereon, and
(iii) waive compliance with or modify the terms of such Mortgage Loan
as appropriate to permit the Mortgagor to bring such Mortgage
Loan current and/or remedy any deviations from compliance with
the documentation for such Mortgage Loan.
provided, however, that as to clause (ii) above, the Servicer may in its
discretion arrange with a Mortgagor a schedule for the payment of interest
due and unpaid for a period that exceeds 180 days if such arrangement is
determined by the Servicer to be reasonable and consistent with its then
current practice respecting comparable mortgage loans held in its own
portfolio, including but not limited to its practices regarding mortgage
loans secured by mortgage properties located in federally designated
disaster areas.
Any waiver or modification of the sort described in this Section
3.02(a) shall not (x) be considered in any determination pursuant to
clause (i) of the definition of Seriously Delinquent Mortgage Loan or (y)
affect the amount or timing of the Servicer's obligation to make Monthly
Advances with respect to any Mortgage Loan which Monthly Advances shall be
made without regard to any such waiver or modification.
(b) The Servicer shall establish and maintain for the Trust Fund a
Mortgage Loan Payment Record in which the following payments on and
collections in respect of the Mortgage Loans shall as promptly as
practicable be credited by the Servicer for the account of the Holders of
the Certificates:
(i) All Interest Collections and Principal Collections;
(ii) The Transfer Deposit Amount in respect of any Mortgage
Loans transferred, substituted or repurchased pursuant to
Sections 2.02, 2.04, 3.01 and 3.06;
(iii) All Net Trust Liquidation Proceeds; and
(iv) All Trust Insurance Proceeds (including, for this purpose, any
amounts required to be credited by the Servicer pursuant to
the last sentence of Section 3.04(c)).
The foregoing requirements respecting credits to the Mortgage Loan Payment
Record are exclusive. Without limiting the generality of the preceding
sentence, the Servicer need not enter in the Mortgage Loan Payment Record
amounts representing fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the account
of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items. If any such amounts are credited
to the Mortgage Loan Payment Record, they shall be thereafter debited to
the Mortgage Loan Payment Record by the Servicer in accordance with its
normal servicing procedures.
(c) Until the Business Day prior to each Distribution Date on which
amounts are required to be deposited in the Certificate Account pursuant
to Section 4.02, the Servicer may, so long as the Indirect Parent has a
short-term credit rating of A-1/P-1 or higher and a long-term unsecured
debt rating of at least A3 by Moody's, retain and commingle such amounts
with its own funds and shall be entitled to retain for its own account
any investment income thereon, and any such investment income shall not be
subject to any claim of the Trustee or Certificateholders. In the event
that the Servicer is not permitted to retain and commingle such amounts
with its own funds, it shall, all provisions in this Agreement to the
contrary notwithstanding, deposit such amounts in the Certificate Account
created and maintained pursuant to Section 4.02 not later than the second
Business Day following receipt, subject to withdrawal to the same extent
as debits to the Mortgage Loan Payment Record are permitted pursuant to
Section 3.03.
(d) The Mortgage Loan Payment Record shall be made available for
inspection during normal business hours of the Servicer upon request of
the Trustee or the firm of independent accountants acting pursuant to
Section 3.10.
Section 3.03. Permitted Debits to the Mortgage Loan
-------------------------------------
Payment Record.
--------------
The Servicer may, from time to time, make debits to the Mortgage Loan
Payment Record for the following purposes:
(i) to make deposits into the Certificate Account pursuant to
Section 4.02;
(ii) to reimburse or indemnify the Servicer to the extent required or
permitted by Section 7.03;
(iii) to reimburse the Servicer for unreimbursed Monthly Advances
theretofore made in respect of any Mortgage Loan to the extent
of receipts by the Servicer of late payments of Trust Interest
Collections and Net Trust Liquidation Proceeds in respect of
such Mortgage Loan;
(iv) to reimburse the Servicer for any Nonrecoverable Advance;
(v) to pay the Servicer amounts received in respect of Defective
Mortgage Loans during the Collection Period in which such
Defective Mortgage Loans were replaced, substituted for or
repurchased or which were otherwise reflected in the calculation
of the related Transfer Deposit Amount;
(vi) to pay the Servicer out of related collections the servicing fee
pursuant to Section 3.08; and
(vii) to pay the Servicer the servicing fee pursuant to Section 3.08
with respect to any Liquidated Mortgage Loan to the extent that
Net Liquidation Proceeds for such Mortgage Loan exceed the
related Loan Balance together with interest accrued thereon at
the Net Loan Rate from the last date to which such interest was
distributed to Certificateholders to the end of the related
Collection Period preceding the Distribution Date for which the
related Net Trust Liquidation Proceeds are distributed to
Certificateholders.
In addition, if the Servicer credits to the Mortgage Loan Payment
Record any amount not required to be credited thereto or any amount in
respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment it may at any time
debit such amount in the Mortgage Loan Payment Record, any provision
herein to the contrary notwithstanding. All amounts credited by the
Servicer to the Mortgage Loan Payment Record shall be held by the Servicer
in trust for the Certificateholders until such amounts are disbursed in
accordance with Section 4.02 or debited in accordance with this Section
3.03.
Section 3.04. Hazard Insurance Policies; Property
-----------------------------------
Protection Expenses.
-------------------
(a) Under the terms of each of the Mortgage Loans, the Mortgagor is
required to maintain for the corresponding Mortgaged Property a hazard
insurance policy which contains a standard mortgagee's clause with an
appropriate endorsement in favor of the Servicer or the Trustee and which
insures against loss by fire and by hazards included within the term
"extended coverage" and by such other hazards for which the Servicer re-
quires coverage. The hazard insurance coverage for the Mortgage Loans
shall be in the amounts and for the periods of time required by the
Servicer. In general, such hazard coverage for each Mortgage Loan will be
in an amount approximately equal to the lesser of (a) the maximum
insurable value of the Mortgaged Property or (b) the Credit Limit of such
Mortgage Loan plus the outstanding balance of any mortgage loan senior to
such Mortgage Loan, but in no event will such amount be less than is
necessary to prevent the Mortgagor from becoming a coinsurer thereunder.
If the Mortgaged Property is in an area identified at the time of
origination in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and such flood insurance has been
made available) the Servicer will cause to be maintained a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable insurance carrier, in
an amount representing coverage not less than the least of (i) the Credit
Limit of such Mortgage Loan plus the outstanding balance of any mortgage
loan senior to such Mortgage Loan, (ii) the full insurable value or (iii)
the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973. The Servicer shall also maintain on
property acquired upon foreclosure, or by deed in lieu of foreclosure,
hazard insurance with extended coverage in a similar amount. In general,
such hazard coverage for each such foreclosed Mortgage Loan will be in an
amount which is at least approximately equal to the lesser of (a) the
maximum insurable value from time to time of the improvements which are a
part of such property or (b) the Credit Limit of such Mortgage Loan plus
the outstanding balance of any mortgage loan senior to such Mortgage Loan
at the time of such foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Liquidation Expenses to be incurred in
connection therewith. Amounts collected by the Servicer under any such
policies shall be credited to the Mortgage Loan Payment Record and
deposited in the Certificate Account to the extent that they constitute
Net Trust Liquidation Proceeds or Trust Insurance Proceeds.
(b) If the Servicer, or an affiliate thereof, shall obtain and
maintain a "mortgagee interest policy" issued by an insurer acceptable to
the Rating Agencies insuring against hazard losses on all of the Mortgaged
Properties in an amount equal to the aggregate Loan Balances outstanding
from time to time under the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in the second and
third sentences of Section 3.04(a). Such mortgagee policy may contain a
deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a
policy complying with the second and third sentences of Section 3.04(a),
and there shall have been a loss which would have been covered by such
policy, credit to the Mortgage Loan Payment Record and deposit into the
Certificate Account, no later than 60 days after such loss occurs, the
amount not otherwise payable under the blanket policy because of such
deductible clause.
(c) The Servicer shall incur, or refrain from incurring, Liquidation
Expenses and Property Protection Expenses with respect to Mortgage Loans
in a manner consistent with this Agreement and the Servicer's then current
practice respecting comparable mortgage loans in its own portfolio.
Anything contained herein to the contrary notwithstanding, the Servicer
shall have the right to assign, transfer, abandon or surrender any
Mortgaged Property, if, in the good faith judgment of the Servicer, there
is a reasonable possibility that continued retention of such interest in
such Mortgaged Property could result in Liquidation Expenses and Property
Protection Expenses with respect to such Mortgage Loan exceeding
Liquidation Proceeds. The Servicer shall be reimbursed for amounts
expended for Property Protection Expenses and Liquidation Expenses with
respect to Mortgage Loans in accordance with the terms of this Agreement.
Section 3.05. Mortgagor Transfers of
----------------------
Mortgaged Properties.
--------------------
In any case in which the Servicer becomes aware that a Mortgaged
Property has been conveyed by a Mortgagor (except to, or for the benefit
of, the Mortgagor, a co-Mortgagor or relative of the Mortgagor), the
Servicer will take reasonable steps to freeze such Mortgagor's Credit
Limit at the level of the current outstanding Loan Balance.
Notwithstanding the Servicer's efforts to freeze a Mortgagor's Credit
Limit at the current outstanding Loan Balance under such circumstances,
the Loan Balance of such a Mortgage Loan may include any charges which may
accrue subsequent to the date of such freeze.
The Servicer shall exercise or refrain from exercising its right to
undertake to collect the full amount due under the related Loan Agreement
consistent with the then current practice of the Servicer and without
regard to the inclusion of such Mortgage Loan in the Trust Fund and not in
the Servicer's portfolio. If it elects not to enforce its right to
accelerate and collect the full amount of such Mortgage Loan or if it is
prevented from doing so by applicable law, the Servicer is authorized to
take or enter into an assumption and modification agreement from or with
the Person to whom such Mortgaged Property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Loan
Agreement. If deemed appropriate by the Servicer after the Person to whom
such Mortgaged Property has been or is about to be conveyed enters into an
assumption and modification agreement, the original Mortgagor may be
released from liability. The Servicer shall notify the Trustee that any
assumption and modification agreement has been completed by delivering to
the Trustee an Officer's Certificate certifying that such agreement is in
compliance with this Section 3.05 and by retaining the original copy of
such assumption and modification agreement. Any such assumption and
modification agreement shall, for all purposes, be considered a part of
the related Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. No change in the terms of the
related Loan Agreement may be made by the Servicer in connection with any
such assumption to the extent that such change would not be permitted to
be made in respect of the original Loan Agreement pursuant to Section
3.01(d). Any fee collected by the Servicer for entering into any such
assumption will be retained by the Servicer as additional servicing
compensation.
Notwithstanding any provision of this Agreement to the contrary, the
Servicer shall not be deemed to be in default, breach or otherwise in
violation of its obligations hereunder by reason of any transfer of a
Mortgaged Property which occurs by operation of law or which the Servicer
is restricted by law from preventing.
Section 3.06. Realization Upon Defaulted
--------------------------
Mortgage Loans.
--------------
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come
into and continue in delinquency or default and as to which no satis-
factory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02. In connection with such foreclosure or other
conversion, the Servicer shall follow such practices (including, in the
case of any delinquency or default on a related prior mortgage loan, the
advancing of funds to correct such delinquency or default) and procedures
as it shall deem necessary or advisable and as shall be normal and usual
in the general first and second mortgage loan servicing activities of the
Servicer. The Servicer shall be reimbursed for Property Protection
Expenses incurred by it out of the related Liquidation Proceeds.
Notwithstanding the foregoing, the Servicer shall not be required (i) to
expend its own funds in connection with any foreclosure or towards the
correction of any delinquency or default on a related prior mortgage loan
or restoration of any property unless, in the reasonable judgment of the
Servicer, such foreclosure, correction or restoration will increase Net
Trust Liquidation Proceeds, or (ii) to foreclose upon or otherwise convert
to ownership any Mortgaged Property which the Servicer has determined may
be materially contaminated with hazardous wastes or hazardous substances.
In lieu of foreclosing on any delinquent or defaulted Mortgage Loan,
the Servicer, may, in its sole discretion, repurchase from the Trust Fund
any Mortgage Loan which is a Seriously Delinquent Mortgage Loan. Each
repurchase shall be subject to the same conditions as set forth in Section
2.02. The repurchase price for any Seriously Delinquent Mortgage Loan
shall be equal to the sum of (i) the Trust Balance thereof as of the end
of the Collection Period next preceding the Distribution Date upon which
the proceeds of such repurchase are to be distributed and (ii) accrued and
unpaid interest to the end of such Collection Period computed on a daily
basis at the Net Loan Rate on the Trust Balance thereof. The purchase
price shall be included as part of the Transfer Deposit Amount deposited
into the Certificate Account on the Business Day next preceding the
Distribution Date upon which the proceeds of such repurchase are to be
distributed. Upon making any such purchase the Servicer shall be entitled
to receive an instrument of assignment or transfer from the Trustee to the
same extent as set forth in Section 2.02.
In the event that title to any Mortgaged Property securing a Mortgage
Loan other than a Common Mortgage Loan is acquired in foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall be
issued to the Servicer on behalf of the Trust Fund, to the Trustee on
behalf of Certificateholders, or to the Trustee's nominee on behalf of
Certificateholders.
Section 3.07. Trustee to Cooperate.
--------------------
Upon the payment in full of the Trust Balance of any Mortgage Loan
during the Rapid Amortization Period or the distribution of all Net Trust
Liquidation Proceeds with respect to any Mortgage Loan, the Servicer will
notify the Trustee by a certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payment which are required to be credited to the Mortgage Loan Payment
Record pursuant to Section 3.02 have been so credited) of a Servicing
Officer. Such notification shall be made each month at the time that the
Servicer delivers the Servicing Certificate to the Trustee pursuant to
Section 4.01. Upon any such payment or distribution, the Servicer is
authorized to execute, pursuant to the authorization contained in Section
3.01, if the Loan Balance of such Mortgage Loan equals zero, an instrument
of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Servicer if required by applicable
law and be delivered to the Person entitled thereto. No expenses incurred
in connection with such instrument of satisfaction shall be reimbursed
from amounts at the time credited to the Mortgage Loan Payment Record.
If the Trustee is holding the Mortgage Files, from time to time and
as appropriate for the servicing or foreclosure of any Mortgage Loan, the
Trustee shall, upon request of the Servicer and delivery to the Trustee of
a receipt signed by a Servicing Officer, release the related Mortgage File
to the Servicer and shall execute at the Servicer's direction such
documents as shall be necessary to the prosecution of any such
proceedings. Such trust receipt shall obligate the Servicer to return the
Mortgage File to the Trustee when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case,
upon receipt of a certificate of a Servicing Officer similar to that
hereinabove specified, the receipt shall be released by the Trustee to the
Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
delinquent or defaulted Mortgage Loan following any recordation of the
assignments of Mortgage in accordance with the provisions of this
Agreement, the Trustee shall, if so requested, assign such delinquent or
defaulted Mortgage Loan for the purpose of collection to the Servicer or
to another assignee for collection designated by the Servicer (any such
assignment shall unambiguously indicate that the assignment is for the
purpose of collection only), and, upon such assignment, such assignee for
collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan and the Servicer will
deposit or credit any Net Trust Liquidation Proceeds received with respect
thereto in the Certificate Account or the Mortgage Loan Payment Record, as
the case may be. In the event that all delinquent payments due under any
such Mortgage Loan are paid by the Mortgagor and any other defaults are
cured then the Servicer shall cause the assignee for collection to
promptly reassign such Mortgage Loan to the Trustee and return it to the
place where the related Mortgage File was being maintained.
Section 3.08. Servicing Compensation; Payment
-------------------------------
of Certain Expenses by Servicer.
-------------------------------
(a) The Servicer shall be entitled to withhold and pay to itself as
servicing compensation out of each payment received by it on account of
interest on a Mortgage Loan an amount equal to daily interest at the
Servicing Fee Rate on the Loan Balance from time to time outstanding
during the related Interest Period. Additional servicing compensation
in the form of assumption fees, annual fees, late payment charges or
otherwise shall be retained by the Servicer.
(b) The Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including payment of
Trustee fees, and all other fees and expenses not expressly stated
hereunder to be for the account of the Certificateholders) and shall not
be entitled to reimbursement therefor except as specifically provided
herein.
Section 3.09. Annual Statement as to Compliance.
---------------------------------
The Servicer will deliver to the Company and the Trustee on or before
March 31 of each year, beginning with the first March 31 that occurs at
least six months after the Cut-off Date, an Officers' Certificate stating,
as to each signer thereof, that (a) a review of the activities of the
Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officer's supervision and (b) to the
best of such officer's knowledge, based on such review the Servicer has
fulfilled all of its obligations under this Agreement in all material
respects throughout such year, or, if there has been a default in the
fulfillment of any such obligation in any material respect, specifying
each such default known to such officer and the nature and status thereof.
Copies of such statement shall be provided to each Rating Agency and the
Certificate Insurer. Copies of such statement shall also be provided by
the Servicer to any Certificateholder upon request. If the Servicer shall
fail to provide such copies and the Trustee is aware that the Servicer has
not so provided copies, the Trustee shall provide such copies at the
Servicer's expense if the Trustee has received such statement.
Section 3.10. Annual Independent Public
-------------------------
Accountants' Servicing Report.
-----------------------------
On or before March 31 of each year, beginning with the first March 31
that occurs at least six months after the Cut-off Date, the Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants which is a member of the American Institute of Certified
Public Accountants to furnish a report to the Company and the Trustee to
the effect that all Mortgage Loans serviced by the Servicer under this
Agreement were included in the total population that was subject to
selection for testing in such firm's examination of certain documents and
records and that such examination, which has been conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage
Bankers (or such other audit or review program applicable to the
Servicer), has disclosed no items of material noncompliance with the
provisions of the Uniform Single Attestation Program for Mortgage Bankers
(or such other program), except for such items of noncompliance as shall
be set forth in such report. Copies of such report shall be provided to
the Rating Agencies, the Certificate Insurer, and, upon request, to the
Certificateholders, by the Servicer, or by the Trustee at the Servicer's
expense if the Trustee has received such report and the Servicer shall
fail to provide such copies and the Trustee is aware that the Servicer has
not so provided copies.
Section 3.11. Access to Certain Documentation
-------------------------------
and Information Regarding the
-----------------------------
Mortgage Loans.
--------------
(a) The Servicer shall provide to the Trustee, the Certificate
Insurer, Investor Certificateholders which are federally insured savings
and loan associations, the Office of Thrift Supervision, the Federal
Deposit Insurance Corporation and the supervisory agents and examiners of
such office and such corporation, access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision, such access being afforded without charge but only
upon reasonable request and during normal business hours at the offices of
the Servicer. Nothing in this Section 3.11 shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer to provide access as provided in this Section 3.11 as a result of
such obligation shall not constitute a breach of this Section 3.11.
(b) The Servicer shall supply information, in such form as the
Trustee shall reasonably request, to the Trustee on or before the start of
the third Business Day preceding each Distribution Date, as is required in
the Trustee's reasonable judgment to enable the Trustee to make required
distributions and to furnish the required reports to Certificateholders
and to make any draws under the Certificate Insurance Policy.
Section 3.12. Maintenance of Certain Servicing Policies.
-----------------------------------------
The Servicer shall during the term of its service as servicer
maintain in force (i) a policy or policies of insurance covering errors
and omissions in the performance of its obligations as servicer hereunder
and (ii) a fidelity bond in respect of its officers, employees or agents.
Each such policy or policies and bond shall, together, comply with the
requirements from time to time of the Federal National Mortgage
Association for persons performing servicing for mortgage loans purchased
by such association; provided, however, that if the cost of the premiums
for such policy or policies and bond in any year is greater than an amount
equal to the sum of (i) the premiums paid by the Servicer for such policy
or policies and bond in the year during which this Agreement was executed
and (ii) the product of (x) the number of full years from the date of this
Agreement to such future date, (y) 0.15 and (z) the premium amount
described in clause (i) above, the policy or policies and bond maintained
by the Servicer may provide for coverage which does not satisfy the
requirements of the Federal National Mortgage Association so long as the
premiums paid by the Servicer therefor approximate such sum.
Section 3.13. Reports to the Securities and Exchange Commission.
-------------------------------------------------
The Servicer shall, on behalf of the Trust, cause to be filed with
the Securities and Exchange Commission any periodic reports required to be
filed under the provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange
Commission thereunder.
Section 3.14. Information Required by the Internal Revenue Service
----------------------------------------------------
Generally and Reports of Foreclosures and Abandonments
------------------------------------------------------
of Mortgaged Property.
---------------------
In addition to the requirements set forth in Section 3.01, the
Servicer shall prepare and deliver, or cause to be prepared and delivered,
to the Trustee for the Trustee's signature, and shall file or cause to be
filed, all federal and state information reports when and as required by
all applicable state and federal income tax laws, including, without
limitation, reports required by Section 6050J of the Code.
Section 3.15. Tax Returns.
-----------
In accordance with Section 2.07 hereof, the Trustee shall not file
any federal, state or local income tax return for the Trust or apply for a
taxpayer identification number on behalf of the Trust. The Transferor
shall treat the Mortgage Loans as its property for all federal, state and
local income and franchise tax purposes and shall report all income earned
thereon (including amounts payable as fees to the Servicer) as its income
for federal income tax purposes. In the event the Trust shall be required
pursuant to an audit or administrative proceeding or change in applicable
regulations to file federal, state, local income or franchise tax returns,
the Servicer shall prepare and deliver, or cause to be prepared and
delivered, to the Trustee for filing any tax returns required to filed by
the Trust; the Servicer, as agent on behalf of the Trust, shall promptly
sign such returns and such returns shall be filed by the Servicer. The
Servicer shall also prepare or shall cause to be prepared all tax
information required by and to be distributed to Certificateholders. In
no event shall the Trustee or the Servicer be liable for any liabilities,
costs or expenses of the Trust, the Certificateholders or the Certificate
Owners arising under any tax law, including without limitation federal,
state or local income, franchise or excise taxes or any other tax imposed
on or measured by income (or any interest or penalty with respect thereto
or arising from a failure to comply therewith).
Section 3.16. Further Assurances.
------------------
The Servicer shall provide any certifications and other information
reasonably requested by the Trustee.
ARTICLE IV
Servicing Certificate; Certificate Account Deposit
Section 4.01. Servicing Certificate.
---------------------
With respect to each Distribution Date, not later than the second
Business Day prior to each Distribution Date, the Servicer shall deliver
to the Trustee, the Certificate Insurer and to the Rating Agencies a
Servicing Certificate stating the related Collection Period, Distribution
Date, the series number of the Certificates, the date of this Agreement,
and including, but not limited to, the following information:
(i) the aggregate amount of Trust Interest Collections for such
Collection Period (net of any amount included therein which has
been retained by the Servicer prior to such Distribution Date in
reimbursement for any portion of a Monthly Advance made in
respect of the related Mortgage Loan as permitted by clause
(iii) of Section 3.03);
(ii) the aggregate amount of Trust Principal Collections for such
Collection Period;
(iii) the aggregate of any Trust Insurance Proceeds received during
the related Collection Period (including, for this purpose, any
amounts required to be credited by the Servicer pursuant to the
last sentence of Section 3.04(b));
(iv) the aggregate of any Net Trust Liquidation Proceeds received
during the related Collection Period;
(v) the amount of any Transfer Deposit Amount paid by the Transferor
or Servicer pursuant to Section 2.02, 2.04, 3.01 or 3.06;
(vi) the Monthly Advance for such Distribution Date;
(vii) the Available Distribution Amount for such Distribution
Date;
(viii) any Monthly Advance Reimbursement Amount for such Distribution
Date;
(ix) the Floating Allocation Percentage and the Fixed Allocation
Percentage for such Distribution Date;
(x) the Certificate Interest Collections for such Distribution
Date;
(xi) the Certificate Formula Interest for the related Accrual
Period, together with a specification as to the Certificate
Rate applicable to such Distribution Date and whether it is
derived from LIBOR or the Alternate Certificate Rate;
(xii) the Unpaid Certificate Interest Shortfall, if any;
(xiii) the portion of the Unpaid Certificate Interest Shortfall, if
any, to be distributed on such Distribution Date;
(xiv) the amount of Unpaid Certificate Interest Shortfall, if any, to
remain after the distribution on such Distribution Date;
(xv) the Transferor Interest Collections and Transferor Principal
Collections for such Distribution Date;
(xvi) the Accelerated Principal Distribution Amount for such
Distribution Date;
(xvii) the Scheduled Principal Collections Payment, separately
stating the components thereof;
(xviii) the aggregate of the Liquidation Loss Amounts and the Investor
Loss Amount for such Distribution Date;
(xix) the aggregate amount, if any, of Investor Loss Reduction
Amounts for previous Distribution Dates that have not been
previously reimbursed to Investor Certificateholders pursuant
to Section 5.01(a)(iv);
(xx) the Pool Balance of the Mortgage Loans, as of the end of the
preceding Collection Period;
(xxi) the Invested Amount as of the end of the preceding Collection
Period;
(xxii) the Required Amount for such Distribution Date;
(xxiii) the Transferor Subordinated Amount for such Distribution Date;
(xxiv) the Overcollateralization Amount, if any, after giving effect
to the distribution to be made on such Distribution Date;
(xxv) the Certificate Principal Balance and Pool Factor after giving
effect to the distribution on such Distribution Date;
(xxvi) the Transferor Certificate Principal Balance after giving
effect to the distribution on such Distribution Date;
(xxvii) the aggregate amount of Additional Balances created during the
previous Collection Period;
(xxviii) whether a Rapid Amortization Event has occurred since the prior
Distribution Date, specifying each such Rapid Amortization
Event if one has occurred;
(xxix) the Insured Amount, if any, for such Distribution Date;
(xxx) the Reimbursement Amount, if any, for such Distribution Date;
(xxxi) the amount to be distributed to the Transferor pursuant to
Section 5.01(a)(vii);
(xxxii) the number and aggregate Trust Balances of Mortgage Loans
delinquent (a) 31 to 60 days, (b) 61 to 90 days and (c) 91 days
or more, respectively, as of the end of the related Collection
Period;
(xxxiii) the number and aggregate Trust Balances of all Mortgage Loans
in foreclosure as of the end of the related Collection Period;
(xxxiv) the book value (within the meaning of 12 C.F.R. Section571.13
or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xxxv) the aggregate of the Trust Balances as of the end of the
related Collection Period of the Mortgage Loans which became
Liquidated Mortgage Loans during such Collection Period;
(xxxvi) the cumulative amount of Liquidation Loss Amounts for such
Distribution Date and all prior Distribution Dates; and
(xxxvii) the number and aggregate Trust Balances of Mortgage Loans to be
retransferred from the Trust Fund on the related Retransfer
Date and the cumulative number and aggregate Trust Balance of
all Mortgage Loans that have been retransferred on all prior
Retransfer Dates.
Section 4.02. Certificate Account.
-------------------
The Servicer shall establish and maintain with the Trustee the
Certificate Account as a single, separate account for the benefit of the
Holders of Certificates. The Servicer shall remit to the Trustee by wire
transfer of immediately available funds for deposit into the Certificate
Account, not later than 1:00 p.m. New York City time on the Business Day
prior to each Distribution Date, an amount equal to the aggregate of the
amounts specified in clauses (i) - (v), inclusive, of the Servicing
Certificate furnished to the Trustee pursuant to Section 4.01. The
Servicer shall include with such deposit any Monthly Advance for such
Distribution Date as specified in the Servicing Certificate.
On each Distribution Date upon which there is a Monthly Advance
Reimbursement Amount, upon the request of the Servicer, the Trustee shall
withdraw from the Certificate Account for the account of the Servicer an
amount equal to the Monthly Advance Reimbursement Amount, but not in
excess of (i) the Available Distribution Amount (without taking into
account any portion thereof representing payments of Trust Interest
Collections and Trust Principal Collections allocable to the Transferor
and payments of any Insured Amounts) minus (ii) the sum of the Investor
Certificate Distribution Amount, the Premium Amount and the Reimbursement
Amount.
At the direction of the Servicer signed by a Servicing Officer, the
Trustee shall invest any funds in the Certificate Account in Permitted
Investments specified in such direction (including (but not limited to)
obligations of the Trustee or any of its affiliates, if such obligations
otherwise qualify as Permitted Investments). Such direction shall be in
writing, shall designate specific investments and shall certify that the
specified investments constitute Permitted Investments. Each investment
shall mature not later than the Business Day next preceding the
Distribution Date following the date of such investment (unless the
obligor in respect of such investment is the Trustee, in which case such
investment may mature on such Distribution Date) and shall not be sold or
disposed of prior to its maturity. All income and gain realized from any
such investment shall be for the benefit of the Servicer. The Trustee
shall remit all such income and gain to the Servicer on each Distribution
Date. The amount of any losses incurred in respect of any such
investments shall be deposited in the Certificate Account by the Servicer
out of its own funds immediately as realized. The Trustee shall not be
liable for any loss incurred in connection with any such investment except
with respect to any investment where the Trustee is the obligor thereon.
Section 4.03. Payments Under Support Agreement.
--------------------------------
In the event that the Servicer does not, on or before 1:00 P.M. New
York City time on the Business Day preceding a Distribution Date, remit to
the Trustee for deposit in the Certificate Account the respective amounts
required to be remitted by it pursuant to Section 4.02, the Trustee, no
later than 2:00 P.M. on such day, shall make a written demand pursuant to
the Support Agreement upon the Indirect Parent for any and all amounts
required to be deposited in the Certificate Account by it pursuant
thereto.
To the extent of any payment by the Indirect Parent under the Support
Agreement, the Indirect Parent shall have all rights of the Servicer under
this Agreement to be reimbursed for such payment made by the Indirect
Parent, including, without limitation, rights in and to any Mortgage Loan
or payment with respect to any Mortgage Loan or the proceeds thereof. In
addition, the Indirect Parent shall be subrogated to the rights of
Investor Certificateholders to the extent of payments under the Support
Agreement. Each of the Transferor, the Servicer and the Trustee agrees to
such subrogation and, further, agrees to execute such instruments and to
take such actions as, in the sole judgment of the Indirect Parent, as
evidenced in writing to the Transferor, the Servicer and the Trustee, are
necessary to evidence such subrogation.
Section 4.04. The Certificate Insurance Policy.
--------------------------------
(a) If, on any Determination Date, the statement delivered to the
Trustee pursuant to Section 4.01 indicates that there will be the payment
of an Insured Amount for the related Distribution Date, the Trustee shall
complete the Notice for Payment (as defined and included in the form
specified by the Certificate Insurance Policy). The Trustee shall submit
such notice to the Certificate Insurer no later than 12:00 noon New York
City time on the Business Day preceding such Distribution Date as a claim
for an Insured Payment.
(b) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Investor Certificateholders, the Trustee shall deposit such
Insured Payments in the Certificate Account and shall distribute such
Insured Payments, or the proceeds thereof, in accordance with Section
5.01(a); provided that Insured Payments shall be applied and distributed
solely to Holders of the Investor Certificates and any Preference Amount
shall be distributed solely to the Holders of the Investor Certificates.
(c) The Trustee shall (i) receive as attorney-in-fact of each Holder
of Investor Certificates receiving any Insured Payment from the
Certificate Insurer and (ii) disburse the same to the Holders of such
Certificates as set forth in Section 5.01(a). Insured Payments disbursed
by the Trustee from proceeds of a Certificate Insurance Policy shall not
be considered payment by the Trust Fund with respect to such Certificates,
and the Certificate Insurer shall be entitled to receive the related
Reimbursement Amount pursuant to Section 5.01(a)(v). The Trustee hereby
agrees on behalf of each Investor Certificateholder and the Trust Fund for
the benefit of the Certificate Insurer that it recognizes that to the
extent the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Holders of such
Certificates, the Certificate Insurer will be entitled to receive the
related Reimbursement Amount pursuant to Section 5.01(a)(v).
(d) Subject only to the priority of payment provisions of this
Agreement, each of the Transferor, the Servicer and the Trustee
acknowledges that, to the extent of any payment made by the Certificate
Insurer pursuant to the Certificate Insurance Policy, the Certificate
Insurer is to be fully subrogated to the extent of such payment and any
additional interest due on any late payment, to the rights of the Holders
of the Investor Certificates to any moneys paid or payable in respect of
the Investor Certificates under this Agreement or otherwise. Each of the
Transferor, the Servicer and the Trustee agrees to such subrogation and,
further, agrees to execute such instruments and to take such actions as,
in the sole judgment of the Certificate Insurer, as evidenced in writing
to the Transferor, the Servicer and the Trustee, are necessary to evidence
such subrogation and, subject to the priority of payment provisions of
this Agreement, to perfect the rights of the Certificate Insurer to
receive any moneys paid or payable in respect of the Investor Certificates
under this Agreement or otherwise.
ARTICLE V
Payments and Statements to
Certificateholders
Section 5.01. Distributions.
-------------
(a) Distribution of Certificate Interest Collections. On each
------------------------------------------------
Distribution Date, the Trustee shall, based upon information set forth in
the Servicing Certificate, distribute out of the Certificate Account to
the extent of Certificate Interest Collections collected during the
related Collection Period and any Monthly Advance for such Distribution
Date (including any amount paid by the Indirect Parent under the Support
Agreement pursuant to Section 4.03), in the following amounts and order of
priority to the following Persons:
(i) to the Certificate Insurer, the Premium Amount;
(ii) to the Investor Certificateholders as interest, the
Certificate Formula Interest and then any Unpaid
Certificate Interest Shortfall;
(iii) to the Investor Certificateholders as principal in
reduction of the Certificate Principal Balance, any
Investor Loss Amount for such Distribution Date;
(iv) to the Investor Certificateholders as principal in
reduction of the Certificate Principal Balance, the
aggregate amount of any Investor Loss Reduction Amounts for
previous Distribution Dates that have not been previously
reimbursed to Investor Certificateholders pursuant to this
clause (iv);
(v) to the Certificate Insurer, any Reimbursement Amount;
(vi) to the Investor Certificateholders as principal in
reduction of the Certificate Principal Balance, any
Accelerated Principal Distribution Amount; and
(vii) to the Transferor, any remaining amount.
provided, however, that, notwithstanding the above prioritization of the
distribution of the Certificate Interest Collections on deposit in the
Certificate Account, on each Distribution Date any Insured Payment
received by the Trustee and deposited in the Certificate Account shall be
applied by the Trustee solely for the benefit of the Investor
Certificateholders.
(b) Distribution of Trust Principal Collections. Subject to Section
-------------------------------------------
11.02(b) and except on the Stated Maturity Date, on each Distribution
Date, the Trustee shall distribute out of the Certificate Account to
Investor Certificateholders the Trust Principal Collections up to the
Scheduled Principal Collections Payment (but not in excess of the
Certificate Principal Balance). On the Stated Maturity Date, the Trustee
shall distribute Trust Principal Collections to the Investor
Certificateholders up to the Certificate Principal Balance.
(c) Application of Transferor Subordinated Amount. (i) If, after
---------------------------------------------
applying Certificate Interest Collections as provided in Section 5.01(a)
above, any amounts payable pursuant to clauses (i) through (iv),
inclusive, of Section 5.01(a) remain unpaid, the Trustee shall, based on
information set forth in the Servicing Certificate, apply Transferor
Interest Collections and Transferor Principal Collections (but only up to
the Transferor Subordinated Amount prior to such application) to make such
payments and the Transferor Subordinated Amount shall be reduced in
accordance with clause (i)(a) of the definition thereof to the extent of
such application of funds.
(ii) If Transferor Interest Collections and Transferor Principal
Collections as so applied in the preceding paragraph are insufficient to
cover the amounts payable pursuant to clauses (iii) and (iv) of Section
5.01(a) on such Distribution Date, then the remaining Investor Loss Amount
(but only to the extent of the remaining Transferor Subordinated Amount on
such Distribution Date) shall be reallocated to the Transferor (i.e., in
accordance with the definition of Aggregate Investor Loss Amount) and the
Transferor Subordinated Amount shall be reduced in accordance with clause
(i)(b) of the definition thereof to the extent of such reallocation to the
Transferor.
(d) Distribution of the Insured Payment. With respect to any
-----------------------------------
Distribution Date, to the extent that:
(i) the amount on deposit in the Certificate Account on such
Distribution Date and available to be distributed pursuant to
Section 5.01(a), together with the amount of Transferor Interest
Collections and Transferor Principal Collections to be applied
pursuant to Section 5.01(c), are less than the amount payable
pursuant to Section 5.01(a)(ii) on such Distribution Date, plus
(ii) after the Transferor Subordinated Amount has been reduced to
zero, the amount, if any, by which the Certificate Principal
Balance as of such Distribution Date (after giving effect to all
other amounts distributable and allocable to principal on the
Investor Certificates on such Distribution Date) exceeds the
Invested Amount as of such Distribution Date (after giving
effect to all other amounts distributable and allocable to
principal on the Investor Certificates on such Distribution
Date), plus
(iii) any portion of the Certificate Principal Balance remains
outstanding on the Stated Maturity Date (after giving effect to
all other amounts distributable and allocable to principal on
the Investor Certificates on such Distribution Date),
the Trustee will make such payments (the "Deficiency Amount") to Investor
Certificateholders from the Insured Payment pursuant to Section 4.04.
Notwithstanding the foregoing, the Certificate Insurance Policy (i)
shall not cover any such Deficiency Amount on any Dissolution Distribution
Date and (ii) shall not be available to cover any insufficiency in the
distributions required to be made to Investor Certificateholders pursuant
to Section 11.02(b).
The aggregate amount of principal distributed to Investor
Certificateholders under Article V of this Agreement shall not exceed the
Original Certificate Principal Balance.
(e) Method of Distribution. On each Distribution Date, the Trustee
----------------------
shall distribute to each Investor Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting
the final distribution) by check mailed to such Certificateholder at the
address appearing in the Certificate Register, or upon written request of
a Holder of a Investor Certificate received by the Trustee at least five
Business Days prior to the related Record Date, by wire transfer (but only
if such Certificateholder is the Depository or such Certificateholder owns
of record one or more Investor Certificates which have principal denomi-
nations aggregating at least $5,000,000), or by such other means of
payment as such Certificateholder and the Trustee shall agree.
Distributions among Investor Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Investor
Certificates held by such Investor Certificateholders.
(f) Final Distribution. Except as otherwise provided in Section
------------------
10.01 and Section 11.02, when the Trustee expects that the final
distribution with respect to the Investor Certificates will be made on the
next Distribution Date, the Trustee shall, no later than three (3) days
after the related Determination Date, mail to each Holder on such date of
the Investor Certificates a notice to the effect that: (i) the Trustee
expects that the final distribution with respect to the Investor
Certificates will be made on such Distribution Date but only upon
presentation and surrender of such Certificates at the office of the
Trustee or as otherwise specified therein, and (ii) no interest shall
accrue on the Investor Certificates from and after the end of the related
Interest Accrual Period. In the event that Certificateholders do not
surrender their Certificates for final cancellation, the Trustee shall
follow procedures comparable to the arrangements set forth in Section
10.01(e).
(g) Distributions on Book-Entry Certificates. Each distribution
----------------------------------------
with respect to a Book-Entry Certificate shall be paid to the Depository,
which shall credit the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm
shall be responsible for disbursing funds to the Certificate Owners that
it represents. All such credits and disbursements with respect to a
Book-Entry Certificate are to be made by the Depository and the Depository
Participants in accordance with the provisions of the Investor
Certificates. None of the Trustee, the Transferor nor the Servicer shall
have any responsibility therefore except as otherwise provided by
applicable law.
(h) Distributions to Holders of Transferor Certificates. On each
---------------------------------------------------
Distribution Date, the Trustee shall, based upon the information set forth
in the Servicing Certificate for such Distribution Date, distribute to the
Transferor the Transferor Interest Collections and Transferor Principal
Collections that are not required to be distributed to the Investor
Certificateholders pursuant to Section 5.01(c) on such Distribution Date;
provided that collections allocable to the Transferor Certificates will be
distributed to the Transferor only to the extent that such distribution
will not reduce the amount of the Transferor Certificate Principal Balance
as of such Distribution Date below the Minimum Transferor Interest.
Amounts not distributed to the Transferor because of such limitations will
be retained in the Certificate Account until the Transferor Certificate
Principal Balance exceeds the Minimum Transferor Interest, at which time
such excess shall be released to the Transferor. If any such amounts are
still retained in the Certificate Account upon the commencement of the
Rapid Amortization Period, such amounts will be paid to the Investor
Certificateholders as a reduction of the Investor Certificate Principal
Balance.
Section 5.02. Certain Calculations by the Trustee.
-----------------------------------
On the LIBOR Business Day next preceding each Distribution Date the
Trustee shall determine LIBOR for the next Accrual Period. The Trustee
shall promptly advise the Servicer of such determination by tested telex
or telefax to the address provided herein.
The determination of LIBOR by the Trustee for each Accrual Period
(excluding the first Accrual Period) shall (in the absence of manifest
error) be final, conclusive and binding upon the Certificateholders, the
Servicer and any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns.
Section 5.03. Statements to Certificateholders.
--------------------------------
Not later than the second Business Day prior to each Distribution
Date, the Servicer shall deliver to the Trustee for mailing to each Holder
of a Investor Certificate and the Certificate Insurer a statement with
respect to such Distribution Date setting forth:
(i) the Investor Certificate Distribution Amount;
(ii) the amount of interest included in such distribution and
the related Certificate Rate;
(iii) the amount, if any, of any Unpaid Certificate Interest
Shortfall in such distribution;
(iv) the amount, if any, of the remaining Unpaid Certificate
Interest Shortfall after giving effect to such distribution;
(v) the amount, if any, of principal in such distribution,
separately stating the components thereof;
(vi) the amount, if any, of the reimbursement of previous
Investor Loss Reduction Amounts in such distribution;
(vii) the amount, if any, of the aggregate of unreimbursed
Investor Loss Reduction Amounts after giving effect to such
distribution;
(viii) the Investor Floating Allocation Percentage for such
Distribution Date;
(ix) the Invested Amount, the Certificate Principal Balance and
the Pool Factor, each after giving effect to such distribution;
(x) the Required Amount for such Distribution Date,
(xi) the Transferor Subordinated Amount after giving effect to
such distribution,
(xii) the Pool Balance of the Mortgage Loans as of the end of
the preceding Collection Period;
(xiii) the Overcollateralization Amount, if any;
(xiv) the Servicing Fee for such Distribution Date;
(xv) the amount of any Monthly Advance by the Servicer;
(xvi) the number and aggregate Trust Balances of Mortgage Loans
delinquent (a) 31 to 60 days, (b) 61 to 90 days and (c) 91 days or
more, respectively, as of the end of the preceding Collection Period;
(xvii) the number and aggregate Trust Balances of the Mortgage
Loans in foreclosure as of the end of the preceding Collection
Period;
(xviii) the book value (within the meaning of 12 C.F.R.
Section 571.13 or comparable provision) of any real estate acquired
through foreclosure or grant of a deed in lieu of foreclosure; and
(xix) the amount of any Insured Payments by the Certificate
Insurer;
(xx) the number and aggregate Trust Balance of Mortgage Loans
to be retransferred from the Trust Fund on the related Retransfer
Date, and the cumulative number and aggregate Trust Balance of all
Mortgage Loans that have been retransferred on all prior Retransfer
Dates.
In the case of information furnished pursuant to clauses (ii)
through (vii) above, the amounts shall be expressed as a dollar amount per
Investor Certificate with a $1,000 denomination.
Within 90 days after the end of each calendar year, the Servicer
shall deliver to the Trustee for mailing to each Person who at any time
during the calendar year was the Holder of a Investor Certificate and to
the Certificate Insurer a statement containing the information set forth
in clauses (ii) and (v) above aggregated for such calendar year or, in the
case of each Person who was a Certificateholder for a portion of such
calendar year, setting forth such information for each month thereof.
Such obligation of the Servicer shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by
the Servicer pursuant to any requirements of the Code.
The Trustee shall prepare or cause to be prepared (based on
information provided to it by the Servicer and in a manner consistent with
the treatment of the Investor Certificates as indebtedness) Internal
Revenue Service Form 1099 (or any successor form) and any other tax forms
required to be filed or furnished to Certificateholders in respect of
distributions by the Trustee on the Investor Certificates (e.g., Internal
Revenue Service Form 1099-OID) and shall file and distribute such forms as
required by law.
Section 5.04. Rights of Certificateholders.
----------------------------
The Investor Certificates shall represent fractional undivided
interests in the Trust Fund, including the benefits of the Certificate
Account and the right to receive Certificate Interest Collections,
Principal Collections and other amounts at the times and in the amounts
specified in this Agreement; the Transferor Certificates shall represent
the remaining interest in the Trust Fund.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates shall be
----------------
substantially in the forms set forth in Exhibits A and C, and the
Transferor Certificates shall be substantially in the forms set forth in
Exhibits B and D, and shall, on original issue, be executed, countersigned
and delivered by the Trustee to or upon the order of the Transferor
concurrently with the transfer and assignment to the Trustee of the Trust
Fund. The Investor Certificates shall be initially evidenced by one or
more certificates representing the entire Original Certificate Principal
Balance. Beneficial ownership of the Investor Certificates that are Book-
Entry Certificates may be held in minimum dollar denominations of $25,000
and integral multiples of $1,000 in excess thereof (except as provided in
the following paragraph). The sum of the denominations of all outstanding
Investor Certificates shall equal the Original Certificate Principal
Balance. The Transferor Certificates shall be issuable as one or more
certificates representing the entire interest in the assets of the trust
other than that represented by the Investor Certificates and shall
initially be issued to the Transferor.
Beneficial ownership of the Investor Certificates that are Book-Entry
Certificates may be held in minimum dollar denominations of less than
$25,000 and integral multiples of $1,000 in excess thereof in the case of
Persons who (i) are sophisticated, institutional investors having
knowledge and experience in financial and business matters, (ii) are
purchasing on behalf of, and serving as investment advisor or manager for,
one or more Persons who are sophisticated, institutional investors having
knowledge and experience in financial and business matters, (iii) are
purchasing Certificates which have, in the aggregate, an Original
Certificate Principal Balance in excess of $25,000, and (iv) have
requested that Investor Certificates be issued in such lower minimum
denominations and registered in the name of Persons meeting the criteria
in clause (ii).
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer under its seal imprinted
thereon. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless such Certificate shall have been manually
countersigned by the Trustee substantially in the form provided for
herein, and such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated
the date of their countersignature. Subject to Section 6.02(c), the
Investor Certificates shall be Book-Entry Certificates. The Transferor
Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and
----------------------------
Exchange of Certificates; Registrar.
-----------------------------------
(a) The Certificate Registrar shall cause to be kept at the
Corporate Trust Office a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. The Trustee shall initially
serve as Certificate Registrar for the purpose of registering Investor
Certificates and transfers and exchanges of Investor Certificates as
herein provided.
Upon surrender for registration of Transfer of any Investor Certif-
icate at any office or agency of the Trustee maintained for such purpose
pursuant to the foregoing paragraph, the Trustee shall execute, counter-
sign and deliver, in the name of the designated Transferee or Transferees,
one or more new Investor Certificates of the same aggregate Percentage
Interest.
At the option of the Investor Certificateholders, Investor
Certificates may be exchanged for other Investor Certificates of
authorized denominations of the same aggregate Percentage Interest, upon
surrender of the Investor Certificates to be exchanged at any such office
or agency. Whenever any Investor Certificates are so surrendered for
exchange the Trustee shall execute, countersign and deliver the Investor
Certificates which the Certificateholder making the exchange is entitled
to receive. Every Investor Certificate presented or surrendered for
Transfer or exchange shall (if so required by the Trustee) be duly
endorsed by, or be accompanied by a written instrument of Transfer in form
satisfactory to the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any Transfer or exchange of
Investor Certificates, but the Trustee may require payment of a sum suf-
ficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Investor Certificates.
All Certificates surrendered for Transfer and exchange shall be
cancelled by the Trustee.
(b) Except as provided in Section 6.02(d), 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
Investor 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 Investor Certificates; (iii) ownership and transfers of
registration of the Investor 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 Investor 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.
Whenever notice or other communication to the Investor
Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 6.02(d), the Trustee shall give to the Depository all
such notices and communications specified herein to be given to
Certificateholders.
(c) If (x)(i) the Servicer advises the Trustee and the Certificate
Insurer in writing that the Depository is no longer willing or able to
properly discharge its responsibilities as Depository, and (ii) the
Servicer is unable to locate a qualified successor, (y) the Servicer at
its option may advise 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 Percentage
Interests aggregating not less than 50% of the aggregate Percentage Inter-
ests of the Investor 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 Investor
Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Investor
Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Trustee shall, at the expense of
the Servicer, issue the Definitive Certificates. The Definitive
Certificates shall be issued in minimum denominations of $25,000 and
integral multiples of $1,000 in excess thereof, except that any Investor
Certificate that was represented by a Book-Entry Certificate in an amount
less than $25,000 immediately prior to the issuance of a Definitive
Certificate pursuant to the second paragraph of Section 6.01 shall be
issued in minimum denomination equal to the amount represented by such
Book-Entry Certificate and shall be subject to the same restrictions on
transfer set forth in the second paragraph of Section 6.01. Neither the
Servicer nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certifi-
cates 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.
Section 6.03. Mutilated, Destroyed, Lost
--------------------------
or Stolen Certificates.
----------------------
If (i) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee, the
Servicer and the Transferor such security or indemnity as may be required
by them to save 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 Certifi-
cate, a new Certificate of like tenor, Class and Percentage Interest.
Upon the issuance of any new Certificate under this Section, 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 new Certificate issued pursuant to this Section shall con-
stitute complete and indefeasible evidence of ownership in the Trust Fund,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners.
---------------------
The Servicer, the Transferor, the Certificate Insurer, the Trustee
and any agent of the Servicer, the Transferor 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 pursuant to Section
5.01 and for all other purposes whatsoever, and neither the Servicer, the
Transferor, the Certificate Insurer, the Trustee nor any agent of the
Servicer, the Transferor, the Certificate Insurer or the Trustee shall be
affected by notice to the contrary.
Section 6.05. Restrictions on Transfer
------------------------
of Transferor Certificates.
--------------------------
(a) The Transferor Certificates shall be assigned, transferred,
exchanged, pledged, financed, hypothecated or otherwise conveyed
(collectively, for purposes of this Section 6.05 and any other Section
referring to the Transferor Certificates, "transferred" or a "transfer")
only in accordance with this Section 6.05.
(b) No transfer of a Transferor Certificate shall be made unless
such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended, and any applicable state securities
laws or is made in accordance with said Act and laws. The Trustee and the
Servicer shall require a written Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee and the Servicer that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from which Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an
expense of the Trustee or the Servicer, and the Trustee and the Servicer
shall require the transferee to execute an investment letter acceptable to
and in form and substance satisfactory to the Trustee and the Servicer
certifying to the Trustee and the Servicer the facts surrounding such
transfer, which Investment letter shall not be an expense of the Trustee
or the Servicer; provided that such Opinion of Counsel shall not be
required in the case of transfers by or to Merrill Lynch, Pierce, Fenner &
Smith Incorporated or an affiliate thereof. The Holder of a Transferor
Certificate desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Servicer and the Certificate Insurer
against any liability that may result if the transfer is not so exempt or
if not made in accordance with such federal and state laws.
(c) The Transferor Certificates and any interest therein shall not
be transferred except upon satisfaction of the following conditions
precedent: (i) the Person that acquires a Transferor Certificate shall (A)
be organized and existing under the laws of the United States of America
or any state or the district of Columbia thereof (B) expressly assume, by
an agreement supplemental hereto, executed and delivered to the Trustee,
the performance of every covenant and obligation of the Transferor
hereunder with respect to the assets evidenced by the Transferor
Certificates, and (C) as part of its acquisition of a Transferor
Certificate, acquire all rights of the related Transferor or any
transferee under this Section 6.05(c) to amounts payable to such
Transferor or such transferee under Sections 5.01(a)(vii) and 5.01(g),
(ii) the Transferor shall deliver to the Trustee an Officer's Certificate
stating that such transfer and such supplemental agreement comply with
this Section 6.05(c) and that all conditions precedent provided by this
Section 6.05(c) have been complied with and an Opinion of Counsel stating
that all conditions precedent provided by this Section 6.05(c) have been
complied with, and the Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying;
(iii) the Transferor shall deliver to the Trustee a letter from each
Rating Agency confirming that its rating of the Investor Certificates,
after giving effect to such transfer without taking into account the
Certificate Insurance Policy, will not be reduced or withdrawn; (iv) the
Transferor shall deliver to the Trustee an Opinion of Counsel to the
effect that (a) such transfer will not adversely affect the treatment of
the Investor Certificates after such transfer as debt for federal and
applicable state income tax purposes, (b) such transfer will not result in
the Trust being subject to tax at the entity level for federal or
applicable state tax purposes, (c) such transfer will not have any
material adverse impact on the federal or applicable state income taxation
of an Investor Certificateholder or any Certificate Owner and (d) such
transfer will not result in the arrangement created by this agreement or
any "portion" of the assets being treated as a taxable mortgage pool as
defined in Section 7701(i) of the Code; (v) all filings and other actions
necessary to continue the perfection of the interest of the Trust in the
assets and the other property conveyed hereunder shall have been taken or
made and (vi) the transferee shall have assumed the obligations of the
Transferor pursuant to Section 7.06 hereof. Notwithstanding the
foregoing, the requirement set forth in subclause (i)(A) of this Section
6.05(c) shall not apply in the event the Trustee shall have received a
letter from each Rating Agency confirming that its rating of the Investor
Certificates, after giving effect to a proposed transfer to a Person that
does not meet the requirement set forth in subclause (i)(A) without taking
into account the Certificate Insurance Policy, shall not be reduced or
withdrawn.
Section 6.06. Actions of Certificateholders.
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such
Certificateholders in person or by its agent duly appointed in writing;
and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where required, to the Transferor, the Certificate Insurer or
the Servicer. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Transferor, the
Certificate Insurer and the Servicer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Certificateholder of
any such instrument or writing may be proved in any reasonable manner
which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by a Certificateholder shall bind every Holder of
every Certificate issued upon the registration of Transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or
omitted to be done, by the Trustee, the Transferor or the Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
(d) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
(e) The ownership of Certificates shall be proved by the Certificate
Register.
ARTICLE VII
The Servicer and the Transferor
Section 7.01. Liability of the Servicer.
-------------------------
The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Servicer herein.
Section 7.02. Merger or Consolidation of,
---------------------------
or Assumption of the Obligations
--------------------------------
of, the Servicer or Transferor.
------------------------------
Any corporation into which the Servicer or Transferor may be merged
or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Servicer or Transferor shall be a party, or
any corporation succeeding to the business of the Servicer or Transferor,
or any corporation, more than 50% of the voting stock of which is,
directly or indirectly, owned by the Indirect Parent, which executes an
agreement of assumption to perform every obligation of the Servicer or
Transferor hereunder, shall be the successor of the Servicer or Transferor
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.
Notwithstanding anything to the contrary contained in this Section
7.02 or in Section 7.04, the Servicer may assign its rights and delegate
its duties and obligations under this Agreement; provided that (i) the
purchaser or transferee accepting such assignment or delegation shall be a
Person reasonably satisfactory to the Trustee and which shall be qualified
to service mortgage loans for the Federal National Mortgage Association,
and shall execute and deliver to the Trustee an agreement, in form and
substance reasonably satisfactory to the Trustee, which contains an
assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by
the Servicer under this Agreement from and after the date of such
agreement; and (ii) each Rating Agency's rating of the Investor Certif-
icates in effect immediately prior to such assignment, sale or transfer
will not be qualified, downgraded or withdrawn as a result of such
assignment, sale or transfer, as evidenced by a letter to such effect from
each Rating Agency. In the case of any such assignment and delegation,
the Servicer shall remain liable for all liabilities and obligations
incurred by it as Servicer hereunder prior to the satisfaction of the
conditions to such assignment and delegation set forth in clauses (i) and
(ii) of the preceding sentence.
Section 7.03. Limitation on Liability of
--------------------------
the Servicer and Others.
-----------------------
Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the
Trust Fund or the Certificateholders for any action taken or for
refraining from the taking of any action by the Servicer pursuant to this
Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Servicer or any such person against any
liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties of
the Servicer or by reason of reckless disregard of obligations and duties
of the Servicer hereunder. The Servicer and any director or officer or
employee or agent of the 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 Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which is
not incidental to duties to service the Mortgage Loans in accordance with
this Agreement, and which in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable in
respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In the event of
any such loss, liability or expense, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities for which the Servicer shall be entitled to reimbursement
therefor only from amounts otherwise distributable to the Holders of the
Transferor Certificates on any subsequent Distribution Date. The
Servicer's right to reimbursement pursuant to this Section 7.03 shall
survive any resignation or termination of the Servicer pursuant to Section
7.04 or 8.01 with respect to any such losses, liabilities or expenses
arising prior to such resignation or termination (or arising from events
that occurred prior to such resignation or termination). Any claims under
this Section 7.03 by or on behalf of the Certificateholders or the Trust
Fund shall be made only against the Servicer, who shall be liable
hereunder with respect to its own acts and omissions as well as the acts
and omissions of its directors, officers, employees and agents.
Section 7.04. Servicer Not to Resign.
----------------------
Subject to the provisions of Section 7.02, the Servicer shall not
resign from the obligations and duties hereby imposed on it (i) for so
long as the Trust owns Trust Balances of one or more Common Mortgage
Loans, unless it has resigned from its obligations and duties as servicer
under all Prior Trust Pooling and Servicing Agreements applicable to such
Common Mortgage Loans or (ii) except upon determination that the
performance of its duties hereunder is no longer permissible under
applicable law or is in material conflict by reason of applicable law with
any other activities carried on by it or its subsidiaries or other
affiliates, the other activities of the Servicer so causing such a
conflict being of a type and nature carried on by the Servicer or such
subsidiaries or other affiliates at the date of this Agreement. For so
long as the Trust owns Trust Balances of one or more Common Mortgage
Loans, the determination set forth in clause (ii) shall provide the basis
for the Servicer's resignation only if the Servicer simultaneously resigns
from its obligations and duties as servicer under the Prior Trust Pooling
and Servicing Agreements applicable to such Common Mortgage Loans. For so
long as the Trust owns Trust Balances of one or more Common Mortgage
Loans, the Servicer shall resign from its obligations and duties hereunder
promptly upon any resignation from its obligations and duties as servicer
under the Prior Trust Pooling and Servicing Agreements applicable to such
Common Mortgage Loans.
Any resignation under this Section 7.04 shall not relieve the
Servicer of responsibility for any of the obligations specified in
Sections 8.01 and 8.02 as obligations that survive the resignation or
termination of the Servicer; provided, however, that no resignation by the
Servicer shall become effective until the Trustee or a successor servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 8.02. The Servicer shall have no claim (whether
by subrogation or otherwise) or other action against any Certificateholder
for any amounts paid by the Servicer pursuant to any provision of this
Agreement. Any determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee and the Certificate Insurer.
Section 7.05. Limitation on Liability of Certain Persons.
------------------------------------------
No recourse under or upon any obligation or covenant of this
Agreement, or of any Certificate, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Transferor or of any successor corporation, either directly or through the
Transferor, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise. This
Agreement and the obligations issued hereunder are solely corporate
obligations, and that no such personal liability whatever shall attach to,
or is or shall be incurred by the incorporators, shareholders, officers or
directors as such, of the Transferor, or any of them, because of the
issuance of the Certificates, or under or by reason of the obligations,
covenants or agreements contained in this Agreement or in any of the
Certificates or implied therefrom; and that any and all such personal
liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the
issuance of the Certificates, or under or by reason of the obligations,
covenants or agreements contained in this Agreement or in any of the
Certificates or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of
this Agreement and the issuance of the Certificates. The Transferor and
any director, officer, employee or agent of the Transferor 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.
Section 7.06. Liability of Transferor.
-----------------------
Notwithstanding Section 7.05 or any other provisions of this
Agreement, the Transferor by entering into this Agreement, by its
acceptance thereof, agrees to be liable, directly to the injured party,
for the entire amount of any losses, claims, damages or liabilities (other
than those that would be incurred by a Certificateholder if the
Certificates were notes secured by the Trust assets, for example, as a
result of the performance of the Trust assets, market fluctuations, a
shortfall or failure to make payment under the Certificate Insurance
Policy or other similar market or investment risks associated with
ownership of the Certificates) arising out of or based on the arrangement
created by this Agreement or the actions of the Servicer taken pursuant
hereto (to the extent that, if the Trust assets at the time the claim is
made were used to pay in full all outstanding Certificates, the Trust
assets that would remain after the Certificateholders and Certificate
Insurer were paid in full would be insufficient to pay any such losses,
claims, damages or liabilities) as though this Agreement created a
partnership under the Delaware Revised Uniform Partnership Act in which
the Transferor was a general partner. The rights created by this Section
7.06 shall run directly to and be enforceable by the injured party subject
to the limitations hereof.
Section 7.07. Transferor May Own Certificates.
-------------------------------
The Transferor and any Person controlling, controlled by or under
common control with the Transferor may in its individual or any other
capacity become the owner or pledgee of Investor Certificates with the
same rights as it would have if it were not the Transferor or such an
affiliate thereof, except as otherwise provided in the definition of the
term "Certificateholder" specified in Section 1.01. Certificates so owned
by or pledged to the Transferor or such controlling or commonly controlled
Person shall have an equal and proportionate benefit under the provisions
of this Agreement, without preference, priority or distinction as among
all of the Investor Certificates, except as otherwise provided in the
definition of the term "Certificateholder" specified in Section 1.01.
ARTICLE VIII
Default
Section 8.01. Events of Default.
-----------------
If any one of the following events ("Events of Default") shall occur
and be continuing:
(i) Any failure by the Servicer to remit to the Trustee any
payment required to be made under the terms of such Certificates and
this Agreement which continues unremedied for a period of five (5)
Business Days after the date upon which written notice of such
failure shall have been given to the Servicer by the Trustee or to
the Servicer and the Trustee by Holders of Investor Certificates
evidencing not less than 25% of the aggregate Percentage Interests of
the Investor Certificates or by the Certificate Insurer; or
(ii) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Certificates or in this Agreement,
which covenants and agreements (A) materially affect the rights of
Certificateholders and (B) continue unremedied for a period of sixty
(60) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interests of the Investor Certificates or by the
Certificate Insurer; or
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding up or
Liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of sixty (60) consecutive
days; or
(iv) The consent by the Servicer to the appointment of a con-
servator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of
or relating to the Servicer or of or relating to substantially all of
its property; or the Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations;
then, and in each and every such case, so long as an Event of Default
shall not have been remedied by the Servicer, either the Trustee (with the
consent of the Certificate Insurer, which consent shall not be
unreasonably withheld), or the Holders of Investor Certificates evidencing
not less than 25% of the aggregate Percentage Interests of the Investor
Certificates (with the consent of the Certificate Insurer) or the
Certificate Insurer, by notice then given in writing to the Servicer (and
to the Trustee if given by Certificateholders or the Certificate Insurer)
may terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. In addition, for so long as the Trust owns
Trust Balances of one or more Common Mortgage Loans, whether or not there
is any Event of Default hereunder, if the Servicer is terminated as
servicer under the Prior Trust Pooling and Servicing Agreements applicable
to such Common Mortgage Loans, the Trustee shall promptly deliver a notice
of termination to the Servicer and shall appoint as successor Servicer
pursuant to Section 8.02 the same Person appointed to succeed the Servicer
as servicer under such Prior Trust Pooling and Servicing Agreements.
Any written notice provided to the Servicer shall be simultaneously
provided to the Indirect Parent, the Certificate Insurer and the Rating
Agencies. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee pursuant to and under this Section 8.01;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer
and endorsement of the Mortgage Loans and related documents, or otherwise.
The Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Trustee for the
administration by it of all cash amounts that shall at the time be held by
the Servicer and credited by it to the Mortgage Loan Payment Record, or
that have been deposited by the Servicer in the Certificate Account or
thereafter received by the Servicer with respect to the Mortgage Loans.
In addition to any other amounts which are then, or, notwithstanding the
termination of its activities as servicer, may become, payable to the
Servicer under this Agreement, the Servicer shall be entitled to receive
out of any delinquent payment on account of interest on a Mortgage Loan,
due during the period prior to the notice pursuant to this Section 8.01
which terminates the obligation and rights of the Servicer hereunder and
received after such notice, that portion of such payment which it would
have been entitled to retain pursuant to Section 3.03(ii) if such notice
had not been given.
Section 8.02. Trustee to Act; Appointment of Successor.
----------------------------------------
(a) On and after the time the Servicer receives a notice of termina-
tion pursuant to Section 8.01 or the Servicer's resignation in accordance
with the terms of Section 7.04, and, for so long as the Trust owns Trust
Balances of one or more Common Mortgage Loans (and if and for so long as
the Trustee also acts as servicer under a Prior Trust Pooling and
Servicing Agreement applicable to such Common Mortgage Loans), the Trustee
shall be the successor in all respects to the Servicer in its capacity as
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 Servicer by the terms and
provisions hereof; provided, however, that the responsibilities and duties
of the Servicer pursuant to Section 2.02 and Section 2.04, the obligations
of the Servicer to make repurchases or replacements of Mortgage Loans
pursuant to Section 3.01 and Section 3.06 and the obligations of the
Servicer to make Monthly Advances pursuant to Section 4.02 shall not be
the responsibilities, duties or obligations of the Trustee. As compensa-
tion therefor, the Trustee shall, except as provided in Section 8.01, be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as
successor Servicer, (ii) if the Trustee is legally unable so to act, (iii)
for so long as the Trust owns one or more Trust Balances of the Common
Mortgage Loans, if the Trustee is not acting as servicer under the Prior
Trust Pooling and Servicing Agreements applicable to such Common Mortgage
Loans, the Trustee may (in the situation described in clause (i)) or shall
(in the situation described in clause (ii) or (iii)) appoint, with the
consent of the Certificate Insurer, or petition a court of competent
jurisdiction to appoint, any established housing and home finance
institution that is then servicing a home equity loan portfolio and having
all licenses, permits and approvals required by applicable law, and having
a net worth of not less than $10,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided, however, that,
for so long as the Trust owns Trust Balances of one or more Common
Mortgage Loans, any such successor Servicer shall be the same Person that
is then acting as, or has been designated to act as, servicer under the
Prior Trust Pooling and Servicing Agreements applicable to such Common
Mortgage Loans; and provided, further, that the appointment of any such
successor Servicer shall not result in the reduction, suspension or
withdrawal of the ratings assigned to the Investor Certificates by any
Rating Agency without taking into account the Certificate Insurance
Policy. Pending appointment of a successor to the Servicer hereunder,
unless the Trustee is prohibited by law from so acting, the Trustee shall
act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Servicer hereunder. The Trustee
and such successor shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Servicer as servi-
cer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder, and (ii) a fidelity
bond in respect of its officers, employees and agents to the same extent
as the Servicer is so required pursuant to Section 3.12. No successor
servicer (other than the Trustee as successor to the Servicer) shall have
the right (i) to maintain possession of the Mortgage Files as set forth in
Section 2.01(d) or (ii) to retain and commingle payments on, and
collections in respect of, the Mortgage Loans with its own funds pursuant
to Section 3.02(c).
Section 8.03. Notification to Certificateholders.
----------------------------------
Upon any termination or appointment of a successor to the Servicer
pursuant to this Article VIII, the Trustee shall give prompt written
notice thereof (i) to Certificateholders at their respective addresses
appearing in the Certificate Register, (ii) to each Rating Agency at their
respective addresses set forth in Section 11.06, and (iii) to the
Certificate Insurer at its address set forth in Section 11.06.
Section 8.04. Waiver of Past Events of Default.
--------------------------------
The Holders of Investor Certificates evidencing not less than 51% of
the aggregate Percentage Interests of the Investor Certificates together,
with the consent of the Certificate Insurer, may, on behalf of all Holders
of Certificates, waive any Event of Default by the Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to the Certificate Account in
accordance with this Agreement. Upon any such waiver of a past Event of
Default, such Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right
consequent thereon.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.
-----------------
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in
this Agreement. If an Event of Default has occurred (which has not been
cured), the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to
determine whether they conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred,
the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee
shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith
on the part of the Trustee, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
negligent in performing its duties in accordance with the terms
of this Agreement;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of
Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interests of the Investor Certificates with
the consent of the Certificate Insurer relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; and
(iv) The Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer
referred to in clauses (i) and (ii) of Section 8.01 unless a
Responsible Officer of the Trustee at the Corporate Trust Office
obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Servicer, the Holders of
Certificates evidencing not less than 25% of the Trust Fund
(based on the outstanding principal balances of the
Certificates) or the Certificate Insurer.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for
the manner of performance of, any of the obligations of the Servicer under
this Agreement, except during such time, if any, as the Trustee shall be
the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee.
-------------------------------------
Except as otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
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 against the costs,
expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the
Trustee of the obligations, upon the occurrence of an Event of
Default (which has not been cured), to exercise such of the
rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of
his own affairs;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or documents,
unless requested in writing to do so by Holders of Investor
Certificates evidencing not less than 25% of the aggregate
Percentage Interests of the Investor Certificates or the
Certificate Insurer; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable
indemnity against such cost, expense or liability as a condition
to such proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the
Trustee, shall be reimbursed by the Servicer upon demand.
Nothing in this clause (v) shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors; and
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or attorneys or a custodian.
Section 9.03. Trustee Not Liable for Certificates
-----------------------------------
or Mortgage Loans.
-----------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall
be taken as the statements of the Servicer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of
the Certificates (other than the signature and countersignature of the
Trustee on the Certificates) or of any Mortgage Loan or related document.
The Trustee shall not be accountable for the use or application by the
Servicer of any of the Certificates or of the proceeds of such Certi-
ficates, or for the use or application of any funds paid to the Servicer
in respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Servicer.
Section 9.04. 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 Trustee.
Section 9.05. Servicer to Pay Trustee's Fees and Expenses.
-------------------------------------------
The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust) for all services rendered by it in the
execution of the trusts hereby created and in the exercise and performance
of any of the powers and duties hereunder of the Trustee, and the Servicer
will pay or reimburse the Trustee upon its request for all reasonable
expenses (including any expenses arising under Section 4.04(d)), dis-
bursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of Certificateholders hereunder. In addition, the Servicer
covenants and agrees to indemnify the Trustee from, and hold it harmless
against, any and all losses, liabilities, damages, claims, legal actions,
including any pending or threatened claims or legal actions, or expenses
other than those resulting from the negligence or bad faith of the
Trustee.
Section 9.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times (i) be a Person having its
principal office in the state of New York or in the same state as that in
which the initial Trustee under this Agreement has its principal office
and organized and doing business under the laws of such State or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority and (ii) have at all times a long term unsecured debt rating (or
the direct or indirect corporate parent of the Trustee have a long term
unsecured debt rating if the Trustee does not have such a rating) that
will not result in the downgrading or withdrawal of the rating or ratings
then assigned to the Certificates by each Rating Agency. If such Person
publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 9.06, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in
the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee.
---------------------------------
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Transferor. Upon
receiving such notice of resignation, the Servicer shall promptly appoint
a successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee; provided, however, that, (i) such appointment does not
result in a reduction or withdrawal of the then current rating of the
Investor Certificates, and (ii) so long as such consent is not
unreasonably withheld, the Certificate Insurer consents to such
appointment. The Servicer shall make a good faith effort to appoint a
successor within 30 days of its receipt of such notice. If the Servicer
does not appoint a successor Trustee within such 30 day period and it is
not making a good faith effort to appoint a successor Trustee, then the
Certificate Insurer may appoint a successor Trustee. The Servicer shall
indemnify the Trustee for any loss, liability, or expense incurred as a
result of the Servicer's failure to make a good faith effort to appoint a
successor Trustee. If no successor Trustee shall have been so appointed
and having accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign
after written request therefor by the Transferor, (ii) the Transferor has
delivered to the Trustee a letter from any Rating Agency to the effect
that the rating of the Investor Certificates has been or is about to be
reduced or withdrawn on account of a reduction in the long-term credit
rating of the Trustee or the parent of the Trustee (if (a) the Trustee
proposes to the Transferor and the Servicer to enter into an agreement
with the Trustee and the Transferor and the Servicer, each in its sole
discretion, elect to enter into such agreement and (b) such agreement is
consented to by the Certificate Insurer and is satisfactory to the Rating
Agencies without resulting in a reduction in or withdrawal of any rating
of the Investor Certificates, then upon the execution and delivery of such
agreement the Transferor shall not request such resignation pursuant to
this clause (ii)) and the Trustee shall fail to resign after written
request therefor by the Transferor, or (iii) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Transferor or, in the case of clause (ii) above, the
Servicer may remove the Trustee and appoint a successor trustee, subject
to the following paragraph and to the consent of the Certificate Insurer
to such appointment (which consent shall not be unreasonably withheld), by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07
shall not become effective until acceptance of appointment by the
successor Trustee as provided in Section 9.08.
Section 9.08. Successor Trustee.
-----------------
Any successor Trustee appointed as provided in Section 9.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties
and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee. The Transferor, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of
such Trustee hereunder to all holders of Certificates at their addresses
as shown in the Certificate Register. If the Servicer fails to mail such
notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 9.09. Merger or Consolidation of Trustee.
----------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 9.06, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
Section 9.10. Appointment of Co-Trustee or
----------------------------
Separate Trustee.
----------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or any Mortgaged Property may at the time
be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all
or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity and for the benefit of the Certificateholders, such title
to the Trust Fund, or any part thereof, and, subject to the other
provisions of this Section 9.10, such powers, duties, obligations, rights
and trusts as the Servicer and the Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, 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 9.06 and no
notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.08.
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) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee
or co-trustee jointly (provided, however, 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 Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) The Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any 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 then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article IX. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Agreement, speci-
fically 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 Transferor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed,
all of its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 9.11. Tax Returns.
-----------
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required and within the Trustee's
reasonable control or knowledge in connection with the Servicer's
preparation of all tax returns of the Trust Fund, and shall, upon request,
execute such returns.
Section 9.12. Streit Act.
----------
Any provisions required to be contained in this Agreement by Section
126 of Article 4-A of the New York Real Property Law are hereby
incorporated, and such provisions shall be in addition to those conferred
or imposed by this Agreement; provided, however, that to the extent that
such Section 126 shall not apply to this Agreement, such Section 126 shall
not have any effect, and if such Section 126 should at any time be
repealed or cease to apply to this Agreement, or be construed by judicial
decision to be inapplicable, such Section 126 shall cease to have any
further effect upon the provisions of this Agreement. In case of a
conflict between the provisions of this Agreement and any mandatory
provision of Article 4-A of the New York Real Property Law, such mandatory
provisions of such Article 4-A shall prevail, provided, however, that if
such Article 4-A shall not apply to this Agreement, or be construed by
judicial decision to be inapplicable, such mandatory provisions of such
Article 4-A shall cease to have any further effect upon the provisions of
this Agreement.
ARTICLE X
Termination
Section 10.01. Termination.
-----------
(a) The respective obligations and responsibilities of the Servicer,
the Transferor and the Trustee created hereby (other than the obligation
of the Trustee to make certain payments to Certificateholders after the
final Distribution Date and the obligation of the Servicer to send certain
notices as hereinafter set forth) shall terminate upon the last action
required to be taken by the Trustee on the final Distribution Date
pursuant to this Article X following the later of (A) payment in full of
all amounts owing to the Certificate Insurer and (B) the earliest of:
(i) the retransfer, under the conditions specified in
Section 10.01(b), to the Servicer of the Investor
Certificateholders' interest in each Mortgage Loan and all
property acquired in respect of any Mortgage Loan remaining in
the Trust Fund for an amount equal to the sum of (A) the
Certificate Principal Balance, (B) accrued and unpaid
Certificate Formula Interest through the day preceding the final
Distribution Date, (C) any Unpaid Certificate Interest
Shortfall, and (D) any accrued and unpaid Investor Loss
Reduction Amounts through the day preceding such final
Distribution Date;
(ii) the day following the Distribution Date on which the
distribution made to Investor Certificateholders has reduced the
Certificate Principal Balance to zero;
(iii) the final payment or other liquidation (or any Monthly Advance
with respect thereto) of the Trust Balance of the last Mortgage
Loan remaining in the Trust Fund (including without limitation
the disposition of the Mortgage Loans pursuant to Section 10.02)
or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan; and
(iv) the Distribution Date in January 2007.
provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James, living on the date hereof.
(b) The Servicer shall have the right to exercise the option to
retransfer to itself each Mortgage Loan pursuant to Section 10.01(a)(i) on
any Distribution Date on or after the Distribution Date immediately prior
to which the Certificate Principal Balance is less than ten percent (10%)
of the Original Certificate Principal Balance and all amounts due and
owing to the Certificate Insurer for unpaid premiums and unreimbursed
draws on the Certificate Insurance Policy, together with interest thereon
as provided under the Insurance Agreement, have been paid. If such right
is exercised and the Trustee is holding the Mortgage Files, the Servicer
shall provide to the Trustee the certification required by Section 3.07
and the Trustee shall, promptly following payment of the retransfer price,
release to the Servicer the Mortgage Files pertaining to the Mortgage
Loans being retransferred.
(c) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon
which the Investor Certificateholders may surrender their Investor
Certificates to the Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Trustee (upon receipt of
written directions from the Servicer to the Trustee no later than the 20th
day of the month preceding the month of such final distribution, if the
Servicer is exercising its right to repurchase the assets of the Trust
Fund) by letter to Investor Certificateholders and the Certificate Insurer
mailed not earlier than the first day and not later than the tenth day of
the month of such final distribution specifying (A) the Distribution Date
upon which final distribution of the Investor Certificates will be made
upon presentation and surrender of Investor Certificates at the office or
agency of the Trustee therein designated, (B) the amount of any such final
distribution and (C) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Investor Certificates at the office or
agency of the Trustee therein specified. In the event written directions
are delivered by the Servicer to the Trustee as described in the preceding
sentence, the Servicer shall deposit in the Certificate Account before the
Distribution Date for such final distribution in immediately available
funds an amount equal to the repurchase price for the assets of the Trust
Fund computed as above provided. Such deposit shall be in lieu of the
deposit otherwise required to be made in respect of such Distribution
Date.
(d) Upon presentation and surrender of the Investor Certificates,
the Trustee shall cause to be distributed to the holders of Investor
Certificates on the Distribution Date for such final distribution, in
proportion to the Percentage Interests of their respective Investor
Certificates, an amount equal to (i) if such final distribution is not
being made pursuant to the retransfer to the Servicer pursuant to
Section 10.01(a)(i), the amount required to be distributed to Investor
Certificateholders pursuant to Section 5.01 for such Distribution Date and
(ii) if such final distribution is being made pursuant to such retransfer,
the amount specified in Section 10.01(a)(i). The distribution on such
final Distribution Date pursuant to a retransfer pursuant to Section
10.01(a)(i) shall be in lieu of the distribution otherwise required to be
made on such Distribution Date in respect of the Certificates. On the
final Distribution Date prior to having made the distributions called for
above, the Trustee will withdraw from the Certificate Account and remit to
the Certificate Insurer the lesser of (x) the amount available for
distribution on such final Distribution Date, net of any portion thereof
necessary to pay the amounts described in clauses (d)(i) and (ii) above
and (y) the unpaid amounts due and owing to the Certificate Insurer for
unpaid premiums and unreimbursed draws on the Certificate Insurance
Policy, together with interest thereon as provided under the Insurance
Agreement.
(e) In the event that all of the Investor Certificateholders shall
not surrender their Investor Certificates for final payment and
cancellation on or before such final Distribution Date, the Trustee shall
on such date cause all funds in the Certificate Account not distributed in
final distribution to the Certificate Insurer or Investor
Certificateholders to be withdrawn therefrom and credited to the remaining
Investor Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Investor Certificateholders and the
Servicer (if the Servicer has exercised its right to retransfer the
Mortgage Loans) or the Trustee (in any other case) shall give a second
written notice to the remaining Investor Certificateholders to surrender
their Investor Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the Investor Certificates shall not have been surrendered for
cancellation, any funds deposited in such escrow account and remaining
unclaimed shall be paid by the Trustee to the Servicer and thereafter
Investor Certificateholders shall look only to the Servicer with respect
to any claims in respect of such funds.
Section 10.02. Termination by Certificate Insurer.
----------------------------------
In the event the Servicer does not exercise its option to terminate
the Trust Fund pursuant to this Article X, the Certificate Insurer may do
so on the same terms.
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events
-------------------------
If any one of the following events shall occur during the Managed
Amortization Period:
(a) failure on the part of the Servicer (i) to make any payment or
deposit required by the terms of this Agreement, on or before the date
occurring five (5) Business Days after the date such payment or deposit is
required to be made herein, or (ii) duly to observe or perform in any
material respect the covenants set forth in Section 2.04 or (iii) duly to
observe or perform in any material respect any other covenants or
agreements of the Servicer set forth in this Agreement, which failure, in
each case, materially and adversely affects the interests of the
Certificateholders or the Certificate Insurer and which, in the case of
clause (iii), continues unremedied and continues to affect materially and
adversely the interests of the Certificateholders for a period of sixty
(60) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer
by the Trustee, or to the Servicer and the Trustee by the Certificate
Insurer or the Holders of Investor Certificates evidencing Percentage
Interests aggregating not less than 51%;
(b) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect in any material respect when
made, as a result of which the interests of the Investor
Certificateholders or the Certificate Insurer are materially and adversely
affected and which continues to be incorrect in any material respect and
continues to affect materially and adversely the interests of the Investor
Certificateholders or the Certificate Insurer for a period of sixty (60)
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Trustee,
or to the Servicer and the Trustee by either the Certificate Insurer or
the Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 51%; provided, however, that a Rapid
Amortization Event pursuant to this subparagraph (b) shall not be deemed
to have occurred hereunder if the Servicer has accepted retransfer of the
related Mortgage Loan or Mortgage Loans during such period (or such longer
period (not to exceed an additional 60 days) as the Trustee, with the
consent of the Certificate Insurer, may specify) in accordance with the
provisions hereof;
(c) the Transferor or the Servicer shall go into liquidation,
consent to the appointment of a conservator or receiver or liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Transferor or the Servicer or of or relating to all or substantially all
of its property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person 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 Transferor or the Servicer and such decree
or order shall have remained in force undischarged or unstayed for a
period of thirty (30) days; or the Transferor or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
(d) the Trust shall become subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended;
(e) any Event of Default shall occur;
(f) the aggregate of Insured Payments under the Certificate
Insurance Policy exceeds 1% of the Pool Balance as of the Cut-off Date; or
(g) the Transferor or the Servicer becomes subject to a tax lien and
not released within sixty (60) days of its attachment;
then, in the case of any event described in subparagraph (a), (b) or (e)
after the applicable grace period, if any, set forth in such
subparagraphs, either the Certificate Insurer, the Trustee or the Holders
of Investor Certificates evidencing Percentage Interests aggregating more
than 51%, with the consent of the Certificate Insurer, by notice given in
writing to the Transferor and the Servicer (and to the Trustee if given by
either the Certificate Insurer or the Investor Certificateholders) may
declare that an early amortization event (a "Rapid Amortization Event")
has occurred as of the date of such notice, and in the case of any event
described in subparagraphs (c), (d), (f) or (g), a Rapid Amortization
Event shall occur without any notice or other action on the part of the
Trustee, the Certificate Insurer or the Investor Certificateholders,
immediately upon the occurrence of such event.
Section 11.02. Additional Rights Upon an Insolvency Event.
------------------------------------------
(a) If the Transferor goes into liquidation or consents to the
appointment of a conservator or receiver or liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Transferor or of
or relating to all or substantially all its property, or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator or
similar person 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 Transferor
and such decree shall have remained in force undischarged or unstayed for
a period of 30 days; or the Transferor shall admit in writing its
inability to pay its debts generally as they become due, file a petition
to take advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations (such voluntary liquidation, appointment,
entering of such decree, admission, filing, making, suspension or viola-
tion or other event described above, an "Insolvency Event"), (i) the
Transferor shall on the day of such appointment, voluntary liquidation,
entering of such decree, admission, filing, making, suspension or
inability, as the case may be (the "Appointment Day"), promptly give
notice to the Trustee and the Certificate Insurer of such Insolvency
Event, and (ii) the arrangement among the Certificateholders and the
Transferor shall dissolve and the Trust shall be liquidated in accordance
with the following procedures. The Transferor shall on the Appointment
Day immediately cease to transfer Additional Balances to the Trust.
Notwithstanding any cessation of the transfer to the Trust of Additional
Balances, Additional Balances transferred to the Trust prior to the
occurrence of such Insolvency Event or violation, and Principal
Collections and Interest Collections, whenever created, accrued in respect
of such Mortgage Loans shall continue to be a part of the Trust, and shall
continue to be allocated and paid in accordance with Article IV. Within
fifteen (15) days of the Appointment Day, the Trustee shall (i) publish a
notice in an authorized newspaper that an Insolvency Event has occurred
and that the Trustee intends to sell, dispose of or otherwise liquidate
the Trust assets on commercially reasonable terms and in a commercially
reasonable manner and (ii) send written notice to the Certificateholders
describing the provisions of this Section 11.02 and requesting
instructions from such Holders. Unless within seventy-five (75) days from
the day notice pursuant to clause (i) above is first published the Trustee
shall have received written instructions from Holders of Investor
Certificates evidencing more than 51% of the aggregate Percentage
Interests to the effect that such Certificateholders disapprove of the
liquidation of the Trust assets, the Trustee shall sell, dispose of or
otherwise liquidate the Trust assets in a commercially reasonable manner
and on commercially reasonable terms, which shall include the solicitation
of competitive bids. The Trustee may obtain a prior determination from
any such conservator, receiver or liquidator that the terms and manner of
any proposed sale, disposition or liquidation are commercially reasonable.
The provisions of Sections 11.01 and 11.02 shall not be deemed to be
mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Trust assets pursuant to subsection (a) above shall be treated as
collections on the Mortgage Loans received during the Rapid Amortization
Period; provided, however, that such proceeds will, based on amounts
specified in writing to the Servicer to the Trustee, first be paid to the
Certificate Insurer to reimburse the Certificate Insurer for previously
unreimbursed Insured Payments and other amounts owing under the Insurance
Agreement and second be paid to the Trustee in reimbursement of expenses
incurred in connection with the sale, disposition or liquidation of the
Trust assets pursuant to Section 11.02(a); and provided, further, that the
Fixed Allocation Percentage of such remaining proceeds shall be paid to
Investor Certificateholders in the following amounts and order of
priority:
(i) all accrued and unpaid interest on the Certificate
Principal Balance through the Accrual Period immediately preceding
the Distribution Date on which such proceeds are distributed to the
Investor Certificateholders; and
(ii) an amount of principal up to the Certificate Principal
Balance.
The Certificate Insurance Policy will not cover any shortfall in the event
such proceeds are insufficient to make a full distribution to Investor
Certificateholders pursuant to Section 11.02(b). On the day following the
final Distribution Date on which such proceeds are distributed to the
Investor Certificateholders, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article XI with respect to competitive
bids or any other of its duties.
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment.
---------
This Agreement may be amended from time to time by the Servicer, the
Transferor and the Trustee, with the consent of the Certificate Insurer
so long as such consent is not unreasonably withheld and without the
consent of any of the Certificateholders, (i) to cure any ambiguity or
mistake, (ii) to correct or supplement any provisions herein or therein
which may be inconsistent with any other provisions herein or therein, as
the case may be, or (iii) to add or delete any other provisions not
inconsistent herewith with respect to matters or questions arising under
this Agreement, including provisions relating to the Trust's ownership of
Trust Balances of Common Mortgage Loans and the issuance of definitive
Certificates to Certificate Owners in the event that book-entry regis-
tration of Investor Certificates is no longer permitted; provided, how-
ever, that in each case such action shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder.
This Agreement may also be amended from time to time by the Servicer,
the Transferor and the Trustee, with the consent of the Holders of
Investor Certificates evidencing Percentage Interests aggregating not less
than 66% and the consent of the Certificate Insurer, for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or the Certificate Insurance Policy, or
of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (a) reduce in any manner
the amount of, or delay the timing of, collections of payments on Mortgage
Loans or distributions which are required to be made on any Certificate
without the consent of the Holder of such Certificate or (b) reduce the
aforesaid percentage required to consent to any such amendment, without
the consent of the Holders of all Investor Certificates then outstanding.
Notwithstanding the foregoing, the Agreement may not be amended
unless, in connection with such amendment, an Opinion of Counsel is
furnished to the Trustee that such amendment will not (i) adversely affect
the status of the Investor Certificates as debt; (ii) result in the Trust
being taxed at the entity level; or (iii) result in the Trust being taxed
as a taxable mortgage pool (as defined in Section 7701(i) of the Code).
Not later than the time of obtaining any such consent the Trustee
shall furnish written notification of the substance of such amendment to
each Rating Agency. Promptly after the execution of any such amendment or
consent, the Trustee shall furnish written notification of the substance
of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 12.01 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
In connection with any amendment pursuant to this Section 12.01, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect
that such amendment is authorized or permitted by this Agreement. In no
event shall any Opinion of Counsel provided pursuant to this Section 12.01
be an expense of the Trustee.
Section 12.02. Recordation of Agreement.
------------------------
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mort-
gages are situated, and in any other appropriate public recording office
or elsewhere, such recordation to be effected by the Servicer and at its
expense on direction by the Trustee, but only upon direction of the
Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute
but one and the same instrument.
Section 12.03. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting
or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust Fund, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or such party.
No Certificateholder shall have any right to vote (except as provided
in Section 12.01) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of
any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Investor Certificates evidencing
Percentage Interests aggregating not less than 25% shall have made written
request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60
days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding. Each Certificateholder expressly covenants with every other
Certificateholder and the Trustee that no one or more Holders of Certifi-
cates shall have any right in any manner whatever by virtue or by availing
itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 12.03, each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 12.04. (Reserved).
Section 12.05. The Certificate Insurer.
-----------------------
The Certificate Insurer is a third-party beneficiary of this
Agreement. Any right conferred to the Certificate Insurer shall be
suspended during any period in which the Certificate Insurer is in default
in its payment obligations under the Certificate Insurance Policy. During
any period of suspension the Certificate Insurer's rights hereunder shall
vest in the Holders of the Investor Certificates and shall be exercisable
by the Holders of at least a majority in Percentage Interest of the
outstanding Investor Certificates. At such time as the Investor
Certificates are no longer outstanding hereunder and the Certificate
Insurer has been reimbursed for all Insured Payments to which it is
entitled hereunder and has been paid all Premium Amounts due and owing
under the Insurance Agreement, the Certificate Insurer's rights hereunder
shall terminate.
Section 12.06. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES AND THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION), AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 12.07. Notices.
-------
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered at or mailed by
certified mail, return receipt requested, to (a) in the case of the
Servicer, Merrill Lynch Credit Corporation, 4802 Deer Lake Drive East,
Jacksonville, Florida 32246, Attention: General Counsel, (b) in the case
of the Transferor, MLCC Mortgage Investors, Inc., 4802 Deer Lake Drive
East, Jacksonville, Florida 32246, Attention: President, (c) in the case
of the Trustee, at the Corporate Trust Office, (d) in the case of Moody's,
ABS Monitoring Department, 4th Floor, 99 Church Street, New York, New York
10007, (e) in the case of the Certificate Insurer, AMBAC Indemnity
Corporation, One State Street Plaza, New York, New York 10004, Attention:
Structured Finance-MBS, (f) in the case of Standard and Poor's, Debt
Rating Division, 25 Broadway, 20th Floor, New York, New York 10004,
Attention: Asset-Backed Surveillance Group, or, as to each party, at such
other address as shall be designated by such party in a written notice to
each other party. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. Any
notice so mailed to a Certificateholder within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice.
Section 12.08. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of
the Holders thereof.
Section 12.09. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 7.02 and 7.04, this Agreement may not be assigned by
the Transferor or the Servicer without the prior written consent of
Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 66%.
Section 12.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
The parties agree that the Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the beneficial ownership
interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust Fund or for any reason whatsoever, and
that Certificates upon execution, countersignature and delivery thereof by
the Trustee pursuant to Section 6.01 are and shall be deemed fully paid.
Section 12.11. Counterparts.
------------
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 12.12. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 12.13. Third Party Beneficiary.
-----------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and, in addition, shall inure to the benefit of
Certificateholders and, to the extent provided herein, the Certificate
Insurer and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, no other Person shall have any right
or obligation hereunder.
Section 12.14. Merger and Integration.
----------------------
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject
matter hereof, and all prior understandings, written or oral, and all
contemporaneous oral understandings, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except
as provided herein.
* * *
IN WITNESS WHEREOF, the Servicer, the Transferor and the Trustee have
caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.
MERRILL LYNCH CREDIT CORPORATION
By /s/ Francis X. Ervin, Jr.
---------------------------
Name: Francis X. Ervin, Jr.
Title: Senior Vice President
& Treasurer
MLCC MORTGAGE INVESTORS, INC.
By /s/ Laurel A. Davis
---------------------------
Name: Laurel A. Davis
Title: Assistant Vice President
& Assistant Secretary
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee
By /s/ Jennifer Cunningham
--------------------------
Name: Jennifer Cunningham
Title: Assistant Vice President
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee of ML Home Equity Loan Trust
1991-2, ML Home Equity Loan Trust 1993-1,
ML Home Equity Loan Trust 1994-1, ML Home
Equity Loan Trust 1994-2, ML Home Equity
Loan Trust 1995-1 and ML Home Equity Loan
Trust 1995-2
By /s/ Jennifer Cunningham
-------------------------
Name: Jennifer Cunningham
Title: Assistant Vice President
State of Florida )
) ss.:
County of Duval )
On the 25th day of November, 1996 before me, a notary public in
and for the State of Florida, personally appeared Francis X. Ervin, Jr.,
known to me who, being by me duly sworn, did depose and say that he is
located at 4802 Deer Lake Drive East, Jacksonville, Florida 32246; that he
is a Senior Vice President and Treasurer of Merrill Lynch Credit
Corporation, a corporation formed under the laws of the State of Delaware,
one of the parties that executed the foregoing instrument; and that he
signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Kathy M. Molitoris
--------------------------------
Notary Public
(Notarial Seal)
State of Florida )
) ss.:
County of Duval )
On the 25th day of November, 1996 before me, a notary public in
and for the State of Florida, personally appeared Laurel A. Davis, known
to me who, being by me duly sworn, did depose and say that she is located
at 4802 Deer Lake Drive East, Jacksonville, Florida 32246; that she is an
Assistant Vice President and Assistant Secretary of MLCC Mortgage
Investors, Inc., a corporation formed under the laws of the State of
Delaware, one of the parties that executed the foregoing instrument; and
that she signed her name thereto by order of the Board of Directors of
said corporation.
/s/ Kathy M. Molitoris
--------------------------------
Notary Public
(Notarial Seal)
State of California )
) ss.:
County of )
On the 25th day of November, 1996 before me, a notary public in
and for the State of California, personally appeared Jennifer Cunningham,
known to me who, being by me duly sworn, did depose and say that she is
located at 3 Park Plaza, 16th Floor, Irvine, California 92714; that she is
an Assistant vice President of Bankers Trust Company of California, N.A.,
one of the parties that executed the foregoing instrument; and that she
signed her name thereto under authority granted by the Board of Directors
of said Bank.
/s/ David C. West
---------------------------------------
Notary Public
(Notarial Seal)
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Initial Certificate Principal
Balance of this Investor
Certificate : $
Certificate Rate : Variable
Original Certificate Principal
Balance of all Investor
Certificates : $
CUSIP No. :
Date of Pooling and
Servicing Agreement :
Certificate No. : 1
Cut-Off Date :
First Distribution
Date: :
Stated Maturity Date :
ML REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 199_-_
INVESTOR CERTIFICATE
evidencing a percentage interest in the
distributions allocable to the Investor
Certificates evidencing an undivided interest
in a Trust consisting primarily of a pool of
adjustable rate home equity revolving credit
line loans serviced by
MERRILL LYNCH CREDIT CORPORATION
This Certificate does not represent an obligation of or interest in
MLCC Mortgage Investors, Inc. (the "Transferor"), Merrill Lynch Credit
Corporation or the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured
by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing
the Initial Certificate Principal Balance of this Certificate by the
Original Certificate Principal Balance of all Investor Certificates) in
certain monthly distributions with respect to a Trust consisting primarily
of a pool of home equity revolving credit line loans (the "Mortgage
Loans"), transferred by the Transferor to the Trustee and serviced by
Merrill Lynch Credit Corporation (in such capacity, the "Servicer",
including any successor Servicer under the Agreement referred to below).
The Trust was created pursuant to a Pooling and Servicing Agreement dated
as specified above (the "Agreement") among the Transferor, the Servicer,
and Bankers Trust Company of California, N.A., as trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of
the acceptance hereof assents and by which such Holder is bound.
This Certificate is one of the Investor Certificates from a duly
authorized issue of Certificates designated as ML Revolving Home Equity
Loan Asset Backed Certificates, Series 199_-_, representing, to the extent
specified in the Agreement, an undivided interest in: (i) the Mortgage
Loans, to the extent of their Trust Balances, and the proceeds thereof,
(ii) collections in respect of the Trust's interest in the Mortgage Loans
received on or after the Cut-off Date, (iii) an irrevocable and
unconditional limited financial guarantee insurance policy (the "Policy"),
(iii) property that secured a Mortgage Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure or otherwise, (iv) the interest
of the Trust in certain hazard insurance policies covering the Mortgaged
Properties, and (v) certain other property relating to the Mortgage Loans
(collectively, the "Trust Assets").
On each Distribution Date, the Trustee shall distribute to each
Investor Certificateholder of record on the related Record Date (other
than the final distribution) by check mailed to such Certificateholder at
the address appearing in the Certificate Register, or upon written request
of a Holder of an Investor Certificate received by the Trustee at least
five Business Days prior to the related Record Date, by wire transfer (but
only if such Certificateholder is the Depository or such Certificateholder
owns of record one or more Investor Certificates which have principal
denominations aggregating at least $5,000,000), or by such other means of
payment as such Certificateholder and the Trustee shall agree.
Distributions among Investor Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Investor
Certificates held by such Investor Certificateholders. Notwithstanding
the above, the final distribution on this Certificate will be made after
due notice by the Trustee, of the pendency of such distribution, and only
upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose.
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or if such day is not a Business Day,
then on the next succeeding Business Day (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on
the last day preceding the month of such Distribution Date (the "Record
Date"), in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Investor Certificates on such Distribution Date under the terms
of the Agreement.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the
funds on deposit in the Certificate Account for payment hereunder, and
that the Trustee in its individual capacity is not personally liable to
the Certificateholders for any amount payable under this Certificate or
the Agreement or, except as expressly provided in the Agreement, subject
to any liability under the Agreement.
As provided in the Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than
distributions to the Investor Certificateholders and, subject to certain
conditions in the Agreement, Mortgage Loans may, at the election of the
Transferor, be removed from the Trust and transferred to the Transferor
(as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and
limitations of rights, benefits, obligations and duties evidenced hereby,
and the rights, duties and immunities of the Trustee.
It is the intention of the Transferor and the Investor
Certificateholders that the Investor Certificates will be indebtedness for
federal, state and local income and franchise tax purposes and for
purposes of any other tax imposed on or measured by income. The
Transferor, the Trustee and the Holder of this Certificate (or Certificate
Owner) by acceptance of this Certificate (or, in the case of a Certificate
Owner, by virtue of such Certificate Owner's acquisition of a beneficial
interest herein) agrees to treat the Investor Certificates (or beneficial
interest therein), for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness secured by the Trust Assets and to report the transactions
contemplated by the Agreement on all applicable tax returns in a manner
consistent with such treatment. Each Holder of this Certificate agrees
that it will cause any Certificate Owner acquiring an interest in this
Certificate through it to comply with the Agreement as to treatment as
indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by
income.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of
the Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon
all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency
maintained by the Certificate Registrar for such purpose, accompanied by a
written instrument of transfer in form satisfactory to the Trustee, if so
required by the Trustee, be duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized denominations, if applicable, and
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of a like tenor in
authorized denominations (in the case of the Investor Certificates) and
evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Trustee, the Transferor, the Servicer, the Certificate Insurer
and the Certificate Registrar and any agent of the foregoing may treat the
Person in whose name this Certificate is registered as the owner hereof
for all purposes, and neither the Trustee, the Transferor, the Servicer,
the Certificate Insurer, the Certificate Registrar nor any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment
in full of all amounts owing to the Certificate Insurer and (B) the
earliest of: (i) the retransfer to the Servicer of the Investor
Certificateholders' interest in each Mortgage Loan and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund for
an amount equal to the sum of (a) the Certificate Principal Balance, (b)
accrued and unpaid Certificate Formula Interest through the day preceding
the final Distribution Date, (c) any Unpaid Certificate Interest
Shortfall, and (d) any accrued and unpaid Investor Loss Reduction Amounts
through the day preceding such final Distribution Date; (ii) the day
following the Distribution Date on which the distribution made to Investor
Certificateholders has reduced the Certificate Principal Balance to zero;
(iii) the final payment or other liquidation (or any Monthly Advance with
respect thereto) of the Trust Balance of the last Mortgage Loan remaining
in the Trust Fund (including without limitation the disposition of the
Mortgage Loans) or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan; and (iv)
the Stated Maturity Date.
The Servicer, or in the event the Servicer does not exercise its
option to terminate the Trust Fund, the Certificate Insurer, may effect an
early retirement of the Certificates by paying the retransfer price and
accepting retransfer of the Trust Assets pursuant to the terms of the
Agreement on any Distribution Date after the Certificate Principal Balance
is less than or equal to 10% of the Original Investor Certificate
Principal Balance and all amounts due and owing to the Certificate Insurer
have been paid; provided, however, that in no event shall the Trust
continue beyond the expiration of 21 years from the death of certain
person named in the Agreement. Upon retirement of the Certificates in
accordance with Section 10.01 of the Agreement, the Trustee shall execute
such documents and instruments of transfer presented by the Servicer or
Certificate Insurer and take such other actions as the Servicer or
Certificate Insurer may reasonably request to effect the retransfer of the
Mortgage Loans to the Servicer or Certificate Insurer.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed as of the date set forth.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
not in its individual capacity but
solely as Trustee
------------------------------
Authorized Officer
Countersigned:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
By:
--------------------------------
Authorized Officer of
Bankers Trust Company of California, N.A.,
not in its individual capacity
but solely as Trustee
EXHIBIT B
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE INVESTOR
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO
THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, THAT IF
SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT THE TRANSFEREE IS AN
INSURANCE COMPANY WHICH IS PURCHASING THIS CERTIFICATE 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 THIS CERTIFICATE ARE
COVERED UNDER PTCE 95-60 OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR
AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05(c)
OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT
THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.
Date of Pooling and Servicing
Agreement: :
Cut-off Date :
Percentage Interest : 100%
Certificate No. : 1
First Distribution Date :
Stated Maturity Date :
ML REVOLVING HOME MORTGAGE LOAN ASSET BACKED CERTIFICATES,
SERIES 199_-_
TRANSFEROR CERTIFICATE
evidencing a percentage interest in the
distributions allocable to the Transferor
Certificates evidencing an undivided interest
in a Trust consisting primarily of a pool of
adjustable rate home equity loan revolving
credit line loans serviced by
MERRILL LYNCH CREDIT CORPORATION
This Certificate does not represent an obligation of or interest in
MLCC Mortgage Investors, Inc. (the "Transferor"), Merrill Lynch Credit
Corporation or the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Trust Assets are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that ___________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate in the
entire interest not allocated to the Investor Certificates in certain
monthly distributions with respect to a Trust consisting primarily of a
pool of mortgage loans (the "Mortgage Loans"), sold by the Transferor and
serviced by Merrill Lynch Credit Corporation (the "Servicer", including
any successor Servicer under the Agreement referred to below). The Trust
was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Transferor, the Servicer, and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of
the acceptance hereof assents and by which such Holder is bound.
This Certificate evidences a Transferor Certificate from a duly
authorized issue of Certificates designated as ML Revolving Home Equity
Loan Asset Backed Certificates, Series 199_-_, and representing, to the
extent specified in the Agreement, an undivided ownership interest in: (i)
the Mortgage Loans, to the extent of their Trust Balances, and the
proceeds thereof, (ii) collections in respect of the Trust's interest in
the Mortgage Loans received on or after the Cut-off Date, (iii) property
that secured a Mortgage Loan and which has been acquired by foreclosure or
deed in lieu of foreclosure or otherwise, (iv) the interest of the Trust
in certain hazard insurance policies covering the Mortgaged Properties,
and (v) certain other property relating to the Mortgage Loans
(collectively, the "Trust Assets").
The certificates are limited in right of payment to certain payments
on and collections in respect of the Trust Assets, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the
funds available in accordance with the terms of the Agreement for payment
hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and
limitations of rights, benefits, obligations and duties evidenced hereby,
and the rights, duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of
the Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon
all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Investor Certificates.
No transfer of a Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities
Act of 1933, as amended, and any applicable state securities laws or is
made in accordance with said Act and laws. There shall be delivered to
the Trustee and the Servicer a written Opinion of Counsel acceptable to
and in form and substance satisfactory to the Trustee and the Servicer
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from which Act and laws or is
being made pursuant to said Act and laws, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer, and the Trustee and the
Servicer shall require the transferee to execute an investment letter
acceptable to and in form and substance satisfactory to the Trustee and
the Servicer certifying to the Trustee and the Servicer the facts
surrounding such transfer, which Investment letter shall not be an expense
of the Trustee or the Servicer; provided that such Opinion of Counsel
shall not be required in the case of transfers by or to Merrill Lynch,
Pierce, Fenner & Smith Incorporated or an affiliate thereof. The Holder
of a Transferor Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Servicer and the
Certificate Insurer against any liability that may result if the transfer
is not so exempt or if not made in accordance with such federal and state
laws.
As provided in the Agreement and subject to certain limitations set
forth therein, and subject to the restrictions set forth on the first page
hereof, neither this Certificate nor any legal or beneficial interest
herein may be, directly or indirectly, purchased, transferred, sold,
pledged, assigned or otherwise disposed of, and any proposed transferee
hereof shall not become the registered Holder hereof, without the
satisfaction of the conditions set forth in Section 6.05 of the Agreement.
No service charge will be made for any such registration of Transfer
or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection
therewith.
The Trustee, the Servicer, the Certificate Insurer and the
Certificate Registrar and any agent of the foregoing may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee, the Servicer, the Certificate Insurer,
the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment
in full of all amounts owing to the Certificate Insurer and (B) the
earliest of: (i) the retransfer to the Servicer of the Investor
Certificateholders' interest in each Mortgage Loan and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund for
an amount equal to the sum of (a) the Certificate Principal Balance, (b)
accrued and unpaid Certificate Formula Interest through the day preceding
the final Distribution Date, (c) any Unpaid Certificate Interest
Shortfall, and (d) any accrued and unpaid Investor Loss Reduction Amounts
through the day preceding such final Distribution Date; (ii) the day
following the Distribution Date on which the distribution made to Investor
Certificateholders has reduced the Certificate Principal Balance to zero;
(iii) the final payment or other liquidation (or any Monthly Advance with
respect thereto) of the Trust Balance of the last Mortgage Loan remaining
in the Trust Fund (including without limitation the disposition of the
Mortgage Loans) or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan; and (iv)
the Stated Maturity Date.
The Servicer, or in the event the Servicer does not exercise its
option to terminate the Trust Fund, the Certificate Insurer, may effect an
early retirement of the Certificates by paying the retransfer price and
accepting retransfer of the Trust Assets pursuant to the terms of the
Agreement on any Distribution Date after the Investor Certificate
Principal Balance is less than or equal to 10% of the Original Investor
Certificate Principal Balance and all amounts due and owing to the
Certificate Insurer have been paid; provided, however, that in no event
shall the Trust continue beyond the expiration of 21 years from the death
of certain person named in the Agreement. Upon retirement of the
Certificates in accordance with Section 10.01 of the Agreement, the
Trustee shall execute such documents and instruments of transfer presented
by the Servicer or Certificate Insurer and take such other actions as the
Servicer or Certificate Insurer may reasonably request to effect the
retransfer of the Mortgage Loans to the Servicer or Certificate Insurer.
Any purported Transfer of a Transferor Certificate in violation of
the restriction on Transfer will be null and void and vest no rights to
the purported Transferee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed as of the date set forth.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
not in its individual capacity but
solely as Trustee
------------------------------
Authorized Officer
Countersigned:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
By:
--------------------------------
Authorized Officer of
Bankers Trust Company of California, N.A.,
not in its individual capacity
but solely as Trustee
EXHIBIT C
REVERSE OF INVESTOR CERTIFICATE
This Certificate is one of a duly authorized issue of Cer-
tificates designated as ML Revolving Home Equity Loan Asset Backed
Certificates, Series 199_-_ (herein called the "Certificates"), and
representing, to the extent specified in the Agreement, an undivided
interest in: (i) the Trust Balances of the Mortgage Loans and the proceeds
thereof, (ii) collections in respect of the Trust's interest in the
Mortgage Loans received on or after the Cut-off Date, (iii) an irrevocable
and unconditional limited financial guarantee insurance policy (the
"Policy"), (iii) property that secured a Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure or otherwise, (iv)
the interest of the Trust in certain hazard insurance policies covering
the Mortgaged Properties, and (v) certain other property relating to the
Mortgage Loans.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the
funds on deposit in the Certificate Account for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and
limitations of rights, benefits, obligations and duties evidenced hereby,
and the rights, duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations
of the Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon
all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency
maintained by the Certificate Registrar for such purpose, accompanied by a
written instrument of transfer in form satisfactory to the Trustee, if so
required by the Trustee, be duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized denominations, if applicable, and
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of a like tenor in
authorized denominations (in the case of the Investor Certificates) and
evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trustee, the Transferor, the Servicer, the Certificate
Insurer and the Certificate Registrar and any agent of the foregoing may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Transferor, the
Servicer, the Certificate Insurer, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment
in full of all amounts owing to the Certificate Insurer and (B) the
earliest of: (i) the retransfer to the Servicer of the Investor
Certificateholders' interest in each Mortgage Loan and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund for
an amount equal to the sum of (a) the Certificate Principal Balance, (b)
accrued and unpaid Certificate Formula Interest through the day preceding
the final Distribution Date, (c) any Unpaid Certificate Interest
Shortfall, and (d) any accrued and unpaid Investor Loss Reduction Amounts
through the day preceding such final Distribution Date; (ii) the day
following the Distribution Date on which the distribution made to Investor
Certificateholders has reduced the Certificate Principal Balance to zero;
(iii) the final payment or other liquidation (or any Monthly Advance with
respect thereto) of the Trust Balance of the last Mortgage Loan remaining
in the Trust Fund (including without limitation the disposition of the
Mortgage Loans) or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan; and (iv)
the Stated Maturity Date.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
___________________
___________________
---------------------------------------------------------------
(Please Print or Typewrite Name and Address of Assignee)
---------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby
does irrevocably constitute and appoint
Attorney
-------------------------------------------------------
to transfer the within Certificate on the books kept for the
registration thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty)
----------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any
change whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406
of the Code.)
EXHIBIT D
REVERSE OF TRANSFEROR CERTIFICATE
This Certificate is one of a duly authorized issue of Cer-
tificates designated as ML Revolving Home Equity Loan Asset Backed
Certificates, Series 199_-_ (herein called the "Certificates"), and
representing, to the extent specified in the Agreement, an undivided
interest in: (i) the Trust Balances of the Mortgage Loans and the proceeds
thereof, (ii) collections in respect of the Trust's interest in the
Mortgage Loans received on or after the Cut-off Date, (iii) an irrevocable
and unconditional limited financial guarantee insurance policy (the
"Policy"), (iii) property that secured a Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure or otherwise, (iv)
the interest of the Trust in certain hazard insurance policies covering
the Mortgaged Properties, and (v) certain other property relating to the
Mortgage Loans.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the
funds on deposit in the Certificate Account for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and
limitations of rights, benefits, obligations and duties evidenced hereby,
and the rights, duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations
of the Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon
all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency
maintained by the Certificate Registrar for such purpose, accompanied by a
written instrument of transfer in form satisfactory to the Trustee, if so
required by the Trustee, be duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized denominations, if applicable, and
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of a like tenor in
authorized denominations (in the case of the Investor Certificates) and
evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trustee, the Transferor, the Servicer, the Certificate
Insurer and the Certificate Registrar and any agent of the foregoing may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Transferor, the
Servicer, the Certificate Insurer, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment
in full of all amounts owing to the Certificate Insurer and (B) the
earliest of: (i) the retransfer to the Servicer of the Investor
Certificateholders' interest in each Mortgage Loan and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund for
an amount equal to the sum of (a) the Certificate Principal Balance, (b)
accrued and unpaid Certificate Formula Interest through the day preceding
the final Distribution Date, (c) any Unpaid Certificate Interest
Shortfall, and (d) any accrued and unpaid Investor Loss Reduction Amounts
through the day preceding such final Distribution Date; (ii) the day
following the Distribution Date on which the distribution made to Investor
Certificateholders has reduced the Certificate Principal Balance to zero;
(iii) the final payment or other liquidation (or any Monthly Advance with
respect thereto) of the Trust Balance of the last Mortgage Loan remaining
in the Trust Fund (including without limitation the disposition of the
Mortgage Loans) or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan; and (iv)
the Stated Maturity Date.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
___________________
___________________
---------------------------------------------------------------
(Please Print or Typewrite Name and Address of Assignee)
---------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby
does irrevocably constitute and appoint
Attorney
-------------------------------------------------------
to transfer the within Certificate on the books kept for the
registration thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty)
----------------------------
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Certificate in
every particular, without alteration or
enlargement or any change whatever.
(*This information, which is voluntary, is being requested to ensure that
the assignee will not be subject to backup withholding under Section 3406
of the Code.)
EXHIBIT E
(FORM OF NOTICE FOR CERTIFICATE
INSURANCE POLICY)
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
--------------------------------------------
Policy No. AB0088BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: ( )
AMBAC INDEMNITY CORPORATION
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
AB0088BE (the "Policy") issued by AMBAC Indemnity Corporation ("AMBAC").
Terms capitalized herein and not otherwise defined shall have the meanings
specified in the Policy unless the context otherwise requires.
The Trustee hereby certifies as follows:
1. The Trustee is the Trustee under the Agreement for the Holders;
2. The relevant Distribution Date is (date);
3. Payment on the Certificates in respect of the Distribution Date
was due to be received on ______ under the Agreement, in an
amount equal to $________;
4. There is a Non-Payment of an Insured Amount of $________, of
which $___________ represent amounts described in clauses (a)
and (b), or (y), as the case may be, of the definition thereof.
(5. The Trustee has designated $________ as Preference Amounts in
respect of ________ Distribution Dates; such amount is therefore
also due and owing pursuant to the terms of the Agreement as a
portion of the Insured Amount);
6. The Trustee has not heretofore made a demand for the Insured
Amount in respect of the Distribution Date;
7. The Trustee hereby requests the payment of the Insured Amount be
made by AMBAC under the Policy and directs that payment under
the Policy be made to the following account by bank wire
transfer of federal or other immediately available funds in
accordance with the terms of the Policy to:
___________________ Trustee's account number
8. The Trustee hereby agrees that, following receipt of the Insured
Amount from AMBAC, it shall (a) hold such amounts in trust and
apply the same directly to the distribution payment on the
Certificates when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by
the Trustee; and (d) maintain an accurate record of such
payments with respect to each Certificate and the corresponding
claim on the Policy and proceeds thereof.
By: Trustee
--------------------------
Title:
--------------------------
(Officer)
EXHIBIT F
---------
MORTGAGE LOAN SCHEDULE
A COPY ON ELECTRONIC MEDIUM (FLOPPY DISKETTE) OF THE MORTGAGE LOAN
SCHEDULE HAS BEEN FORWARDED TO THE TRUSTEE FOR THEIR FILES. A COPY OF THE
MORTGAGE LOAN SCHEDULE MAY BE OBTAINED FROM THE TRUSTEE.
