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): December 9, 1997
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)
333-14253 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 December 9, 1997 MLCC Mortgage Investors, Inc. (the "Seller")
entered into a Pooling and Servicing Agreement dated as of November 1, 1997
(the "Pooling and Servicing Agreement"), by and among the Depositor, as
depositor, Merrill Lynch Credit Corporation, as master servicer, and Bankers
Trust Company of California, N.A., as trustee (the "Trustee"). The Pooling
and Servicing Agreement is annexed hereto as Exhibit 99.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
The following is filed herewith. The exhibit number
corresponds with Item 601(b) of Regulation S-K.
Exhibit No. Description
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99 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
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Laurel A. Davis
Its: Vice President and
Assistant Secretary
Dated: December 19, 1997
EXHIBIT INDEX
Exhibit No. Page
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99 6
Execution Copy
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MLCC MORTGAGE INVESTORS, INC.,
COMPANY,
MERRILL LYNCH CREDIT CORPORATION,
MASTER SERVICER,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1997
$312,781,441
Mortgage Loan Asset Backed Pass-Through Certificates
Series 1997-B
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . . . 30
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . 31
Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . 34
Section 2.03. Sale and Conveyance of the Subsequent Mortgage Loans . . . 35
Section 2.04. Trust Fund; Authentication of Certificates . . . . . . . . 39
Section 2.05. REMIC Elections . . . . . . . . . . . . . . . . . . . . . 39
Section 2.06. REMIC Tax Matters . . . . . . . . . . . . . . . . . . . . 39
Section 2.07. REMIC Certificate Maturity Date . . . . . . . . . . . . . 40
Section 2.08. Lower-Tier REMIC . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE MASTER
SERVICER; REPURCHASE OF MORTGAGE LOANS;
REPRESENTATION AND WARRANTY OF THE COMPANY
Section 3.01. Representations and Warranties of the Master Servicer . . 41
Section 3.02. Option to Substitute . . . . . . . . . . . . . . . . . . . 52
Section 3.03. Representation and Warranty of the Company . . . . . . . . 53
Section 3.04. Index Convertible Mortgage Loans and Convertible Mortgage
Loans; Certain Procedures and Purchases . . . . . . . . . . 53
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates . . . . . . . . . . . . . . . . . . . . . 56
Section 4.02. Registration of Transfer and Exchange of Certificates . . 57
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 61
Section 4.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 62
Section 4.05. Appointment of Paying Agent . . . . . . . . . . . . . . . 62
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01. Master Servicer to Service Mortgage Loans . . . . . . . . 63
Section 5.02. Sub-Servicing Agreements Between Master Servicer and Sub-
Servicers; Enforcement of Sub-Servicer's
Obligations . . . . . . . . . . . . . . . . . . . . . 64
Section 5.03. Successor Sub-Servicers . . . . . . . . . . . . . . . . . 65
Section 5.04. Liability of the Master Servicer . . . . . . . . . . . . . 65
Section 5.05. No Contractual Relationship Between Sub- Servicer and
Trustee, the Certificateholders, the Certificate
Insurer or the Surety . . . . . . . . . . . . . . . . 66
Section 5.06. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.07. Collection of Mortgage Loan Payments . . . . . . . . . . . 66
Section 5.08. Establishment of Certificate Account; Deposits in
Certificate Account . . . . . . . . . . . . . . . . . 67
Section 5.09. Permitted Withdrawals from the Certificate Account . . . . 69
Section 5.10. Establishment of Escrow Account; Deposits in Escrow
Account . . . . . . . . . . . . . . . . . . . . . . . 70
Section 5.11. Permitted Withdrawals from Escrow Account . . . . . . . . 71
Section 5.12. Payment of Taxes, Insurance and Other Charges . . . . . . 71
Section 5.13. Transfer of Accounts . . . . . . . . . . . . . . . . . . . 72
Section 5.14. Establishment of Pre-Funding Account; Permitted
Withdrawals . . . . . . . . . . . . . . . . . . . . . 72
Section 5.15. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 5.16. Maintenance of Standard Hazard Policies . . . . . . . . . 73
Section 5.17. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 5.18. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 5.19. Fidelity Bond and Errors and Omissions Insurance . . . . . 74
Section 5.20. Collections under Insurance Policies; Enforcement of Due-
on-Sale Clauses; Assumption Agreements . . . . . . . 74
Section 5.21. Income and Realization from Defaulted Mortgage Loans . . . 76
Section 5.22. Custodian and Trustee to Cooperate; Release of Mortgage
Files . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 5.23. Servicing and Other Compensation . . . . . . . . . . . . . 78
Section 5.24. File Review Rights of the Certificate Insurer and the
Surety . . . . . . . . . . . . . . . . . . . . . . . 78
Section 5.25. Annual Statement as to Compliance . . . . . . . . . . . . 79
Section 5.26. Annual Independent Public Accountants' Servicing Report . 79
Section 5.27. Access to Certain Documentation; Rights of the Company in
Respect of the Master Servicer . . . . . . . . . . . 79
Section 5.28. REMIC-Related Covenants . . . . . . . . . . . . . . . . . 80
Section 5.29. Prohibited Transactions and Other Taxes . . . . . . . . . 81
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions . . . . . . . . . . . . . . . . . . . . . . 83
Section 6.02. Statements to the Certificateholders . . . . . . . . . . . 86
Section 6.03. Advances by the Master Servicer . . . . . . . . . . . . . 88
Section 6.04. The Certificate Insurance Policy . . . . . . . . . . . . . 90
Section 6.05. The Certificate Guaranty Surety Bond . . . . . . . . . . . 91
ARTICLE VII
REPORTS TO BE PREPARED BY MASTER SERVICER
Section 7.01. Master Servicer Shall Provide Information as Reasonably
Required . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.02. Federal Information Returns and Reports to
Certificateholders . . . . . . . . . . . . . . . . . 92
ARTICLE VIII
THE COMPANY AND THE MASTER SERVICER
Section 8.01. Indemnification; Third Party Claims . . . . . . . . . . . 94
Section 8.02. Merger or Consolidation of the Company or the Master
Servicer; Status of Master Servicer . . . . . . . . . 95
Section 8.03. Limitation on Liability of the Company, the Master
Servicer, the Trustee and Others . . . . . . . . . . 95
Section 8.04. Company and Master Servicer Not to Resign . . . . . . . . 96
Section 8.05. Successor to the Master Servicer . . . . . . . . . . . . . 97
Section 8.06. Maintenance of Ratings . . . . . . . . . . . . . . . . . . 98
ARTICLE IX
DEFAULT
Section 9.01. Events of Default . . . . . . . . . . . . . . . . . . . . 99
Section 9.02. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . 100
Section 9.03. Trustee or Company to Act; Appointment of Successor . . . 101
Section 9.04. Notification to Certificateholders . . . . . . . . . . . . 101
ARTICLE X
CONCERNING THE TRUSTEE
Section 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 102
Section 10.02. Certain Matters Affecting the Trustee . . . . . . . . . . 103
Section 10.03. Trustee Not Liable for Certificates or Mortgage Loans . . 104
Section 10.04. Trustee May Own Certificates . . . . . . . . . . . . . . . 104
Section 10.05. Master Servicer to Pay Trustee's Fees and Expenses . . . . 104
Section 10.06. Eligibility Requirements for Trustee . . . . . . . . . . . 104
Section 10.07. Resignation and Removal of the Trustee . . . . . . . . . . 105
Section 10.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . 106
Section 10.09. Merger or Consolidation of Trustee . . . . . . . . . . . . 106
Section 10.10. Appointment of Co-Trustee or Separate Trustee . . . . . . 107
Section 10.11. Appointment of Office or Agency . . . . . . . . . . . . . 108
ARTICLE XI
TERMINATION
Section 11.01. Termination . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.02. Additional Termination Requirements . . . . . . . . . . . 110
Section 11.03. Termination By Certificate Insurer or Surety . . . . . . . 111
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Severability of Provisions . . . . . . . . . . . . . . . . 112
Section 12.02. Limitation on Rights of Certificateholders . . . . . . . . 112
Section 12.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 12.04. The Certificate Insurer; Surety. . . . . . . . . . . . . . 114
Section 12.05. Recordation of Agreement; Counterparts. . . . . . . . . . 114
Section 12.06. Duration of Agreement . . . . . . . . . . . . . . . . . . 115
Section 12.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . 115
Section 12.08. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 115
EXHIBITS
A. Mortgage Loan Schedule A-1
B. Contents of Mortgage File B-1
C. Form of Class A Certificates C-1
D. Form of Class B Certificates D-1
E. Form of Class C Certificates E-1
F. Form of Class R Certificate F-1
G. (Reserved) G-1
H. Certificate Account Certification H-1
I. (Reserved) I-1
J. Distribution Account Certification J-1
K. Form of Subsequent Transfer Agreement K-1
L. Form of Investment Letter L-1
M. Form of Transfer Affidavit M-1
N. ERISA Representation Letter N-1
O. (Reserved) O-1
P. Sale Agreement P-1
Q. Form of Notice for Certificate Insurance Policy Q-1
R. Form of Notice for Certificate Guaranty Surety Bond R-1
This Pooling and Servicing Agreement, dated as of November 1, 1997, is
executed among MLCC Mortgage Investors, Inc., as seller (together with its
permitted successors and assigns, the "Company"), Merrill Lynch Credit
Corporation, as master servicer (together with its permitted successors and
assigns, the "Master Servicer"), and Bankers Trust Company of California,
N.A., as trustee (together with its permitted successors and assigns, the
"Trustee").
In consideration of the premises and the mutual agreements hereinafter
set forth, the Company, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.01. Definitions. Whenever used herein, the following words
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and phrases, unless the context otherwise requires, shall have the following
meanings:
ACCRUAL PERIOD: As to any Distribution Date other than the First
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Distribution Date, the actual number of days included in the period beginning
on the preceding Distribution Date and ending on the day preceding such
Distribution Date. In the case of the First Distribution Date, the actual
number of days included in the period beginning on November 17, 1997 and
ending on the day preceding the First Distribution Date.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage
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Loans to the Trustee pursuant to Section 2.03 hereof and the related
Subsequent Transfer Agreement, a notice, which the Master Servicer shall give
to the Trustee and the Certificate Insurer not later than three Business Days
prior to the related Subsequent Transfer Date, of (a) the Company's
designation of Subsequent Mortgage Loans to be conveyed to the Trustee, on
behalf of and for inclusion in the Trust Fund, and (b) the aggregate
Principal Balance of such Subsequent Mortgage Loans as of the related
Subsequent Cut-off Date.
ADDITIONAL COLLATERAL: (i) With respect to any Mortgage 100(Service
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Mark) Loan, the marketable securities subject to a security interest pursuant
to the related Mortgage 100(Service Mark) Pledge Agreement, or (ii) with
respect to any Parent Power(Registered Trademark) Mortgage Loan, the related
Parent Power(Registered Trademark) Agreement.
ADDITIONAL COLLATERAL MORTGAGE LOAN: Each Mortgage Loan that is either
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a Mortgage 100(Service Mark) Loan or Parent Power(Registered Trademark)
Mortgage Loan as to which the Additional Collateral is still required to be
provided as set forth in the related Mortgage 100(Service Mark) Pledge
Agreement or Parent Power(Registered Trademark) Agreement.
ADDITIONAL COLLATERAL MORTGAGE LOAN LIQUIDATION SHORTFALL: The amount,
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if any, by which the then outstanding principal balance of a defaulted
Additional Collateral Mortgage Loan exceeds the Liquidation Proceeds
(including those from the related Additional Collateral) allocable to
principal realized with respect to such Mortgage Loan.
ADVANCE: The aggregate of the advances made by the Master Servicer or
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the Trustee with respect to a particular Distribution Date pursuant to
Section 6.03.
ADVANCE DEPOSIT DATE: As to any Distribution Date, the Business Day
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preceding such Distribution Date.
AFFILIATE: With respect to any Person, any other Person controlling,
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controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies
of a Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise, and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
AGGREGATE NET PRINCIPAL LIQUIDATION LOSSES: With respect to each
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Distribution Date, the amount, if any, by which (a) the aggregate of the
outstanding principal balances of those Mortgage Loans that became Liquidated
Mortgage Loans during the month ending prior to the month of such
Distribution Date exceeds (b) the aggregate Net Liquidation Proceeds for such
Mortgage Loans that are allocable to principal in accordance with the terms
thereof.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
---------
hereof and exhibits and supplements hereto.
ALTERNATE CERTIFICATE RATE: As to any Distribution Date, the weighted
--------------------------
average of the Net Mortgage Rates of all Mortgage Loans applicable as of the
Due Date of the month preceding the month of such Distribution Date, weighted
on the basis of their outstanding Principal Balances (after giving effect to
the Monthly Payments due on or before such Due Date and Principal Prepayments
received prior to such Due Date) at such time.
APPRAISED VALUE: As to any Mortgaged Property and any time referred to
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herein, the appraised value of such Mortgaged Property based upon the
appraisal made by or on behalf of the Mortgage Loan Seller or the Master
Servicer at such time.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of
----------------------
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction where the related Mortgaged Property is located to
reflect of record the sale and
assignment of the Mortgage Loan to the Trustee, which assignment, notice of
transfer or equivalent instrument may, if permitted by law, be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county.
AVAILABLE DISTRIBUTION AMOUNT: With respect to any Distribution Date,
-----------------------------
an amount equal to the amount on deposit in the Certificate Account as of the
close of business on the related Determination Date, plus Advances and other
amounts deposited to the Distribution Account pursuant to Section 6.03,
except:
(a) previously unreimbursed amounts received on particular
Mortgage Loans as late payments or other recoveries of principal or
interest (including Liquidation Proceeds, Insurance Proceeds and
condemnation awards) that were part of a prior Advance;
(b) amounts representing the reimbursement for Nonrecoverable
Advances and other amounts (including the Servicing Fee and the
Correspondent Trailing Premium, if any) permitted to be withdrawn by the
Master Servicer from, or not required to be deposited in, the
Certificate Account pursuant to Section 5.09;
(c) amounts representing all or part of a Monthly Payment due
after the immediately preceding Due Date;
(d) all Repurchase Proceeds, Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds and condemnation awards with respect to the
Mortgage Loans received after the related Principal Prepayment Period,
and all related payments of interest representing interest for any
period of time after the last day of the related Due Period for such
Mortgage Loans; and
(e) all income from Eligible Investments held in the Certificate
Account for the account of the Master Servicer.
BOOK-ENTRY CERTIFICATE: Any Class A 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 (a) a Saturday or Sunday, or (b) a
------------
legal holiday in the State of Florida or the State of New York, or (c) a day
on which banking or savings and loan institutions in the State of Florida,
the State of New York or the State in which the Corporate Trust Office is
located are authorized or obligated by law or executive order to be closed.
CERTIFICATE: Any Class A, Class B, Class C or Class R Certificate.
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CERTIFICATE ACCOUNT: The account created and maintained pursuant to
-------------------
Section 5.08.
CERTIFICATE GUARANTY SURETY BOND: The Limited Purpose Surety Bond No.
--------------------------------
AB0039BE dated February 28, 1996 issued by the Surety.
CERTIFICATEHOLDER or HOLDER: The person in whose name a Certificate is
----------------- ------
registered in the Certificate Register, except that, solely for the purposes
of giving any consent, waiver, request or demand pursuant to this Agreement,
any Certificate registered in the name of the Company, the Master Servicer,
any Sub-Servicer, or any of their respective Affiliates shall be deemed not
to be outstanding and the undivided 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, waiver, request
or demand has been obtained, unless such Person owns the entire Class of
which such Certificate is a part. The Trustee shall be provided with an
Officer's Certificate by the Company, the Master Servicer or any Sub-Servicer
if any Certificate is owned by any Affiliate thereof and shall be entitled to
conclusively rely upon the certificate of the Company or the Master Servicer
or any Sub-Servicer as to the determination of the aggregate Percentage
Interests evidenced by Certificates registered to the Company, the Master
Servicer, any Sub-Servicer or their Affiliates.
CERTIFICATE INSURANCE POLICY: The certificate guaranty insurance policy
----------------------------
dated the Closing Date issued by the Certificate Insurer to the Trustee for
the benefit of the Holders of the Class A Certificates.
CERTIFICATE INSURER: Ambac Assurance Corporation, or any successor
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thereto, as issuer of the Certificate Insurance Policy.
CERTIFICATE OWNER: With respect to a Class A Certificate that is a
-----------------
Book-Entry Certificate, the person who is the beneficial owner of a Book-
Entry Certificate.
CERTIFICATE REGISTER: The register maintained pursuant to Section 4.02.
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CLASS: All Certificates bearing the same class designation.
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CLASS A, CLASS B, CLASS C or CLASS R: Pertaining to Class A, Class B,
------------------------------------
Class C or Class R Certificates, as the case may be.
CLASS A CERTIFICATE: Any one of the Certificates designated as a Class
-------------------
A Certificate substantially in the form set forth in Exhibit C hereto and
executed by the Company and authenticated by the Trustee.
CLASS A DISTRIBUTION AMOUNT: As to any Distribution Date, the aggregate
---------------------------
amount distributed on the Class A Certificates pursuant to Section 6.01.
CLASS A FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
---------------------------------------------
Distribution Date, the sum of (i) the Class A Percentage of the Scheduled
Formula Principal Distribution Amount and (ii) the Class A Prepayment
Percentage of the Unscheduled Formula Principal Distribution Amount.
CLASS A INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
--------------------------------------------
Date, an amount equal to the sum of (a) interest for the related Accrual
Period at the Class A Pass-Through Rate on the Class A Principal Balance as
of such Distribution Date (before giving effect to the distribution on such
Distribution Date), net of Net Interest Shortfall, if any, allocated to the
Class A Certificates pursuant to Section 6.01 in respect of such Distribution
Date, and (b) any Class A Unpaid Interest Shortfall for such Distribution
Date.
CLASS A INTEREST SHORTFALL: As to any Distribution Date, the amount
--------------------------
equal to (a) the Class A Interest Formula Distribution Amount for such
Distribution Date less (b) the amount of interest distributed to the Class A
Certificateholders on such Distribution Date.
CLASS A PASS-THROUGH RATE: As to any Distribution Date, the per annum
-------------------------
rate equal to the lesser of (i) LIBOR plus 0.28% (or, as to any Distribution
Date occurring at least 120 days after the first Distribution Date in respect
of which the option to purchase the Mortgage Loans in Section 11.01(a) may
first be exercised, LIBOR plus 0.68%) and (ii) the Alternate Certificate
Rate.
CLASS A PERCENTAGE: As to any Distribution Date, the percentage (which
-------------------
shall in no event be greater than 100%) derived from dividing the Class A
Principal Balance (before giving effect to the distributions for such
Distribution Date) by the Pool Principal Balance (before giving effect to the
Formula Principal Distribution Amount for such Distribution Date).
CLASS A PREPAYMENT PERCENTAGE: The Class A Prepayment Percentage for
-----------------------------
a Distribution Date on or before the Distribution Date in November 2007 will
be 100%. The Class A Prepayment Percentage for a Distribution Date after the
Distribution Date in November 2007 will be as follows: for any Distribution
Date subsequent to December 2007 to and including the Distribution Date in
November 2008, the Class A Percentage for such
Distribution Date plus 70% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date subsequent to November 2008 to
and including the Distribution Date in November 2009, the Class A Percentage
for such Distribution Date plus 60% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date subsequent to November 2009 to
and including the Distribution Date in November 2010, the Class A Percentage
for such Distribution Date plus 40% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date subsequent to November 2010 to
and including the Distribution Date in November 2011, the Class A Percentage
for such Distribution Date plus 20% of the Subordinated Percentage for such
Distribution Date; for any Distribution Date thereafter, the Class A
Percentage for such Distribution Date (unless on any of the foregoing
Distribution Dates the Class A Percentage exceeds the initial Class A
Percentage, in which case the Class A Prepayment Percentage for such
Distribution Date will once again be 100%).
Notwithstanding the foregoing, a decrease in the Class A Prepayment
Percentage provided for in the preceding paragraph will not occur if, as of
the first Distribution Date to which such decrease would apply in accordance
with the preceding paragraph, the following criteria are not satisfied: (a)
cumulative Unrecovered Principal Amounts shall not exceed (1) if such
Distribution Date is in the period after November 2007 to and including
November 2008, 35% of the Original Class B Principal Balance, (2) if such
Distribution Date is in the period after November 2008 to and including
November 2009, 40% of the Original Class B Principal Balance, (3) if such
Distribution Date is in the period after November 2009 to and including
November 2010, 45% of the Original Class B Principal Balance and (4) if such
Distribution Date is in the period after November 2010 to and including
November 2011, 50% of the Original Class B Principal Balance; and (b) over
the prior three months, the average aggregate outstanding Principal Balance
of the Mortgage Loans delinquent 60 days or more (including for this purpose
any Mortgage Loans in foreclosure and Mortgage Loans with respect to which
the related Mortgaged Property has been acquired by the Trust Fund) has not
exceeded 3.00% of the average aggregate outstanding Principal Balance of all
Mortgage Loans for such period.
Notwithstanding the foregoing, if on any Distribution Date (i) the
Current Subordination Level equals at least twice the Original Subordination
Level, (ii) cumulative Unrecovered Principal Amounts with respect to the
Mortgage Loans have not exceeded (1) if such Distribution Date is on or
before the fifth anniversary of the First Distribution Date, 35% of the
Original Class B Principal Balance, (2) if such Distribution Date is after
the fifth but on or before the sixth anniversary of the First Distribution
Date, 40% of the Original Class B Principal Balance, (3) if such Distribution
Date is after the sixth but on or before the seventh anniversary date of the
First Distribution Date, 45% of the Original Class B Principal Balance and
(4) if such Distribution Date is after the seventh anniversary date of the
First Distribution Date, 50% of the Original Class B Principal Balance; and
(iii) over the prior three months, the average aggregate outstanding
Principal Balance of the Mortgage
Loans delinquent 60 days or more (including for this purpose any Mortgage
Loans in foreclosure and Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust Fund) has not exceeded
3.00% of the average aggregate outstanding Principal Balance of all Mortgage
Loans for such period, then the Class A Prepayment Percentage for such
Distribution Date will be as follows: (A) as to any Distribution Date prior
to the third anniversary of the First Distribution Date, the Class A
Percentage for such Distribution Date plus 50% of the Subordinated Percentage
for such Distribution Date; and (B) as to any Distribution Date thereafter,
the Class A Percentage for such Distribution Date.
CLASS A PRINCIPAL BALANCE: At any time, the Original Class A Principal
-------------------------
Balance minus the sum of all amounts previously distributed to the Class A
Certificateholders on account of principal pursuant to Section 6.01.
CLASS A UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
---------------------------------
amount of the Class A Interest Shortfall for the immediately preceding
Distribution Date.
CLASS B CERTIFICATE: Any one of the Certificates designated as a Class
-------------------
B Certificate substantially in the form set forth in Exhibit D hereto and
executed by the Company and authenticated by the Trustee.
CLASS B FORMULA PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution
---------------------------------------------
Date, the sum of (i) the Subordinated Percentage of the Scheduled Formula
Principal Amount and (ii) the Subordinated Prepayment Percentage of the
Unscheduled Formula Principal Distribution Amount.
CLASS B INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
--------------------------------------------
Date, an amount equal to the sum of (a) interest for the related Accrual
Period at the Class B Pass-Through Rate on the Class B Principal Balance as
of such Distribution Date (before giving effect to the distribution on such
Distribution Date), net of Net Interest Shortfall, if any, allocated to the
Class B Certificates pursuant to Section 6.01 in respect of such Distribution
Date, and (b) any Class B Unpaid Interest Shortfall for such Distribution
Date.
CLASS B INTEREST SHORTFALL: As to any Distribution Date, the amount
--------------------------
equal to (a) the Class B Interest Formula Distribution Amount for such
Distribution Date less (b) the amount of interest distributed to the Class B
Certificateholders on such Distribution Date pursuant to Section 6.01(a)(v).
CLASS B LOSS AMOUNT: As to any Distribution Date, the lesser of (x),
-------------------
the amount, if any, by which (A) the sum of (i) the Formula Principal
Distribution Amount for such Distribution Date and (ii) the aggregate of the
Unrecovered Principal Amounts, if any,
for such Distribution Date exceeds (B) the portion of the Available
Distribution Amount distributed on account of principal on such Distribution
Date and (y) the Class B Principal Balance after giving effect to any amount
distributed on account of principal to the Class B Certificateholders on such
Distribution Date.
CLASS B LOSS AMOUNT INTEREST REQUIREMENT: As to any Distribution Date,
----------------------------------------
the amount, if any, equal to the sum of (a) interest for the related Accrual
Period at the Class B Pass-Through Rate on any Class B Loss Amount for the
immediately preceding Distribution Date, (b) interest for the related Accrual
Period at the Class B Pass-Through Rate on any Class B Loss Amount Unpaid
Interest Shortfall for such Distribution Date (to the extent legally
permitted), and (c) any Class B Loss Amount Unpaid Interest Shortfall for
such Distribution Date.
CLASS B LOSS AMOUNT INTEREST SHORTFALL: As to any Distribution Date,
--------------------------------------
the amount, if any, equal to (a) the Class B Loss Amount Interest Requirement
for such Distribution Date less (b) the amount of interest distributed to the
Class B Certificateholders on such Distribution Date in respect of the Class
B Loss Amount Interest Requirement.
CLASS B LOSS AMOUNT UNPAID INTEREST SHORTFALL: As to any Distribution
---------------------------------------------
Date, the amount of the Class B Loss Amount Interest Shortfall for the
immediately preceding Distribution Date.
CLASS B PASS-THROUGH RATE: As to any Distribution Date, LIBOR plus
-------------------------
1.25%; provided, however, that in the event that the Alternate Certificate
Rate is less than LIBOR plus 1.25%, the Class B Pass-Through Rate for such
Distribution Date shall be the Alternate Certificate Rate.
CLASS B PRINCIPAL BALANCE: At any time, the Original Class B Principal
-------------------------
Balance minus (i) the sum of all amounts previously distributed to the Class
B Certificateholders pursuant to Section 6.01 on account of principal and
(ii) the sum of all Class B Loss Amounts, if any, for prior Distribution
Dates; provided that the Class B Principal Balance shall not be less than
zero.
CLASS B UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
---------------------------------
amount of the Class B Interest Shortfall for the immediately preceding
Distribution Date.
CLASS C CERTIFICATE: Any one of the Certificates designated as a Class
-------------------
C Certificate substantially in the form set forth in Exhibit E hereto and
executed by the Company and authenticated by the Trustee.
CLASS C INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
--------------------------------------------
Date, an amount equal to the lesser of (i) the Formula Excess Interest Amount
and (ii) the sum of (a) the Component C-1 Current Interest, (b) the Component
C-2 Current Interest, and (c) any Class C Unpaid Interest Shortfall for such
Distribution Date, in both cases reduced by any amounts distributed to either
or both the Class A and Class B Certificateholders pursuant to Sections
6.01(a)(iv) (but only to the extent of that portion, if any, of the
Reimbursement Amount representing interest at the Late Penalty Rate),
6.01(a)(vi), Section 6.01(a)(vii) and/or 6.01(a)(ix) on such Distribution
Date.
CLASS C INTEREST SHORTFALL: As to any Distribution Date, the amount
--------------------------
equal to (a) the Class C Interest Formula Distribution Amount for such
Distribution Date less (b) the amount of interest distributed to the Class C
Certificateholders on such Distribution Date.
CLASS C UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
---------------------------------
amount of the Class C Interest Shortfall for the immediately preceding
Distribution Date.
CLASS R CERTIFICATE: Any one of the Certificates executed and delivered
-------------------
by the Company and authenticated by the Trustee substantially in the form set
forth in Exhibit F.
CLASS R DISTRIBUTION AMOUNT: As to any Distribution Date, the aggregate
---------------------------
amount distributed to the Class R Certificateholder on such Distribution Date
pursuant to Section 6.01.
CLOSING DATE: December 9, 1997.
------------
CODE: The Internal Revenue Code of 1986, as amended.
----
COMPANY: MLCC Mortgage Investors, Inc., a Delaware corporation, or its
-------
successor in interest or any successor under this Agreement appointed as
herein provided.
COMPONENT C-1 CURRENT INTEREST: As to any Distribution Date, an amount
------------------------------
equal to (x) one month's interest at the Lower-Tier Pass-Through Rate on the
Lower-Tier A Principal Balance as of such Distribution Date (before giving
effect to any distributions on such Distribution Date) minus (y) one month's
interest at the Class A Pass-Through Rate on the Lower-Tier A Principal
Balance as of such Distribution Date (before giving effect to any
distributions on such Distribution Date), in both cases net of their
applicable portion of the Net Interest Shortfall, if any, allocated to the
Class C Certificates pursuant to Section 6.01 in respect of such Distribution
Date.
COMPONENT C-2 CURRENT INTEREST: As to any Distribution Date, an amount
------------------------------
equal to (x) one month's interest at the Lower-Tier Pass-Through Rate on the
Lower-Tier B Principal Balance as of such Distribution Date (before giving
effect to any distributions on such Distribution Date) minus (y) one month's
interest at the Class B Pass-Through Rate on
the Lower-Tier B Principal Balance as of such Distribution Date (before
giving effect to any distributions on such Distribution Date), in both cases
net of their applicable portion of the Net Interest Shortfall, if any,
allocated to the Class C Certificates pursuant to Section 6.01 in respect of
such Distribution Date.
CONSTRUCTIVE LOAN-TO-VALUE RATIO: The fraction, expressed as a
--------------------------------
percentage, the numerator of which is the outstanding principal amount of the
related Mortgage Loan at the time of origination thereof, less the amount of
the Original Additional Collateral Requirement, if any, and the denominator
of which is the Appraised Value of the related Mortgaged Property at such
time or, in the case of a Mortgage Loan financing the acquisition of the
Mortgaged Property, the sales price of the Mortgaged Property, if such sales
price is less than such Appraised Value.
CONVERSION PRICE: As to any Converting Mortgage Loan, an amount equal
----------------
to the outstanding principal balance of such Converting Mortgage Loan, plus
accrued and unpaid interest thereon at the applicable Mortgage Rate to the
date of conversion, less any Servicing Fee payable with respect to such
Converting Mortgage Loan.
CONVERTIBLE MORTGAGE LOAN: Any Mortgage Loan as to which the Mortgagor,
-------------------------
at its option in accordance with the terms thereof, may convert its Mortgage
Rate to either a fixed rate or to a different Index and applicable Margin
(and at the Mortgagor's election, thereafter to a fixed rate).
CONVERTING MORTGAGE LOAN: A Convertible Mortgage Loan as to which the
------------------------
Mortgagor is entitled to give and has properly given notice under the terms
thereof that such Mortgagor is exercising such Mortgagor's option to convert
the related Mortgage Rate to a fixed rate. A Mortgage Loan that converts to
a different Index is not a Converting Mortgage Loan.
CORRESPONDENT LENDER: A mortgage banking related entity from which MLCC
--------------------
purchases Mortgage Loans under its Correspondent Lending program, as such
program is more fully described in the Prospectus Supplement dated November
25, 1997.
CORRESPONDENT MORTGAGE LOAN: A Mortgage Loan originated by a
---------------------------
Correspondent Lender and included in the Trust Fund.
CORRESPONDENT TRAILING PREMIUM: With respect to a Correspondent
------------------------------
Mortgage Loan, the fee, if any, paid to a Correspondent Lender by MLCC as a
portion of the purchase price for a Correspondent Mortgage Loan, which fee
ranges from 0.125% per annum to 0.750% per annum of the annualized Principal
Balance of the applicable Correspondent Mortgage Loan. MLCC is responsible
for the payment of the Correspondent Trailing Premium, if any, and, to the
extent due, the Correspondent Trailing Premium is
paid by MLCC on a monthly basis out of the Monthly Payment it receives from
the applicable Mortgagor. MLCC pays any such fee to the Correspondent Lender
as long as the applicable Mortgage Loan remains outstanding and the Mortgagor
is current in the remittance of his or her Monthly Payment to MLCC.
CORRESPONDENT TRAILING PREMIUM RATE: With respect to a Correspondent
------------------------------------
Mortgage Loan, the per annum rate at which the related Correspondent Trailing
Premium, if applicable, is paid.
CORRESPONDING CLASSES OF CERTIFICATES: With respect to each Lower-Tier
--------------------------------------
Regular Interest, the Class or Classes of Certificates appearing opposite
such Lower-Tier Regular Interest in Section 2.08.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which
----------------------
at any particular time its corporate business with respect to this Agreement
shall be administered, which office at the date of execution of this
instrument is located at 3 Park Plaza, 16th Floor, Irvine, California 92614,
Telecopy (714) 253-7577.
CURRENT SUBORDINATION LEVEL: With respect to any Distribution Date, the
---------------------------
percentage derived from the fraction, the numerator of which is the Class B
Principal Balance (before giving effect to the distributions and the
allocation of the Class B Loss Amount for such Distribution Date) and the
denominator of which is the Pool Principal Balance (before giving effect to
the Formula Principal Distribution Amount for such Distribution Date).
CUSTODIAL AGREEMENT: The Master Custodial Agreement, dated as of April
-------------------
1, 1996 among Bankers Trust Company of California, N.A., as trustee, Merrill
Lynch Mortgage Investors, Inc., MLCC Mortgage Investors, Inc., MLCC and The
Chase Manhattan Bank, N.A., as custodian.
CUSTODIAN: The custodian under the Custodial Agreement.
---------
CUT-OFF DATE: November 1, 1997 (or the date of origination, if later).
------------
DEFINITIVE CERTIFICATES: As defined in Section 4.02(l).
-----------------------
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 Class A Certificates evidencing in the aggregate the Original Class A
Principal Balance. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code
of the State of New York.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: The fifth day (or if such fifth day is not a
------------------
Business Day, the Business Day immediately preceding such fifth day) of the
month of the related Distribution Date.
DISQUALIFIED ORGANIZATION: As defined in Section 4.02(i).
-------------------------
DISTRIBUTION ACCOUNT: The account created and maintained pursuant to
--------------------
Section 6.01(c).
DISTRIBUTION ACCOUNT SHORTFALL: With respect to any Distribution Date,
------------------------------
the sum of (a) the amount, if any, by which (x) the aggregate of the full
amounts that are due to be distributed on the Class A Certificates pursuant
to clauses (i) and (ii) of Section 6.01(a) exceeds (y) the amount of the
funds (other than the Insured Payment made in respect of such Distribution
Date) that will be on deposit in the Distribution Account in respect of such
Distribution Date and then available to be distributed on the Class A
Certificates, after taking into account all deposits required to be made to
the Distribution Account on or prior to such Distribution Date, including
without limitation all Advances, funds to be transferred from the Pre-Funding
Earnings, the amount deposited by the Company pursuant to the last paragraph
of Section 6.01(a) and payments under the Certificate Guaranty Surety Bond,
and (b) on the third Distribution Date succeeding the month in which there
occurs the latest original scheduled maturity date of any Mortgage Loan that
was an Outstanding Mortgage Loan at any time during such month, the amount,
if any, necessary to reduce the Class A Principal Balance to zero (after
giving effect to all other distributions of principal to be made on such
Distribution Date in respect of the Class A Certificates), without deduction,
in the case of either of the foregoing clauses (a) or (b), of any amounts
required to be withheld that are attributable to the liability of the Trust
Fund or the Trustee for withholding taxes (including, without limitation,
interest and penalties in respect thereof).
DISTRIBUTION DATE: The 15th day of any month, or if such 15th day is
-----------------
not a Business Day, the first Business Day immediately following, beginning
with the First Distribution Date.
DUE DATE: As to any Distribution Date, the first day of the month of
--------
such Distribution Date, which is the day on which each Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to any Distribution Date, the calendar month
----------
preceding the month of such Distribution Date.
ELIGIBLE ACCOUNT: An account that is (i) maintained with a federal or
----------------
state chartered depository institution the short-term unsecured debt
obligations of which have been rated by each Rating Agency in its highest
short-term rating category at the time of the deposit therein, or (ii) a
trust account maintained with the corporate trust department of a depository
institution, which institution is acting in its fiduciary capacity, or (iii)
an account or accounts the deposits in which are fully insured by the FDIC,
or (iv) an account or accounts in a depository institution in which such
accounts are insured by the FDIC (to the limits established by the FDIC), the
uninsured deposits in which accounts are otherwise either (a) secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and
acceptable to the Rating Agencies, the Certificateholders have a claim with
respect to the funds in such account and a perfected first security interest
against any collateral and the proceeds thereof (which shall be limited to
Eligible Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution with which such
account is maintained or (b) swept at the end of each Business Day into
either (1) Eligible Investments in the name of the Trustee so that the amount
remaining in such account (after giving effect to such sweep) is fully
insured by the FDIC or (2) an account that satisfies clause (ii) above, (v)
maintained with Bankers Trust Company of California, N.A. so long as its
short-term unsecured debt obligations have been rated P-1 by Moody's and A-1
by Standard & Poor's at the time of the deposit therein, or (vi) otherwise
acceptable to each Rating Agency without reduction or withdrawal of each
rating of the Class A Certificates, as evidenced by a letter from each Rating
Agency.
ELIGIBLE INVESTMENTS: One or more of the following:
--------------------
(a) obligations of, or guaranteed as to principal and interest by,
the United States or obligations of any agency or instrumentality
thereof when such obligations are backed by the full faith and credit of
the United States;
(b) repurchase agreements (including those in which the purchased
securities are held by a third-party custodian) on obligations specified
in clause (a) maturing not later than the day prior to the Distribution
Date on which such amounts are to be distributed, provided that the
long-term unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating Agency in one of its
two highest rating categories and the short-term debt obligations of the
party agreeing to repurchase shall be rated P-1 by Moody's and A-1+ by
Standard & Poor's;
(c) certificates of deposit, time deposits, demand deposits and
bankers' acceptances (which 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 United
States depository institution or trust company
incorporated under the laws of the United States or any state, provided
that the long-term unsecured debt obligations of such depository
institution or trust company at the date of acquisition thereof have
been rated by each Rating Agency in one of its two highest rating
categories and the short-term obligations of such depository institution
or trust company shall be rated P-1 by Moody's and A-1+ by Standard &
Poor's;
(d) commercial paper (having original maturities of not more than
365 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 Moody's and Standard & Poor's in its highest short-term rating
(which is P-1 in the case of Moody's and A-1+ in the case of Standard &
Poor's); provided that such commercial paper shall mature no later than
the day prior to the Distribution Date on which such amounts are to be
distributed;
(e) money market funds with the highest long-term rating assigned
by the Rating Agencies; and
(f) other obligations or securities that are "permitted
investments" within the meaning of Section 860(G)(a)(5) of the Code,
based upon an Opinion of Counsel delivered to the Trustee, the
Certificate Insurer and the Surety, and acceptable to each Rating
Agency, the Certificate Insurer and the Surety as an Eligible Investment
hereunder and will not result in a reduction or withdrawal of the then
current rating of the Class A Certificates, as evidenced by a letter to
such effect from each Rating Agency;
provided that, except in the case of U.S. Treasury STRIPS, no instrument
shall be an Eligible Investment if such instrument evidences either (a) a
right to receive only interest payments with respect to the obligation
underlying such instrument, or (b) a right to receive both principal and
interest payments derived from obligations underlying such instrument where
the interest and principal payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of
such underlying obligations.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
-----
ESCROW ACCOUNT: The account or accounts created and maintained pursuant
--------------
to Section 5.10.
ESCROW PAYMENTS: The amounts constituting applicable ground rents,
---------------
taxes, assessments, water rates and other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage Loan.
FDIC: The Federal Deposit Insurance Corporation or any successor
----
organization.
FHLMC: The Federal Home Loan Mortgage Corporation or any successor
-----
organization.
FIDELITY BOND: A fidelity bond to be maintained by the Master Servicer
-------------
pursuant to Section 5.19.
FIRST DISTRIBUTION DATE: December 15, 1997.
-----------------------
FNMA: The Federal National Mortgage Association or any successor
----
organization.
FORMULA EXCESS INTEREST AMOUNT: With respect to any Distribution Date,
------------------------------
the amount, if any, by which one month's interest at the Alternate
Certificate Rate on the Pool Principal Balance at the beginning of the
related Principal Prepayment Period (giving effect to the Monthly Payment due
on such Due Date and Principal Prepayments prior to such Due Date) is in
excess of one month's interest at the weighted average of the Class A and
Class B Pass-Through Rates for such Distribution Date on the aggregate
principal balances of such Certificates (before giving effect to any
distributions or Class B Loss Amounts for such Distribution Date).
FORMULA PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution Date, an
-------------------------------------
amount equal to the sum of:
(a) the principal portion of all Monthly Payments, whether or not
received, which were due on the related Due Date on Outstanding Mortgage
Loans as of such Due Date;
(b) with respect to each Mortgage Loan, all Principal Prepayments
made by the Mortgagor during the related Principal Prepayment Period;
(c) with respect to each Mortgage Loan not described in (e) below,
all Insurance Proceeds, condemnation awards and any other cash proceeds
from a source other than the Mortgagor, to the extent required to be
deposited in the Certificate Account pursuant to Section 5.08(iv) and
(v), which are allocable to principal and were received during the
related Principal Prepayment Period, net of related unreimbursed
Servicing Advances and net of any portion thereof which, as to such
Mortgage Loan, constitutes Late Collections;
(d) with respect to each Mortgage Loan that has been repurchased
pursuant to Section 11.01 during the related Principal Prepayment
Period, an amount equal to the Principal Balance of the Mortgage Loan as
of the date of repurchase;
(e) with respect to each Mortgage Loan that became a Liquidated
Mortgage Loan during the related Principal Prepayment Period, the amount
allocable to the principal of such Liquidated Mortgage Loan that was
recovered out of Net Liquidation Proceeds in respect of such Liquidated
Mortgage Loan in such Principal Prepayment Period; and
(f) with respect to each Mortgage Loan repurchased during the
related Principal Prepayment Period by the Master Servicer or the
Mortgage Loan Seller pursuant to Sections 2.01, 2.02, 3.01, 3.04 and
5.01, an amount equal to the principal amount of the Purchase Price
(exclusive of any portion thereof included in clause (a) above).
GNMA: The Government National Mortgage Association or any successor
----
organization.
INDEPENDENT: Of or relating to a Person which (i) is in fact
-----------
independent of the Company and the Master Servicer, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Company and the Master Servicer if different from the Company or an Affiliate
thereof and (iii) is not connected with the Company or the Master Servicer as
an officer, employee, director or person performing similar functions.
INDEX: As to each Mortgage Loan, the index for the adjustment of the
-----
Mortgage Rate on the related Mortgage Note, which index is the prime rate
(referred to in Section 3.01 as the "Prime Index"), the London interbank
offered rate for one-month U.S. Dollar deposits (referred to in Section 3.01
as the "One-Month LIBOR Index"), the London interbank offered rate for six-
month U.S. dollar deposits (referred to in Section 3.01 as the "Six-Month
LIBOR Index"), or the weekly average yield on U.S. Treasury securities
adjusted to a constant maturity of one year (referred to in Section 3.01 as
the "Treasury Index"), in each case as defined in such Mortgage Note.
INDEX CONVERTIBLE MORTGAGE LOAN: Any Mortgage Loan as to which the
-------------------------------
Mortgagor, at its option in accordance with the terms thereof, may convert
its Mortgage Rate to a different Index and applicable Margin, but may not
convert its Mortgage Rate to a fixed rate.
INITIAL MORTGAGE LOANS: The Mortgage Loans other than the Subsequent
----------------------
Mortgage Loans.
INSURANCE AGREEMENT: The Insurance and Indemnity Agreement, dated as
-------------------
of December 9, 1997, among the Company, the Master Servicer, the Certificate
Insurer and the Trustee.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
------------------
insurance policy covering a Mortgage Loan, net of costs of collecting such
proceeds.
INSURED AMOUNT: With respect to any Distribution Date, the sum of (i)
--------------
the Distribution Account Shortfall for such Distribution Date and (ii) any
Preference Amount that has not been previously paid to the Trustee by the
Certificate Insurer.
INSURED EXPENSES: Expenses covered by any insurance policy.
----------------
INSURED PAYMENT: With respect to any Distribution Date, the Insured
---------------
Amount paid to the Trustee by the Certificate Insurer.
INTEREST ADJUSTMENT DATE: The date specified in a Mortgage Note on
------------------------
which its Mortgage Rate is adjusted.
LATE COLLECTIONS: With respect to any Mortgage Loan, all amounts
----------------
received during any Due Period, whether as late payments of Monthly Payments
or as Liquidation Proceeds, condemnation awards, Insurance Proceeds, or with
respect to a disposition of a Mortgaged Property which has been acquired by
foreclosure or deed in lieu of foreclosure or otherwise, any of which
represent late payments or collections of Monthly Payments that were due but
delinquent for a previous Due Date and not previously recovered and with
respect to which delinquent Monthly Payments an Advance has been made by the
Master Servicer or, under the circumstances set forth in Section 6.03(b), by
the Trustee.
LATE PAYMENT RATE: As defined in the Insurance Agreement.
-----------------
LIBOR: As to any Distribution Date as follows:
-----
(i) the posted rate for United States dollar deposits for one
month which appears on Telerate Page 3750 (as defined below) as of 11:00
A.M., London time, on the second LIBOR Business Day prior to the
immediately preceding Distribution Date (or, in the case of the First
Distribution Date, December 5, 1997). If no such posted rate appears,
LIBOR will be determined on such date as described in clause (ii) below.
"Telerate Page 3750" means the display page designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that
service, or such other service as may be nominated as the information
vendor, for the purpose of displaying London inter-bank offered rates of
major banks).
(ii) If on such date no posted rate appears on the Telerate Page
3750 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, Deutsche Bank
AG, Lloyds 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 1/100th of a percent (.0001),
with a 5/1,000th of a percent (.00005) 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
1/100th of a percent (.0001), with a 5/1,000th of a percent (.00005)
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: A Business Day and a day on which banking
------------------
institutions in the City of London, England, are not required or authorized
by law to be closed.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
------------------------
related Mortgaged Property has been acquired, liquidated or disposed of and
with respect to which the Master Servicer has determined that all amounts
which it expects to recover from or on account of such Mortgage Loan or
property acquired in respect thereof have been recovered.
LIQUIDATION EXPENSES: Expenses which are incurred by the Master
--------------------
Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan or property acquired in respect thereof, including,
without limitation, legal fees and expenses, any unreimbursed amount expended
by the Master Servicer pursuant to Sections 5.16 and 5.21 respecting the
related Mortgage Loan and any related and unreimbursed expenditures for real
estate property taxes or for property restoration or preservation.
LIQUIDATION PROCEEDS: Cash (including Insurance Proceeds) received by
--------------------
the Master Servicer in connection with the liquidation of any defaulted
Mortgage Loan or Mortgaged Property acquired in respect thereof, whether
through the sale or assignment of such Mortgage Loan, trustee's sale,
foreclosure sale or otherwise, or the sale of the Mortgaged Property if the
Mortgaged Property is acquired in satisfaction of the Mortgage Loan other
than amounts required to be paid to the Mortgagor pursuant to law or the
terms of the applicable Mortgage Note plus, with respect to a defaulted
Mortgage Loan that is also
an Additional Collateral Mortgage Loan, the amount realized on the related
Additional Collateral with respect to such Mortgage Loan in accordance with
Section 5.21.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
-------------------
numerator of which is the outstanding principal amount of the related
Mortgage Loan at the time of origination and the denominator of which is the
Appraised Value of the related Mortgaged Property at such time or, in the
case of a Mortgage Loan financing the acquisition of the Mortgaged Property,
the sales price of the Mortgaged Property, if such sales price is less than
such Appraised Value.
LOWER-TIER A PRINCIPAL BALANCE: At any time, an amount equal to the
------------------------------
Class A Principal Balance.
LOWER-TIER B PRINCIPAL BALANCE: At any time, an amount equal to the
------------------------------
Class B Principal Balance.
LOWER-TIER INTEREST: Any one of the Lower-Tier Regular Interests or the
-------------------
Lower-Tier Interest R.
LOWER-TIER INTEREST A: An uncertificated "regular interest" in the
---------------------
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC.
LOWER-TIER INTEREST B: An uncertificated "regular interest" in the
---------------------
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC.
LOWER-TIER INTEREST R: The sole class of "residual interest" in the
---------------------
Lower-Tier REMIC.
LOWER-TIER PASS-THROUGH RATE: For any interest bearing Lower-Tier
----------------------------
Regular Interest, the per annum rate set forth or calculated in the manner
described in Section 2.08.
LOWER-TIER REGULAR INTEREST: Lower-Tier Interest A or Lower-Tier
---------------------------
Interest B.
LOWER-TIER REMIC: As described in Section 2.05.
----------------
MARGIN: With respect to each Mortgage Loan, the number of basis points
------
which are added to or subtracted from the Index to establish the Mortgage
Rate on the related Mortgage Note.
MASTER SERVICER: Merrill Lynch Credit Corporation, a Delaware
---------------
corporation, or its successor in interest or any successor under this
Agreement as herein provided.
MAXIMUM MORTGAGE RATE: With respect to each Mortgage Loan, the maximum
---------------------
rate of interest set forth as such in the related Mortgage Note.
MLCC: Merrill Lynch Credit Corporation and its successors in interest.
----
MONTHLY PAYMENT: The minimum required monthly payment of principal and
---------------
interest due on a Mortgage Loan as specified in the Mortgage Note for any
month (before any adjustment to such scheduled amount by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or grace
period). Monthly Payments shall be deemed due on an Outstanding Mortgage
Loan until such time as it becomes a Liquidated Mortgage Loan.
MOODY'S: Moody's Investors Service, Inc. or its successor in interest.
-------
MORTGAGE: The mortgage, deed of trust or other instrument creating a
--------
first lien or a first priority ownership interest in an estate in fee simple
in real property (or a leasehold that extends at least five years beyond the
maturity of the related Mortgage Loan) securing a Mortgage Note.
MORTGAGE 100(Service Mark) LOAN: A Mortgage Loan having at the time of
-------------------------------
origination a Loan-to-Value Ratio generally in excess of MLCC's maximum
acceptable Loan-to-Value Ratio for such Mortgage Loan, which Mortgage Loan is
secured by additional collateral in the form of a security interest in
marketable securities having a market value, as of the date of such loan's
origination, at least equal to the Original Additional Collateral
Requirement.
MORTGAGE 100(Service Mark) PLEDGE AGREEMENT: With respect to each
-------------------------------------------
Mortgage 100(Service Mark) Loan, the Mortgage 100(Service Mark) Pledge
Agreement for Securities Account between the Mortgagor under such Mortgage
100(Service Mark) Loan and MLCC, pursuant to which such Mortgagor granted a
security interest in various investment securities.
MORTGAGE FILE: The items referred to in Exhibit B annexed hereto
-------------
pertaining to a particular Mortgage Loan.
MORTGAGE LOAN: An individual mortgage loan and all rights with respect
-------------
thereto, evidenced by a Mortgage and a Mortgage Note plus, in the case of an
Additional Collateral Mortgage Loan, the Mortgage 100(Service Mark) Pledge
Agreement or Parent Power(Registered Trademark) Agreement, sold and assigned
by the Company to the Trustee and which is the subject of this Agreement and
included in the Trust Fund. The Mortgage Loans originally sold and subject
to this Agreement are identified on the Mortgage Loan Schedule. The term
"Mortgage
Loan" includes each Subsequent Mortgage Loan as of the Subsequent Transfer
Date applicable thereto.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans attached hereto
----------------------
as Exhibit A, setting forth the following information as to each Mortgage
Loan: (i) the Mortgage Loan identifying number; (ii) a code indicating
whether the Mortgaged Property is owner-occupied; (iii) the property type of
the Mortgaged Property; (iv) the original number of months to maturity and
the number of months remaining to maturity from the Cut-off Date; (v) the
Appraised Value of the Mortgaged Property as set forth in an appraisal which
was delivered at the time of the origination of the Mortgage Loan, or, in the
event the Mortgage Loan was made in connection with the acquisition of the
Mortgaged Property by the Mortgagor, the lesser of such Appraised Value and
the purchase price of the Mortgaged Property actually paid by the Mortgagor
at the time of the origination of the Mortgage Loan; (vi) the original Loan-
to-Value Ratio; (vii) the current Mortgage Rate; (viii) the current Margin;
(ix) the amount of the current Monthly Payment; (x) the next Interest
Adjustment Date; (xi) the original Principal Balance of the Mortgage Loan;
and (xii) the Principal Balance of the Mortgage Loan as of the close of
business on the Cut-off Date. The Mortgage Loan Schedule shall include each
Schedule of Subsequent Mortgage Loans delivered on a Subsequent Transfer
Date.
MORTGAGE LOAN SELLER: Merrill Lynch Credit Corporation, a Delaware
--------------------
corporation, and its successors and assigns.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
-------------
Mortgagor secured by a Mortgage.
MORTGAGE POOL: The pool of Mortgage Loans held in the Trust Fund.
-------------
MORTGAGE RATE: With respect to each Mortgage Loan, the per annum rate
-------------
of interest for the applicable period borne by the Mortgage Loan, as
determined pursuant to the Mortgage Note.
MORTGAGED PROPERTY: The real property securing a Mortgage Note.
------------------
MORTGAGOR: The obligor on a Mortgage Note.
---------
NET INTEREST SHORTFALL: With respect to any Distribution Date, the sum
----------------------
of (i) the Net Prepayment Interest Shortfall, if any, for such Distribution
Date and (ii) the Relief Act Reduction, if any, for such Distribution Date as
determined in Section 6.01.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
------------------------
Liquidation Proceeds net of Liquidation Expenses.
NET MORTGAGE RATE: As to any day and Mortgage Loan, its Mortgage Rate
-----------------
less the sum of (i) the Servicing Fee Rate, (ii) if such Mortgage Loan is a
Correspondent Mortgage Loan, the Correspondent Trailing Premium Rate, if any,
and (iii) the Premium Amount (expressed as a per annum rate).
NET PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date, the
---------------------------------
aggregate of the Prepayment Interest Shortfalls incurred on the Mortgage
Loans in the preceding Principal Prepayment Period that were not made up by
the application of the Servicing Fees collected by the Master Servicer in
respect of such Principal Prepayment Period pursuant to Section 6.03(c).
NONRECOVERABLE ADVANCE: Any advance previously made or proposed to be
----------------------
made in respect of a Mortgage Loan by the Master Servicer or the Trustee
pursuant to Section 6.03 which, in the good faith judgment of the Master
Servicer or the Trustee, will not be ultimately recoverable by the Master
Servicer or the Trustee from Late Collections, Liquidation Proceeds or
otherwise. The determination by the Master Servicer that it has made, or
would be making, a Nonrecoverable Advance shall be evidenced by a certificate
of a Servicing Officer of the Master Servicer delivered to the Trustee and
the Company and detailing the reasons for such determination.
NON-U.S. PERSON: An individual, corporation, partnership or other
---------------
Person other than a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate that is
subject to U.S. federal income tax (regardless of the source of its income)
or a trust if (a) a court within the United States is able to exercise
primary supervision over the administration of the trust and (b) one or more
United States trustees have authority to control all substantial decisions of
trust.
OFFICERS' CERTIFICATE: A certificate signed by any one of the Chairmen
---------------------
of the Board, Vice Chairman of the Board, the President, a Senior Vice
President, a Vice President, an Assistant Vice President, the Treasurer, an
Assistant Treasurer, the Secretary, an Assistant Secretary or any other duly
authorized officer of the Company or the Master Servicer, as the case may be,
and delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
------------------
for the Company or the Master Servicer and who is reasonably acceptable to
the Trustee and the Surety and the Certificate Insurer; provided, however
that the Trustee and the Surety and the Certificate Insurer shall receive an
opinion of Independent counsel with respect to any opinion submitted
regarding the qualification of the Trust Fund (exclusive of the Mortgage
100(Service Mark) Pledge Agreements, the Parent Power(Registered Trademark)
Agreements and the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings)) as two REMICs or
compliance with any of the REMIC Provisions.
ORIGINAL ADDITIONAL COLLATERAL REQUIREMENT: With respect to any
------------------------------------------
Additional Collateral Mortgage Loan, an amount equal to the Additional
Collateral required by the Company at the time of the origination of such
Additional Collateral Mortgage Loan in order to achieve a Constructive Loan-
to-Value Ratio for such Additional Collateral Mortgage Loan, generally equal
to seventy percent (70%); for purposes of the Required Surety Payment, in no
event shall the Original Additional Collateral Requirement for an Additional
Collateral Mortgage Loan exceed thirty percent (30%) of its original
principal balance.
ORIGINAL CLASS A PRINCIPAL BALANCE: $308,089,000.
----------------------------------
ORIGINAL CLASS B PRINCIPAL BALANCE: $4,692,441.
----------------------------------
ORIGINAL POOL PRINCIPAL BALANCE: (including the Pre-Funded Amount)
-------------------------------
$312,781,441.
ORIGINAL PRE-FUNDED AMOUNT: $75,000,000.
--------------------------
ORIGINAL SUBORDINATION LEVEL: The percentage derived from the fraction
----------------------------
the numerator of which is the Original Class B Principal Balance and the
denominator of which is the Original Pool Principal Balance, which percentage
is 1.50%.
ORIGINATE or ORIGINATION: When used with respect to a Mortgage Loan
--------- -----------
(whether or not used as a capitalized term), the closing and funding of such
Mortgage Loan.
OUTSTANDING MORTGAGE LOAN: As to any Due Date, a Mortgage Loan which
-------------------------
was not the subject of a Principal Prepayment in full prior to such Due Date,
which did not become a Liquidated Mortgage Loan prior to such Due Date and
which was not repurchased under Section 2.01, 2.02, 3.01, 3.04 or 5.01 prior
to such Due Date.
PARENT POWER(Registered Trademark) AGREEMENT: With respect to each
--------------------------------------------
Parent Power(Registered Trademark) Mortgage Loan, a Parent Power(Registered
Trademark) Guaranty and Security Agreement for Securities Account or a Parent
Power(Registered Trademark) Guaranty Agreement for Real Estate.
PARENT POWER(Registered Trademark) GUARANTY AGREEMENT FOR REAL ESTATE:
---------------------------------------------------------------------
With respect to a Parent Power(Registered Trademark) Mortgage Loan, an
agreement between MLCC and a guarantor on behalf of the Mortgagor under such
Parent Power(Registered Trademark) Mortgage Loan pursuant to which such
guarantor guarantees the payment of certain losses under such Parent
Power(Registered Trademark) Mortgage Loan, authorizes MLCC to draw on a home
equity credit line to fund such guaranty and has
secured such guaranty with a lien on residential real estate of the
guarantor. The required amount of the collateral supporting such guaranty is
at least equal to the Original Additional Collateral Requirement for such
Parent Power(Registered Trademark) Mortgage Loan. For purposes of this
definition, the Parent Power(Registered Trademark) Guaranty Agreement For
Real Estate shall not include the rights of the mortgagee under the security
instrument relating to the Equity Access(Registered Trademark) Account (as
defined in the related Parent Power(Registered Trademark) Agreement) referred
to therein, which rights have been retained by MLCC.
PARENT POWER(Registered Trademark) GUARANTY AND SECURITY AGREEMENT FOR
----------------------------------------------------------------------
SECURITIES ACCOUNT: With respect to a Parent Power(Registered Trademark)
- ------------------
Mortgage Loan, an agreement between MLCC and a guarantor on behalf of the
Mortgagor under such Parent Power(Registered Trademark) Mortgage Loan
pursuant to which such guarantor guarantees the payment of certain losses
under such Parent Power(Registered Trademark) Mortgage Loan and has granted a
security interest to MLCC in certain marketable securities to collateralize
such guaranty. The required amount of such collateral is at least equal to
the Original Additional Collateral Requirement for such Parent
Power(Registered Trademark) Mortgage Loan.
PARENT POWER(Registered Trademark) MORTGAGE LOAN: A Mortgage Loan
------------------------------------------------
having at the time of origination a Loan-to-Value Ratio generally in excess
of MLCC's maximum acceptable Loan-to-Value Ratio for such Mortgage Loan,
which Mortgage Loan is supported by a Parent Power(Registered Trademark)
Agreement.
PAYING AGENT: The Person appointed by the Master Servicer as Paying
------------
Agent pursuant to Section 4.05. If the Master Servicer has not appointed a
Paying Agent, the Master Servicer shall be the Paying Agent.
PAYMENT ADJUSTMENT DATE: The date specified in a Mortgage Note on which
-----------------------
the Monthly Payment is adjusted.
PERCENTAGE INTEREST: As to any Class A or Class B Certificate, the
-------------------
percentage interest evidenced thereby in distributions required to be made
hereunder, such percentage interest being equal to the percentage obtained by
dividing the denomination of such Certificate by the aggregate of the
denominations of all the Certificates of such Class; and as to the Class C
and Class R Certificates, the Percentage Interest specified on the face
thereof.
PERSON: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
POOL PRINCIPAL BALANCE: The Original Pool Principal Balance less (i)
----------------------
the aggregate of all Formula Principal Distribution Amounts and all
Unrecovered Principal
Amounts for, unless otherwise specified, the Distribution Date in the month
of the reference thereto and all prior Distribution Dates less (ii) the
amount distributed from the Pre-Funding Account to the Class A
Certificateholders on account of principal in accordance with the last
sentence of Section 5.14(b).
PREFERENCE AMOUNT: As defined in the Certificate Insurance Policy.
-----------------
PRE-FUNDED AMOUNT: With respect to any date, the amount on deposit in
-----------------
the Pre-Funding Account, exclusive of any Pre-Funding Earnings therein.
PRE-FUNDING ACCOUNT: The trust account created and maintained by the
-------------------
Trustee pursuant to Section 5.14. The Pre-Funding Account shall be an
Eligible Account.
PRE-FUNDING DISTRIBUTION DATE: Each Distribution Date occurring during
-----------------------------
the Pre-Funding Period, and the Distribution Date occurring in the month (i)
following the month in which the Pre-Funding Period ends, if such period ends
on or after the Distribution Date in such month or (ii) in which the Pre-
Funding Period ends, if such period ends prior to the Distribution Date in
such month.
PRE-FUNDING EARNINGS: As to any Pre-Funding Distribution Date, the
--------------------
amount of actual net investment earnings realized or accrued, if applicable,
on amounts on deposit in the Pre-Funding Account during the period beginning
on the Distribution Date in the month preceding such Pre-Funding Distribution
Date (or in the case of the first Pre-Funding Distribution Date, beginning on
the Closing Date) and ending on the Business Day before such Pre-Funding
Distribution Date.
PRE-FUNDING PERIOD: The period commencing on the Closing Date and
------------------
ending on the earliest to occur of (i) the date on which the aggregate amount
on deposit in the Pre-Funding Account (exclusive of any investment earnings)
is less than $100,000, (ii) the date on which an Event of Default occurs or
(iii) March 6, 1998.
PREMIUM AMOUNT: With respect to the Certificate Insurance Policy, the
--------------
amount that is payable as a premium under the terms of the Certificate
Insurance Policy.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
-----------------------------
for each Mortgage Loan that was the subject of a partial Principal Prepayment
or a Principal Prepayment in full during the related Principal Prepayment
Period (other than a Principal Prepayment in full resulting from the purchase
of a Mortgage Loan pursuant to Section 2.02, 3.01, 3.04 or 11.01 hereof), the
amount by which interest paid by the Mortgagor in connection with such
Principal Prepayment of such Mortgage Loan is less than 30 days' interest at
the related Mortgage Rate on the amount paid.
PRINCIPAL BALANCE: At the time of any determination, the principal
-----------------
balance of a Mortgage Loan remaining to be paid at the close of business on
the Cut-off Date with respect to an Initial Mortgage Loan or the Subsequent
Cut-off Date with respect to a Subsequent Mortgage Loan (after deduction of
all principal payments due on or before the respective Cut-off Date or
Subsequent Cut-off Date whether or not paid but without deducting Monthly
Payments due after the respective Cut-off Date or Subsequent Cut-off Date and
received on or before the respective Cut-off Date or Subsequent Cut-off Date)
reduced by all amounts distributed to Certificateholders that are allocable
to principal of such Mortgage Loan (including Advances made pursuant to
Section 6.03).
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
--------------------
Mortgage Loan (other than Liquidation Proceeds) made by a Mortgagor which is
received in advance of its scheduled Due Date, and which is not accompanied
by an amount of interest representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment.
PRINCIPAL PREPAYMENT PERIOD: With respect to any Distribution Date, the
---------------------------
period beginning on the first day of the month preceding the month in which
such Distribution Date occurs and ending on the last day of the month
preceding the month in which such Distribution Date occurs.
PURCHASE PRICE: With respect to any Mortgage Loan required to be
--------------
purchased on any date pursuant to Sections 2.01, 2.02, 3.01, 3.04, 5.01 or
5.07, an amount equal to the sum of (a) 100% of the Principal Balance thereof
plus any unreimbursed Advances of principal thereof and (b) unpaid accrued
interest at the Mortgage Rate thereon from the Due Date to which interest was
last paid by the Mortgagor through the end of the related Due Period.
RATING AGENCY: Standard & Poor's and Moody's. References herein to the
-------------
highest long-term debt rating category of a Rating Agency shall mean AAA in
the case of Standard & Poor's and Aaa in the case of Moody's, and references
to the second highest long-term rating category of a Rating Agency shall mean
AA in the case of Standard & Poor's and Aa1, Aa2 or Aa3 in the case of
Moody's.
RECORD DATE: As to each Distribution Date, the last Business Day of the
-----------
calendar month immediately preceding the calendar month in which the
Distribution Date occurs (or the Closing Date in the case of the First
Distribution Date).
REIMBURSEMENT AMOUNT: As to any Distribution Date, the sum of (x)(i)
--------------------
all Insured Payments in respect of the Class A Certificates previously
received by the Trustee and not previously repaid to the Certificate Insurer
pursuant to Section 6.01 plus (ii) interest accrued on each such Insured
Payment not previously repaid, calculated at the Late Payment
Rate from the date the Trustee received the related Insured Payment and
(y)(i) any other amounts then due and owing to the Certificate Insurer under
the Insurance Agreement plus (ii) interest on such amounts at the Late
Payment Rate. The Certificate Insurer shall notify the Trustee and the
Master Servicer of the amount of any Reimbursement Amount.
RELIEF ACT REDUCTION: With respect to any Distribution Date, the
--------------------
aggregate amount of reductions, if any, in the amount of interest due on the
Mortgage Loans on the related Due Date on account of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended.
REMIC: A "real estate mortgage investment conduit," as such term is
-----
defined in the Code.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
----------------
real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be
in effect from time to time.
REPURCHASE PROCEEDS: All proceeds of any Mortgage Loan or property
-------------------
acquired in respect thereof repurchased by the Master Servicer or Mortgage
Loan Seller pursuant to Section 2.01, 2.02, 3.01, 3.04, 5.01 or 11.01.
REQUIRED SURETY PAYMENT: With respect to any Additional Collateral
-----------------------
Mortgage Loan that becomes a Liquidated Mortgage Loan, the lesser of (i)
related Additional Collateral Mortgage Loan Liquidation Shortfall and (ii)
the excess, if any, of (a) the Original Additional Collateral Requirement
with respect to such Mortgage Loan over (b) the net proceeds realized by MLCC
from the related Additional Collateral as set forth in Section 5.21.
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 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, 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.
SALE AGREEMENT: The Sale and Seller's Warranties Agreement dated as of
--------------
November 1, 1997 between the Company and the Mortgage Loan Seller attached
hereto as Exhibit P.
SCHEDULE OF SUBSEQUENT MORTGAGE LOANS: The schedule attached to each
-------------------------------------
Subsequent Transfer Agreement listing the Subsequent Mortgage Loans being
conveyed to the Trustee on behalf of the Trust Fund pursuant thereto. Each
such schedule shall include the same categories of information set forth in
the definition of the Mortgage Loan Schedule substituting, where appropriate,
information as of the applicable Subsequent Cut-off Date rather than the Cut-
off Date.
SCHEDULED FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
-----------------------------------------------
Distribution Date, the amount specified in clause (a) of the Formula
Principal Distribution Amount.
SERIOUSLY DELINQUENT MORTGAGE LOAN: Any Mortgage Loan as to which a
----------------------------------
Monthly Payment is 90 days or more delinquent.
SERVICING ADVANCES: All customary, reasonable and necessary "out of
------------------
pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations, including, but not limited to, the cost of (i)
the preservation, restoration and protection of the Mortgaged Property, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage, (iv) taxes and
assessments on the Mortgaged Properties subject to the Mortgage Loans and (v)
compliance with the obligations under Section 5.12.
SERVICING FEE: With respect to each Mortgage Loan, the amount of the
-------------
monthly fee paid for the servicing of such Mortgage Loan, equal to 1/12 of
the Servicing Fee Rate of the Principal Balance of such Mortgage Loan. Such
fee shall be payable only at the time of and with respect to those Mortgage
Loans for which payment is in fact made of the entire amount of the Monthly
Payments. The right to receive the Servicing Fee is limited to, and the
Servicing Fee is payable solely from, the interest portion of such Monthly
Payments collected by the Master Servicer, or as otherwise provided under
Section 5.09.
SERVICING FEE RATE: 0.25% per annum.
------------------
SERVICING OFFICER: Any officer of the Master Servicer involved in, or
-----------------
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Trustee by the Master Servicer, as such list may from time to time be
amended.
SINGLE CERTIFICATE: A Certificate of any Class (other than a Class C
------------------
or Class R Certificate) that evidences a denomination of $1,000.
STANDARD & POOR'S: Standard & Poor's Ratings Services, a Division of
-----------------
The McGraw-Hill Companies, Inc., or its successor in interest.
STANDARD HAZARD POLICY: Each standard hazard insurance policy or
----------------------
replacement therefor referred to in Section 5.16.
SUBORDINATED PERCENTAGE: As to any Distribution Date, 100% less the
-----------------------
Class A Percentage.
SUBORDINATED PREPAYMENT PERCENTAGE: As to any Distribution Date, 100%
----------------------------------
less the Class A Prepayment Percentage.
SUBSEQUENT CUT-OFF DATE: As to those Subsequent Mortgage Loans which
-----------------------
are transferred and assigned to the Trustee on behalf of the Trust Fund
pursuant to a Subsequent Transfer Agreement, the first day of the month in
which the related Subsequent Transfer Date occurs.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans sold to the Trust Fund
-------------------------
pursuant to Section 2.03 and the related Subsequent Transfer Agreement, which
shall be listed on the Schedule of Subsequent Mortgage Loans attached to such
Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated
-----------------------------
as of a Subsequent Transfer Date executed by the Trustee and the Company
substantially in the form of Exhibit K herein, pursuant to which Subsequent
Mortgage Loans are sold and assigned to the Trustee.
SUBSEQUENT TRANSFER DATE: The date specified in each Subsequent
------------------------
Transfer Agreement on which the related Subsequent Mortgage Loans are sold to
the Trust Fund.
SUB-SERVICER: Any Person with whom the Master Servicer enters into a
------------
Sub-Servicing Agreement.
SUB-SERVICING AGREEMENT: Any written contract between the Master
-----------------------
Servicer and any Sub-Servicer, relating to servicing or administration of
certain Mortgage Loans as provided in Section 5.02, in such form as has been
approved by the Trustee, the Certificate Insurer or the Surety.
SURETY: Ambac Assurance Corporation (formerly known as AMBAC Indemnity
------
Corporation), or any successor thereto, as issuer of the Certificate Guaranty
Surety Bond.
SURETY AGREEMENT: The Surety Bond Reimbursement Agreement dated as of
----------------
February 28, 1996 between Merrill Lynch Credit Corporation and the Surety.
TRANSFER: A direct or indirect transfer or other assignment of record
--------
or beneficial interest in a Class R Certificate.
TRUST FUND: The corpus of the trust created by this Agreement, to the
----------
extent described herein, consisting of (i) the Mortgage Loans, (ii) such
assets as shall from time to time be identified as deposited in the
Certificate Account and Pre-Funding Account, (iii) property which secured a
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure, (iv) Standard Hazard Policies and any other insurance policies,
and the proceeds thereof, (v) certain rights of the Company under the Sale
Agreement as more particularly set forth in the last paragraph of Section
2.01 and as described in Sections 2.02 and 3.01 hereof, (vi) such amounts as
shall from time to time be deposited in the Distribution Account, (vii) the
Certificate Insurance Policy, (viii) the Certificate Guaranty Surety Bond,
(ix) each Mortgage 100(Service Mark) Pledge Agreement and (x) each Parent
Power(Registered Trademark) Agreement. The Mortgage 100(Service Mark) Pledge
Agreements, the Parent Power(Registered Trademark) Agreements and the Pre-
Funding Account (including the funds therein and Pre-Funding Earnings) shall
not be part of the two REMICs created by this Agreement.
TRUSTEE: Bankers Trust Company of California, N.A., as trustee, or its
-------
successor in interest or any successor or co-trustee under this Agreement
appointed as herein provided.
UNRECOVERED PRINCIPAL AMOUNT: As to any Liquidated Mortgage Loan, the
----------------------------
portion, if any, of the principal of such Liquidated Mortgage Loan that was
not recovered at the time such Liquidated Mortgage Loan became a Liquidated
Mortgage Loan. An Unrecovered Principal Amount in respect of a Distribution
Date is one that was incurred in the immediately preceding Principal
Prepayment Period.
UNSCHEDULED FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
-------------------------------------------------
Distribution Date, the sum of the amounts specified in clauses (b), (c), (d),
(e) and (f) of the Formula Principal Distribution Amount.
UPPER-TIER INTEREST R: The sole class of "residual interest" in the
---------------------
Upper-Tier REMIC.
UPPER-TIER REMIC: As described in Section 2.05.
----------------
Section 1.02. Interest Calculations. Interest on the Class A and Class
---------------------
B Certificates shall be calculated on the basis of the actual number of days
in the related Accrual Period divided by 360.
(End of Article I)
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
----------------------------------------
Section 2.01. Conveyance of Mortgage Loans. The Company, concurrently
----------------------------
with the execution and delivery hereof, does hereby sell, transfer, assign,
set over and convey to the Trustee (for inclusion in the Trust Fund) without
recourse all the right, title and interest of the Company in and to the
Initial Mortgage Loans, including all interest and principal due after the
Cut-off Date on or with respect to the Initial Mortgage Loans (it being
understood that payments of principal and interest first due on the Initial
Mortgage Loans on or before the Cut-off Date shall not be conveyed to the
Trustee pursuant hereto), and each Mortgage 100(Service Mark) Pledge
Agreement and each Parent Power(Registered Trademark) Agreement. The
foregoing sale, transfer, assignment, set-over and conveyance of each Parent
Power(Registered Trademark) Agreement that is a Parent Power(Registered
Trademark) Guaranty Agreement for Real Estate does not constitute and is not
intended to result in an assumption by the Trustee or the Trust Fund of any
obligation or liability of MLCC under the related Equity Access(Registered
Trademark) Account (as defined in such Parent Power(Registered Trademark)
Agreement). MLCC is authorized to correct any error in any Mortgage
100(Service Mark) Pledge Agreement or Parent Power(Registered Trademark)
Agreement and to terminate any such agreement and release the related
collateral in accordance with the terms thereof.
In connection with the foregoing conveyance of the Initial Mortgage
Loans, within 21 days after the Closing Date, the Master Servicer, on behalf
of the Company, shall deliver to, and deposit with, the Custodian the
documents or instruments listed in Exhibit B hereto with respect to each
Mortgage Loan so assigned (the requirements for a Mortgage Loan secured by
shares in a cooperative corporation are separately specified in clause (6) of
Exhibit B hereto); provided that the Master Servicer shall deliver at least
50% of the Mortgage Notes on or before the Closing Date.
By way of clarification, the remainder of this Section applies to
Subsequent Mortgage Loans as well as the Initial Mortgage Loans.
If in connection with any Mortgage Loan the Master Servicer cannot
deliver the related Mortgage with evidence of recording thereon as provided
above, or within the 180 days permitted in clause (2) of Exhibit B hereto,
solely because of a delay caused by the public recording office to which such
Mortgage has been delivered for recordation, the Master Servicer shall
deliver or cause to be delivered to the Custodian an Officer's Certificate of
the Master Servicer, stating that such Mortgage has been delivered to the
appropriate public recording official for recordation. The Master Servicer
shall promptly deliver or cause to be delivered to the Custodian such
Mortgage with evidence of recording indicated thereon upon receipt thereof
from the public recording official. Notwithstanding the above, the Master
Servicer shall use all reasonable efforts to cause each original Mortgage
with evidence of recording thereon to be delivered to the Custodian within
270 days of the Closing Date (or the Subsequent Transfer Date in the
case of Subsequent Mortgage Loans).
If the long-term unsecured debt of Merrill Lynch & Co., Inc., if it is
rated by Moody's, is rated below A3 or if it is rated by Standard & Poor's,
is rated below A-, or an Event of Default shall have occurred and is
continuing or if MLCC is no longer the Master Servicer (unless each Rating
Agency confirms that the absence of recordation will not result in the
reduction or withdrawal of its rating of the Class A Certificates), then MLCC
(or the successor Master Servicer in the case of an Event of Default) shall,
within 60 days after such occurrence (unless the long-term unsecured debt of
Merrill Lynch & Co., Inc., if it is rated by Standard & Poor's, is rated
below BBB-, in which case MLCC will have 30 days after such occurrence),
cause to be sent for recording to the appropriate public recording office for
real property records each Assignment of Mortgage referred to in this Section
2.01 except for Mortgage Loans on Mortgaged Properties located in states
where, as evidenced by an opinion of independent counsel acceptable to the
Trustee, the Certificate Insurer, the Surety, the Company and the Rating
Agencies, such recording is not required to protect the interests of the
Trustee in the Mortgage Loan, including the related Mortgage, against the
claim of any other transferee or any successor to or creditor of the Mortgage
Loan Seller or the Originator of such Mortgage Loan. While each Assignment of
Mortgage required to be recorded is being recorded, the Master Servicer shall
leave with the Custodian a photocopy of such Assignment of Mortgage. If any
such Assignment of Mortgage is returned unrecorded to the Master Servicer
because of any defect therein, the Master Servicer shall cause such defect to
be cured and such Assignment of Mortgage to be recorded in accordance with
this paragraph. The Master Servicer shall deliver or cause to be delivered
each original recorded Assignment of Mortgage and intermediate assignment to
the Custodian within 120 days of the occurrence giving rise to the obligation
to record or shall deliver to the Custodian on or before such date an
Officer's Certificate stating that such Assignment of Mortgage has been
delivered to the appropriate public recording office for recordation, but has
not been returned solely because of a delay caused by such recording office.
At such time as either MLCC or the Trustee obtains actual knowledge of the
occurrence of an event that requires the recordation specified in this
paragraph, the party obtaining such knowledge shall promptly give written
notice of such event to the other party and to the Certificate Insurer and
the Surety.
If the Master Servicer cannot cause any Mortgage or Assignment of
Mortgage or intermediate assignments, subject to the provisions in this
Section 2.01 regarding recording office delays, to be recorded and evidence
of such recording delivered to the Custodian within 270 days of the
occurrence giving rise to the obligation to record, the Mortgage Loan Seller
shall be required to purchase such Mortgage Loan from the Trustee at the
Purchase Price or the Mortgage Loan Seller shall be required to substitute
another Mortgage Loan for such deficient Mortgage Loan in accordance with the
procedures and subject to the limitations set forth in Section 3.02(i)
through (viii), such repurchase or substitution
obligation constituting the sole remedy available to the Trustee, the
Certificateholders, the Certificate Insurer and the Surety for failure of a
Mortgage Loan to be recorded.
With respect to any Additional Collateral Mortgage Loan for which there
has been filed a UCC-1 financing statement in favor of MLCC as secured party
and for which an Assignment of Mortgage is submitted for recording pursuant
to the second preceding paragraph, the Master Servicer shall, within 30 days
after such Assignment of Mortgage is submitted for recording, prepare or
cause to be prepared and deliver to the Custodian for filing by the Custodian
in the appropriate recording office a UCC-3 statement giving notice of the
assignment of the related security interest to the Trustee and the Master
Servicer shall thereafter cause the Custodian to file all necessary
continuation statements. To the extent necessary, the Master Servicer shall
cause the Custodian to file any such UCC-3 statement in the appropriate
recording office.
The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Mortgage documents
relating to the Mortgage Loan not delivered to the Trustee or the Custodian
under the Custodial Agreement are and shall be held in trust by the Master
Servicer or any Sub-Servicer, for the benefit of the Trustee as the owner
thereof and the Master Servicer's or such Sub-Servicer's possession of the
contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Master Servicer or such Sub-Servicer is in a custodial capacity only. The
Company agrees to take no action inconsistent with the Trustee's ownership of
the Mortgage Loans, to promptly indicate to all inquiring parties that the
Mortgage Loans have been sold and to claim no ownership interest in the
Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Company's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If the
conveyance of the Mortgage Loans from the Mortgage Loan Seller to the Company
to the Trustee is characterized as a pledge and not a sale, then the Company
shall be deemed to have transferred to the Trustee, in addition to the Trust
Fund, all of the Company's right, title and interest in, to and under the
obligation deemed to be secured by said pledge; and it is the intention of
this Agreement that the Mortgage Loan Seller and the Company shall also be
deemed to have granted to the Trustee a first priority security interest in
all of the Mortgage Loan Seller's and the Company's right, title, and
interest in, to, and under the obligation deemed to be secured by said pledge
and that the Trustee and the Custodian shall be deemed to be an independent
custodian for purposes of perfection of such security interest. If the
conveyance of the Mortgage Loans from the Company to the Trustee is
characterized as a pledge, it is the intention of this Agreement that this
Agreement shall constitute a security agreement under applicable law, and
that the Mortgage Loan Seller and the Company shall be deemed to have granted
to the Trustee a first priority security interest in all of Mortgage Loan
Seller's and the Company's right, title
and interest in, to and under the Mortgage Loans, all payments of principal
of or interest on such Mortgage Loans, all other rights relating to and
payments made in respect of the Trust Fund, and all proceeds of any thereof.
If the trust created by this Agreement terminates prior to the satisfaction
of the claims of any Person in any Certificates, the security interest
created hereby shall continue in full force and effect and the Trustee shall
be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance of the Initial Mortgage Loans, the Company
does hereby convey, assign and set over to the Trustee all of its right,
title and interest in that portion of the Trust Fund described in items (ii)
through (ix) of the definition thereof and further assigns to the Trustee for
the benefit of the Certificateholders, the Certificate Insurer and the Surety
those representations and warranties of the Mortgage Loan Seller contained in
the Sale Agreement and described in Section 3.01 hereof and the benefit of
the remedies for the breach thereof.
Section 2.02. Acceptance by Trustee. The Trustee acknowledges the
---------------------
assignment to it of the documents referred to in Section 2.01 above and
acknowledges that upon the Custodian's receipt thereof, pursuant to the
Custodial Agreement, the Custodian will hold such documents and any other
documents constituting a part of the Mortgage Files delivered to the
Custodian in trust for the use and benefit and of all present and future
Certificateholders, the Certificate Insurer and the Surety. The Mortgage
Loan Seller shall repurchase at the Purchase Price, or substitute new
Mortgage Loans (in accordance with Section 3.02(i) through (viii)) for, all
Mortgage Loans to which an exception was taken in the Custodian's Interim
Certification (as defined in the Custodial Agreement), within 60 days of the
date of delivery of the Mortgage Files (the "Delivery Date") to the
-------------
Custodian, unless such exception is cured to the satisfaction of the Company,
the Certificate Insurer and the Surety within 30 Business Days of the date
thereof (or such other period as is agreed by the Company, the Certificate
Insurer and the Surety and the Trustee but not more than 50 Business Days).
Pursuant to the Custodial Agreement, the Custodian agrees, for the benefit of
the Trustee, the Certificateholders, the Certificate Insurer and the Surety,
to review each Mortgage File delivered to it within 45 days after the
Delivery Date to ascertain that all required documents have been executed and
received, and that such documents relate to the Mortgage Loans, that have
been conveyed to the Trustee. If the Custodian finds any document or
documents constituting a part of a Mortgage File to be missing or defective
(that is, mutilated, damaged, defaced, incomplete, improperly dated, clearly
forged or otherwise physically altered) in any material respect, the
Custodian, pursuant to the Custodial Agreement, shall promptly so notify the
Trustee, the Master Servicer, the Certificate Insurer, the Surety and the
Company by delivering the Interim Certification to them within 45 days after
the Delivery Date. The Mortgage Loan Seller shall correct or cure such
omission, defect or other irregularity within 60 days from the date the
Mortgage Loan Seller was notified of such omission or defect and, if the
Mortgage Loan Seller does not correct or cure such omission or defect within
such period, then the Mortgage Loan Seller, within 90 days from the date the
Custodian notified
the Mortgage Loan Seller of such omission or defect, shall either (i)
repurchase such Mortgage Loan from the Trustee at the Purchase Price of such
Mortgage Loan or (ii) substitute a new Mortgage Loan for such deficient
Mortgage Loan in accordance with the provisions of Section 3.02(i) through
(viii). The Purchase Price for the purchased Mortgage Loan shall be paid to
the Master Servicer and deposited by the Master Servicer in the Certificate
Account and, upon receipt by the Trustee and the Custodian of written
notification of such deposit signed by a Servicing Officer, the Custodian,
pursuant to the Custodial Agreement, shall promptly execute and deliver such
instruments of transfer or assignment, without recourse, as shall be neces-
sary to vest in the Mortgage Loan Seller or its designee, as the case may be,
the interest of the Trustee in any Mortgage Loan released pursuant hereto,
and the Trustee shall have no further responsibility with regard to such
Mortgage Loan. It is understood and agreed that the obligation of the
Mortgage Loan Seller to purchase or substitute for any Mortgage Loan as to
which a material defect in or omission of a constituent document exists shall
constitute the sole remedy respecting such defect or omission available to
the Trustee on behalf of Certificateholders, the Certificate Insurer or the
Surety. Notwithstanding anything herein to the contrary, the Trustee and the
Custodian shall be under no duty or obligation to inspect, review and examine
such documents, instruments, certificates or other papers to determine that
they are genuine, enforceable or appropriate to the represented purpose, or
that they have actually been recorded, or that they are other than what they
purport to be on their face or to determine that all items described in
clause (4) of Exhibit B hereto have been delivered or to determine whether
the title policy affirmatively insures against encroachments as described in
clause (5) of Exhibit B hereto.
The Custodian, pursuant to the Custodial Agreement, shall deliver to the
Company, the Trustee, the Certificate Insurer, the Surety and the Master
Servicer the Interim and Final Certification. If (i) within 90 days of the
Closing Date, the Custodian has not received an Officer's Certificate or a
certificate of the Master Servicer stating that the Mortgage has been
delivered to the appropriate public recording official for recordation or
(ii) if within 270 days of the Closing Date the Custodian finds that any
Mortgage has not been recorded, the Custodian, pursuant to the Custodial
Agreement, shall promptly notify the Trustee, the Certificate Insurer, the
Surety and the Master Servicer and the Master Servicer shall be required,
within 30 days of receipt of such notice, to repurchase such Mortgage Loan or
to substitute a new Mortgage Loan for such deficient Mortgage Loan in
accordance with Section 3.02(i) through (viii) hereof.
Section 2.03. Sale and Conveyance of the Subsequent Mortgage Loans.
----------------------------------------------------
(a) Subject to the conditions set forth in Sections 2.03 (b), (c), (d) and
(e) below, in consideration of the delivery on the related Subsequent
Transfer Dates to or upon the order of the Company of all or a portion of the
balance of funds in the Pre-Funding Account, the Company shall on any
Subsequent Transfer Date sell, transfer, assign, set over and convey to the
Trustee (for inclusion into the Trust Fund), without recourse (but subject to
the obligations set forth herein) all right, title and interest of the
Company in and to each Subsequent Mortgage Loan
listed on the Schedule of Subsequent Mortgage Loans delivered to the Trustee,
the Custodian, the Certificate Insurer and the Surety on such Subsequent
Transfer Date, including its Principal Balance as of the Subsequent Cut-off
Date and all collections of such principal and all payments of interest in
respect of such Subsequent Mortgage Loans to the extent such collections
represent interest accrued from and including the related Subsequent Transfer
Date (interest accruing prior to such Subsequent Transfer Date being property
of the Mortgage Loan Seller) due after the related Subsequent Cut-off Date
and each related Mortgage 100(Service Mark) Pledge Agreement and each related
Parent Power(Registered Trademark) Agreement. The foregoing sale, transfer,
assignment, set over and conveyance of each Parent Power(Registered
Trademark) Agreement that is a Parent Power(Registered Trademark) Guaranty
Agreement for Real Estate does not constitute and is not intended to result
in an assumption by the Trustee or the Trust Fund of any obligation or
liability of MLCC under the related Equity Access(Registered Trademark)
Account (as defined in such Parent Power(Registered Trademark) Agreement).
MLCC is authorized to correct any error in any Mortgage 100(Service Mark)
Pledge Agreement or Parent Power(Registered Trademark) Agreement and to
terminate any such agreement and release the related collateral in accordance
with the terms thereof. If it is discovered that any of the conditions set
forth in Section 2.03 (b), (c), (d) and (e) has not been satisfied with
respect to a Subsequent Mortgage Loan, then such failure to satisfy such
condition shall be deemed to be a breach of a representation and warranty in
Section 3.01(b) and, if such breach materially and adversely affects the
value of such Subsequent Mortgage Loan or the interests of the
Certificateholders (or materially and adversely affects the interests of the
Certificate Insurer or the Surety in such Subsequent Mortgage Loans), the
Mortgage Loan Seller shall be obligated to repurchase or substitute for such
Subsequent Mortgage Loan in accordance with and subject to the limitations in
Sections 3.01(b) and 3.02, as applicable. If such deemed breach relates to
Mortgage Loans or Subsequent Mortgage Loans in the aggregate, then the
Mortgage Loan Seller shall select such of the Subsequent Mortgage Loans for
purchase or substitution as will result in the satisfaction of such
conditions.
The amount released from the Pre-Funding Account shall be one hundred
percent (100%) of the aggregate Principal Balances as of the applicable
Subsequent Cut-off Date of the Subsequent Mortgage Loans so transferred.
(b) Each of the following conditions shall be satisfied on or prior to
the related Subsequent Transfer Date:
(i) the Master Servicer shall have provided the Trustee and the
Certificate Insurer with a timely Addition Notice and shall have
provided any information reasonably requested by either of the foregoing
with respect to the Subsequent Mortgage Loans;
(ii) the Company shall have executed and delivered a Subsequent
Transfer Agreement with all required schedules and exhibits;
(iii) the Master Servicer shall have deposited or cause to be
deposited in the applicable Certificate Account all collections of
principal in respect of the Subsequent Mortgage Loans received after the
related Subsequent Cut-off Date and all collections of interest accruing
from and after the related Subsequent Transfer Date;
(iv) as of each Subsequent Transfer Date, neither the Company nor
the Master Servicer is insolvent and neither will become insolvent by
such transfer and neither the Company nor the Master Servicer is aware
of any pending insolvency;
(v) such purchase and sale of Subsequent Mortgage Loans will not
result in a material adverse federal income tax consequence to the Trust
Fund or the Holders of the Certificates;
(vi) the Pre-Funding Period shall not have terminated; and
(vii) the Company shall have delivered to the Certificate Insurer,
the Rating Agencies and the Trustee Opinions of Counsel with respect to
the transfer of the Subsequent Mortgage Loans substantially in the form
of the Opinions of Counsel delivered to the Certificate Insurer, the
Rating Agencies and the Trustee on the Closing Date (bankruptcy,
corporate and tax opinions).
(c) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Master Servicer shall take the actions set forth in
Section 2.01 and the Trustee (and the Custodian pursuant to the Custodial
Agreement) shall take the actions applicable to it specified in Section 2.02
and the Master Servicer shall be deemed to have made the representations and
warranties set forth in Section 3.01(b), in each case with respect to the
Subsequent Mortgage Loans delivered on a Subsequent Transfer Date, except
that references in said sections to Mortgage Loans, the Closing Date and the
Cut-off Date shall refer to the applicable Subsequent Mortgage Loans,
Subsequent Transfer Date and Subsequent Cut-off Date, respectively. In
connection with such assignment and transfer, within 21 days after the
related Subsequent Transfer Date, the Master Servicer, on behalf of the
Company, shall deliver to, and deposit with, the Custodian the documents or
instruments listed in Exhibit B hereto with respect to each related
Subsequent Mortgage Loan; provided that the Master Servicer shall deliver at
least 50% of the related Mortgage Notes on or before the related Subsequent
Transfer Date.
(d) As of its Subsequent Cut-off Date, such Subsequent Mortgage Loans
shall satisfy the following criteria:
(i) each such Subsequent Mortgage Loan shall not be delinquent in
payment by one or more monthly payments as of the related Subsequent
Cut-off Date;
(ii) the remaining stated term to maturity of each such Subsequent
Mortgage Loan will not be less than 275 months and will not exceed 301
months ;
(iii) each such Subsequent Mortgage Loan will have a Margin as
described under "MLCC and Its Mortgage Programs" in the Prospectus
Supplement dated November 25, 1997;
(iv) each such Subsequent Mortgage Loan will be underwritten in
accordance with the Master Servicer's underwriting guidelines in effect
at the time of origination;
(v) each such Subsequent Mortgage Loan will not have a Loan-to-
Value Ratio greater than 118%; and
(vi) the Subsequent Mortgage Loans will have as of the end of the
Pre-Funding Period, a weighted average term since origination not in
excess of 4 months.
In the sole discretion of the Certificate Insurer, Subsequent Mortgage Loans
not satisfying the requirements set forth above may be purchased by the Trust
Fund; provided, however, that the addition of such Subsequent Mortgage Loans
will not materially affect the aggregate characteristics of the entire
Mortgage Pool.
(e) Following the purchase of any Subsequent Mortgage Loan by the Trust
Fund, the Mortgage Loans (including the Subsequent Mortgage Loans) shall:
(i) have a weighted average original term to stated maturity of not
more than 301 months;
(ii) have a weighted average Constructive Loan-to-Value Ratio of
not more than 71%;
(iii) have no Mortgage Loan with a Principal Balance in excess of
$5,000,000 (except for 1 Initial Mortgage Loan) and no more than 46% by
aggregate principal balance will have a Principal Balance in excess of
$1,000,000;
(iv) not have a concentration of Mortgaged Properties in a single
zip code in excess of 4.5% by aggregate Principal Balance of the
Mortgage Loans;
(v) have a weighted average gross margin of at least 1.875%;
(vi) have at least 84% by aggregate Principal Balance of Mortgage
Loans secured interests in attached or detached single family dwellings
units (including units
in de minimis planned unit developments but excluding condominiums,
cooperatives, 2-4 family residences and planned unit development
projects); and
(vii) have a weighted average Mortgage Rate that is not more than
100 basis points lower than the weighted average Mortgage Rate of the
Initial Mortgage Loans.
Section 2.04. Trust Fund; Authentication of Certificates. Subject to
------------------------------------------
the provisions of Section 2.01, the Trustee acknowledges and accepts the
assignment to it of the Trust Fund created pursuant to this Agreement in
trust for the use and benefit of all present and future Certificateholders,
the Certificate Insurer and the Surety. The Trustee acknowledges the
assignment to it of the Mortgage Loans, the Mortgage 100(Service Mark) Pledge
Agreements and the Parent Power(Registered Trademark) Agreements and has
caused to be authenticated and delivered to or upon the order of the Company,
in exchange therefor, Certificates duly authenticated by the Trustee in
authorized denominations evidencing ownership of the entire Trust Fund.
Section 2.05. REMIC Elections. The Company hereby directs the Trustee
---------------
to sign two initial tax returns to be provided by the Master Servicer which
shall cause the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
to elect for federal income tax purposes to consist of two REMICs. This
Agreement shall be construed so as to carry out the intention of this
Agreement that the Lower-Tier REMIC shall consist of all of the assets
constituting the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
and shall be evidenced by the Lower-Tier Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Lower-Tier
REMIC for purposes of the REMIC Provisions) and the Lower-Tier Interest R
(which will represent the single "residual interest" in the Lower-Tier REMIC
for purposes of the REMIC Provisions). The Trustee shall hold the Lower-Tier
Regular Interests. In addition, the Upper-Tier REMIC at all times prior to
the date on which final payment is made (or made available on demand) to the
Holders of any Class A, Class B and Class C Certificates shall consist of the
Lower-Tier Regular Interests and shall be evidenced by the Class A, Class B
and Class C Certificates (which will represent the "regular interests" in the
Upper-Tier REMIC for purposes of the REMIC Provisions) and the Upper-Tier
Interest R (which will represent the single "residual interest" in the Upper-
Tier REMIC for purposes of the REMIC Provisions). The Class R Certificate
shall represent beneficial ownership of the Lower-Tier Interest R and the
Upper-Tier Interest R. The Closing Date is hereby designated as the "startup
day" of such REMIC within the meaning of Section 860G(a)(9) of the Code.
Section 2.06. REMIC Tax Matters. The tax year of the Trust Fund shall
-----------------
be the calendar year, and the Trust Fund shall use the accrual method of
reporting income and loss.
Section 2.07. REMIC Certificate Maturity Date. Solely for purposes
-------------------------------
of satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, and
based upon certain assumptions, the "latest possible maturity date" of all
regular interests in the Lower-Tier and Upper-Tier REMICs created hereby is
the Distribution Date in November 2025.
Section 2.08. Lower-Tier REMIC. Principal of and interest on the
----------------
Lower-Tier Regular Interests and the Lower-Tier Interest R shall be allocated
to the Corresponding Class of Certificates in the manner set forth in the
following table:
Corresponding Class of Certificates
-----------------------------------
<TABLE>
<CAPTION>
Lower-Tier Initial Lower-Tier Allocation of Allocation
Interest Principal Balance Pass-Through Rate Principal(1) of Interest
---------- ----------------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
A $308,089,000 (2) Class A Class A and Class
C
B $4,692,441 (2) Class B Class B and Class
C
R (3) (3) (4) (4)
</TABLE>
_______________
(1) The amount of principal allocable from a Lower-Tier Regular Interest to
its Corresponding Class of Certificate on any Distribution Date shall be
100%.
(2) The Lower-Tier Pass-Through Rate for Lower-Tier Interests A and B for any
Distribution Date will be equal to the Alternate Certificate Rate for such
Distribution Date.
(3) The Lower-Tier Interest R will have no Principal Balance and will not
bear interest.
(4) The beneficial ownership of the Lower-Tier Interest R and the Upper-Tier
Interest R will be represented by the Class R Certificate.
(End of Article II)
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE MASTER
--------------------------------------------
SERVICER; REPURCHASE OF MORTGAGE LOANS;
--------------------------------------
REPRESENTATION AND WARRANTY OF THE COMPANY
-----------------------------------------
Section 3.01. Representations and Warranties of the Master Servicer.
-----------------------------------------------------
The Master Servicer hereby represents and warrants to the Trustee that on the
Closing Date it has entered into the Sale Agreement, wherein in its capacity
as the Mortgage Loan Seller, the Master Servicer has made the following
representations and warranties, and in its capacity as Master Servicer,
hereby further represents and warrants to the Trustee, the Certificate
Insurer, the Surety and the Company as of the Closing Date, for the Initial
Mortgage Loans, or in the case of the Subsequent Mortgage Loans, the
applicable Subsequent Transfer Date, as follows:
(a) With respect to the Master Servicer in this Section 3.01 and
Section 3.02, Master Servicer means both Master Servicer and Mortgage
Loan Seller for as long as the Master Servicer and the Mortgage Loan
Seller are the same Person, and means Mortgage Loan Seller only when the
Mortgage Loan Seller and the Master Servicer are different Persons:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and is qualified to transact business in each state in
which any Mortgaged Property is located or is not required under
applicable law from such qualification and no demand for such
qualification has been made upon the Master Servicer by any such
state. The Master Servicer is or will be in compliance with the
laws of any such state to the extent necessary to ensure the
enforceability of each Mortgage Loan and the servicing of the
Mortgage Loans by it in accordance with the terms of this
Agreement;
(ii) The Master Servicer has the full power and authority to
hold each Mortgage Loan, to sell each Mortgage Loan and execute,
deliver and perform, and to enter into and consummate all
transactions contemplated by this Agreement and the Sale Agreement
and to conduct its business as presently conducted, has duly
authorized the execution, delivery and performance of this
Agreement and the Sale Agreement, has duly executed and delivered
this Agreement and the Sale Agreement, and this Agreement, the Sale
Agreement and each Assignment of Mortgage to the Company
constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against it 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 availability of equitable remedies;
(iii) None of the execution and delivery of this Agreement or
the Sale Agreement, the origination or acquisition of the Mortgage
Loans by the Master Servicer, the sale of the Mortgage Loans to the
Company, the consummation of the transactions contemplated thereby,
or the fulfillment of or compliance with the terms and conditions
of this Agreement or the Sale Agreement will materially conflict
with or result in a material breach of any of the terms, conditions
or provisions of the Master Servicer's certificate of incorporation
or bylaws or any material legal restriction or any agreement or
instrument to which the Master Servicer is now a party or by which
it is bound, or constitute a material default or result in an
acceleration under any of the foregoing, or result in the material
violation of any law, rule, regulation, order, judgment or decree
to which the Master Servicer or its property is subject;
(iv) The Master Servicer is an approved conventional
seller/servicer for FNMA or FHLMC in good standing;
(v) With respect to each Mortgage Loan, the Master Servicer
is in possession of a complete Mortgage File in compliance with
this Agreement, except for such documents as have been delivered to
the Custodian and except for the Mortgages or assignments thereof
submitted for recordation as set forth in Section 2.01 hereof;
(vi) Immediately prior to the transfer of the Mortgage Loans
to the Company, the Master Servicer had good title to and is the
sole owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note;
(vii) There is no litigation pending or, to the Master
Servicer's knowledge, threatened to which the Master Servicer is a
party and which is reasonably likely to adversely affect the sale
of the Mortgage Loans, the execution, delivery or enforceability of
this Agreement or the Sale Agreement, or the ability of the Master
Servicer to service the Mortgage Loans under this Agreement in
accordance with the terms hereof, or which is reasonably likely to
have a material adverse effect on the financial condition of the
Master Servicer;
(viii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of or compliance by
the Master Servicer with this Agreement or the Sale Agreement, the
sale of the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement or the
Sale Agreement except for consents, approvals, authorizations and
orders which have been obtained;
(ix) To the best of the Master Servicer's knowledge, the
consummation of the transactions contemplated by this Agreement and
the Sale Agreement is in the ordinary course of business of the
Master Servicer, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Master Servicer pursuant to
this Agreement and the Sale Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(x) The origination, acquisition and collection practices
used by the Master Servicer and, to the best knowledge of the
Master Servicer, by the originator of the Mortgage Loan, with
respect to each Mortgage Note and Mortgage, have been in all
material respects legal and proper and, with respect to collection
practices, customary in the mortgage origination and servicing
business. With respect to escrow deposits and payments that the
Master Servicer collects, to the extent such payments are in the
possession of, or under the control of, the Master Servicer, there
exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. No escrow
deposits or other charges or payments due the Master Servicer have
been capitalized under any Mortgage or the related Mortgage Note;
(xi) No selection procedure believed by the Master Servicer
to be adverse to the interests of Certificateholders was used in
selecting the Mortgage Loans for inclusion in the Trust Fund;
(xii) No statement, report or other document furnished or to
be furnished on or before the Closing Date by the Master Servicer
pursuant to this Agreement or the Sale Agreement or in connection
with the transactions contemplated hereby or thereby contains any
untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not
misleading;
(xiii) The information supplied to the Company with respect
to the Mortgage Loans, the Master Servicer and the Master
Servicer's loan servicing portfolio, including, but not limited to,
the information contained in the Prospectus Supplement relating to
the offering of the Class A Certificates relating to the Mortgage
Loans and the Master Servicer, particularly the information under
the caption "The Mortgage Pool", is true and correct in all
material respects and does not omit to state a material fact
necessary to make
such information, in light of the circumstances under which given,
not misleading; and
(xiv) The Master Servicer will treat the sale of the Mortgage
Loans to the Company as a sale for federal income tax (to the
extent appropriate), reporting and accounting purposes.
(b) With respect to each Mortgage Loan as of the Closing Date in
the case of the Initial Mortgage Loans and the related Subsequent
Transfer Date in the case of the Subsequent Mortgage Loans (unless
another date is specified):
(i) The information set forth in the Mortgage Loan Schedule
is true and correct in all material respects;
(ii) (A) As of the Cut-off Date ( or the related Subsequent
Cut-off Date in the case of a Subsequent Mortgage Loan), (1) the
Mortgage Loan is not delinquent in payment by one or more Monthly
Payments and the Mortgage Loan has not been dishonored and (2) the
Mortgage Loan has never been delinquent in payment by two or more
Monthly Payments and has not more than once during the twelve
months preceding the Cut-off Date (the Subsequent Cut-off Date in
the case of a Subsequent Mortgage Loan) been delinquent in payment
by more than one Monthly Payment and (B) except as permitted in
clause (A)(1) above, there are no material defaults under the terms
of the Mortgage Loan and the Master Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of
any amount required by the Mortgage Loan;
(iii) To the best of the Master Servicer's knowledge, there
are no delinquent taxes or other outstanding charges affecting the
related Mortgaged Property which would permit a taxing authority to
initiate foreclosure proceedings against the Mortgaged Property;
(iv) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except
by written instruments contained in the Mortgage File, the
substance of which waiver, alteration or modification is reflected
on the Mortgage Loan Schedule. No Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
which assumption agreement is part of the Mortgage File and the
terms of which are reflected in the Mortgage Loan Schedule;
(v) The Mortgagor has not asserted that the Mortgage Note and
the Mortgage are subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will
the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the
Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including
the defense of usury and to the best of the Master Servicer's
knowledge, no such right of rescission, set-off, counterclaim or
defense has been asserted by any Person other than the obligor with
respect thereto;
(vi) All buildings upon the Mortgaged Property are required
to be insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are
customarily included in extended coverage in the area where the
Mortgaged Property is located, pursuant to Standard Hazard Policies
conforming to the requirements of Section 5.16. To the best
knowledge of the Master Servicer, all such Standard Hazard Policies
are in effect. On the date of origination such Standard Hazard
Policies contained a standard mortgagee clause naming the Master
Servicer or the originator of the Mortgage Loan and their
respective successors in interest as mortgagee and, to the best
knowledge of the Master Servicer, such clause is still in effect
and, to the best of the Master Servicer's knowledge, all premiums
due thereon have been paid. If the Mortgaged Property is located
in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, such
Mortgaged Property is covered by flood insurance. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance
at Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to maintain such
insurance at Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(vii) At the time of origination of such Mortgage Loan and
thereafter, all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws required to be complied with by the
Master Servicer as the originator of the Mortgage Loan and
applicable to the Mortgage Loan have been complied with in all
material respects;
(viii) The Mortgage has not been satisfied as of the Cut-off
Date (or the related Subsequent Cut-off Date in the case of a
Subsequent Mortgage Loan), cancelled or subordinated, in whole, or
rescinded, and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in
part (except for a release that does not materially impair the
security of the Mortgage Loan or a release the effect of which is
reflected in the Loan-to-Value Ratio for the Mortgage Loan as set
forth in the Mortgage Loan Schedule), nor to the best of the Master
Servicer's knowledge has any instrument been executed that would
effect any such release, cancellation, subordination or rescission;
(ix) Ownership of the Mortgaged Property is held in fee
simple (except for Mortgage Loans as to which the related land is
held in a leasehold which extends at least five years beyond the
maturity date of the Mortgage Loan). Except as permitted by the
fourth sentence of this Subsection (ix), the Mortgage is a valid,
subsisting and enforceable first lien on the Mortgaged Property,
including all buildings on the Mortgaged Property and all in-
stallations and mechanical, electrical, plumbing, heating and air
conditioning systems affixed to such buildings, and all additions,
alterations and replacements made at any time with respect to the
foregoing securing the Mortgage Note's original principal balance.
The Mortgage and the Mortgage Note do not contain any evidence on
their face of any security interest or other interest or right
thereto. Such lien is free and clear of all adverse claims, liens
and encumbrances having priority over the first lien of the
Mortgage subject only to (1) the lien of non-delinquent current
real property taxes and assessments not yet due and payable, (2)
covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording
which are acceptable to mortgage lending institutions generally, or
which are specifically referred to in the lender's title insurance
policy delivered to the originator of the Mortgage Loan and either
(A) which are referred to or otherwise considered in the appraisal
made for the originator of the Mortgage Loan, or (B) which do not
in the aggregate adversely affect the Appraised Value of the
Mortgaged Property as set forth in such appraisal, and (3) other
matters to which like properties are commonly subject which do not
in the aggregate materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged
Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage
Loan establishes and creates a valid, subsisting and enforceable
first lien and first priority security interest on the property
described therein;
(x) The Mortgage Note is not subject to a third party's
security interest or other rights or interest therein;
(xi) The Mortgage Note and the related Mortgage are genuine
and, to the best of the Master Servicer's knowledge, each is the
legal, valid and
binding obligation of the maker thereof, enforceable in accordance
with its terms subject to bankruptcy, insolvency and other laws of
general application affecting the rights of creditors. To the best
of the Master Servicer's knowledge, all parties to the Mortgage
Note and the Mortgage had the legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage. The Mortgage Note and the Mortgage have been duly and
properly executed by such parties. The proceeds of the Mortgage
Loan have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with;
(xii) Immediately prior to the transfer and assignment to the
Company, the Mortgage Note and the Mortgage were not subject to an
assignment or pledge, and the Master Servicer had full right to
transfer and sell the Mortgage Loan to the Company free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security
interest, including, to the best knowledge of the Master Servicer,
any lien, claim or other interest arising by operation of law;
(xiii) Each Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy
or insurance acceptable to FNMA or FHLMC, issued by a title insurer
acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring
(subject to the exceptions contained in (ix)(1) and (2) above) the
Master Servicer, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of
the Mortgage Loan. The Master Servicer is the sole insured of such
lender's title insurance policy, such title insurance policy has
been duly and validly endorsed to the Trustee or the assignment to
the Trustee of the Master Servicer's interest therein does not
require the consent of or notification to the insurer and such
lender's title insurance policy is in full force and effect and
will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement. To the best of the
Master Servicer's knowledge, no claims have been made under such
lender's title insurance policy, and no prior holder of the related
Mortgage has done, by act or omission, anything which would impair
the coverage of such lender's title insurance policy;
(xiv) To the best of the Master Servicer's knowledge, there
is no default, breach, violation or event of acceleration existing
under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a
default, breach, violation or event permitting acceleration, except
for any Mortgage Loan payment which is not late by more than 30
days; and the Master Servicer has not waived any default, breach,
violation or event permitting acceleration;
(xv) To the best of the Master Servicer's knowledge, there
are no mechanics' or similar liens or claims which have been filed
for work, labor or material (and, to the best of the Master
Servicer's knowledge, no rights are outstanding that under law
could give rise to such lien) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(xvi) To the best of the Master Servicer's knowledge, all
improvements subject to the Mortgage lay wholly within the
boundaries and building restriction lines of the Mortgaged Property
(and wholly within the project with respect to a condominium unit)
and no improvements on adjoining properties encroach upon the
Mortgaged Property except those which are insured against by the
title insurance policy referred to in clause (xiii) above and all
improvements on the property comply with all applicable zoning and
subdivision laws and ordinances;
(xvii) Each Mortgage Loan (except for the Mortgage Loans
referred to in the next sentence) was originated by, or closed in
the name of and funded by, the Master Servicer, and at the time of
each such origination the Master Servicer was a mortgagee approved
by the Secretary of Housing and Urban Development (the "HUD
Secretary") pursuant to Sections 203 and 211 of the National
Housing Act. Fifty-five (55) Initial Mortgage Loans, having an
aggregate Cut-off Date Principal Balance of $31,596,908, are
Correspondent Mortgage Loans. Initial Mortgage Loans and any
Subsequent Mortgage Loans which are Correspondent Mortgage Loans
were originated in the name of a Correspondent Lender which was a
mortgagee approved by the HUD Secretary pursuant to Sections 203
and 211 of the National Housing Act. As more fully described in
the Prospectus Supplement dated November 25, 1997 relating to the
Class A Certificates, each Mortgage Loan was underwritten in
accordance with the Master Servicer's underwriting guidelines in
effect at the time of origination. Each Mortgage Loan is an
adjustable rate conventional mortgage loan. Each Mortgage Loan
bears interest at a rate adjusted monthly or semiannually on the
relevant Interest Adjustment Date to a rate (rounded to the nearest
1/8th of 1% or 1/16th of 1%) equal to the applicable Margin stated
therein and shown on the Mortgage Loan Schedule plus the Index most
recently published as of the date 25 days (in the case of a monthly
adjustable Mortgage Loan) or 45 days (in the case of a semiannually
adjustable Mortgage
Loan) before the related Interest Adjustment Date, subject to its
Maximum Mortgage Rate. There is no minimum mortgage rate
applicable to a Mortgage Loan. No Mortgage Loan is subject to a
periodic interest rate cap (exclusive of the effect of usury or
similar laws). Each Mortgage Note is payable in scheduled monthly
installments, with interest payable in arrears. The Monthly
Payment on each Mortgage Loan is adjusted monthly or semiannually
on the relevant Payment Adjustment Date so that the monthly payment
is sufficient, during the first ten years of the term of the
Mortgage Loan, to pay only the interest due thereon and,
thereafter, to fully amortize, without balloon payments, the then
outstanding principal balance over its remaining term to stated
maturity and to pay interest at the related Mortgage Rate in effect
on such Payment Adjustment Date; provided that if a Convertible
Mortgage Loan is converted to a fixed rate, its Monthly Payment is
adjusted to a level payment that will fully amortize such Mortgage
Loan through its original maturity date. Convertible Mortgage
Loans and Index Convertible Mortgage Loans may be converted to a
new Index and Margin in accordance with the terms of the related
Mortgage Note. The Mortgage contains the usual and customary
provision of the Master Servicer at the time of origination for the
acceleration of the payment of the unpaid Principal Balance of the
Mortgage Loan if the related Mortgaged Property is sold without the
prior consent of the mortgagee thereunder;
(xviii) The Mortgaged Property at origination or acquisition
was and, to the best of the Master Servicer's knowledge, currently
is free of material damage and waste and in good repair and at
origination there was, and to the best of the Master Servicer's
knowledge there currently is, no proceeding pending for the total
or partial condemnation thereof;
(xix) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including, (1) in
the case of a Mortgage designated as a deed of trust, by trustee's
sale or judicial foreclosure, and (2) otherwise by judicial
foreclosure. The Master Servicer has no knowledge of any homestead
or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale
or the right to foreclose the Mortgage;
(xx) If the Mortgage constitutes a deed of trust, a trustee,
duly qualified if required under applicable law to act as such, has
been properly designated and currently so serves and is named in
the Mortgage, and no fees or expenses are or will become payable by
the Trustee to the trustee under the
deed of trust, except in connection with a trustee's sale or
attempted sale after default by the Mortgagor;
(xxi) With respect to each Mortgage Loan, there is an
appraisal on a FNMA-approved form (or a narrative residential
appraisal) of the related Mortgaged Property signed prior to the
approval of such Mortgage Loan application by a qualified
appraiser, appointed by the Master Servicer or the originator of
such Mortgage Loan, as appropriate, who has no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the
approval or disapproval of such Mortgage Loan;
(xxii) The Master Servicer has no knowledge of any
circumstances or condition with respect to the Mortgage, the
Mortgaged Property, the Mortgagor or the Mortgager's credit
standing that can reasonably be expected to cause investors to
regard the Mortgage Loan as an unacceptable investment, cause the
Mortgage Loan to become delinquent, or adversely affect the value
or marketability of the Mortgage Loan;
(xxiii) Each Mortgage Loan has a Loan-to-Value Ratio that is
not greater than 125%, and has not been significantly modified
within the meaning of Treasury Regulation Section 1.860G-2(h);
(xxiv) The Initial Mortgage Loans were originated from August
1996 through October 1997. At origination all Initial Mortgage
Loans had a term to stated maturity of 25 years;
(xxv) No Mortgage Loan contains "subsidized buydown" or
"graduated payment" features;
(xxvi) Before giving effect to any exercise of the option in
an Index Convertible Mortgage Loan or a Convertible Mortgage Loan
to convert to a new Index, the Margins on the Initial Mortgage
Loans (A) in the case of the Prime Index Mortgage Loans, generally
range from -0.125% to 0.750% (B) in the case of the Six-Month LIBOR
Index Mortgage Loans, generally range from 0.750% to 2.875%, (C) in
the case of One-Month LIBOR Index Mortgage Loans, generally range
from 1.000% to 2.750%, and (D) in the case of Treasury Index
Mortgage Loans, generally range from 2.000% to 3.000%;
(xxvii) No more than 4.2% of the Initial Mortgage Loans, by
Cut-off Date Principal Balances, are, as of the Cut-off Date,
secured by Mortgaged Properties located in the same zip code area;
(xxviii) The Mortgaged Property is a single-family (one- to
four-unit) dwelling residence erected thereon, or a two- to four-
family residence erected
thereon, or an individual condominium unit in a condominium, or an
individual unit in a planned unit development project or in a de
minimis planned unit development, or the Mortgage Loan is secured
by a security interest in cooperative shares and a lease or other
arrangement in respect of a cooperative apartment. No such
residence is a mobile home or a manufactured dwelling which is not
permanently attached to the land. If the Mortgage Loan was
originated in the Mortgage Loan Seller's construction to permanent
financing program, construction of the related dwelling residence
is complete;
(xxix) Based on representations of the related mortgagors,
approximately 83.4% of the Initial Mortgage Loans (measured by
aggregate Principal Balance) represent loans for primary
residences, 12.8% represent loans for secondary vacation residences
and 3.8% represent loans for investment properties;
(xxx) The Mortgage Rates borne by the Initial Mortgage Loans
as of the Cut-off Date ranged from 6.625% per annum to 9.25% per
annum;
(xxxi) The original principal balances of the Initial
Mortgage Loans ranged from $19,875 to $7,750,000. The maximum
outstanding principal balance of any Initial Mortgage Loan as of
the Cut-off Date was $7,750,000
(xxxii) No more than 30.5% of the Initial Mortgage Loans by
Principal Balance as of the Cut-off Date are Additional Collateral
Mortgage Loans; and as of the Cut-off Date (or the related
Subsequent Cut-off Date in the case of a Subsequent Mortgage Loan)
each such Additional Collateral Mortgage Loan had the benefit of
Additional Collateral at least equal to the Original Additional
Collateral Requirement for such Mortgage Loan; and
(xxxiii) Except in the case of less than 1.5% of the Initial
Mortgage Loans (by Cut-off Date Principal Balance), which were
originated with limited income documentation, no Initial Mortgage
Loan was originated or acquired in accordance with the terms of a
limited documentation program.
The Company, as assignee of the Master Servicer under this Agreement and
the Sale Agreement, hereby assigns to the Trustee for the benefit of the
Certificateholders, the Certificate Insurer and the Surety all of its right,
title and interest in respect of the Sale Agreement insofar as such
Agreements relate to the representations and warranties set forth in this
Section 3.01.
The representations and warranties set forth in this Section 3.01 shall
survive the delivery of the respective Mortgage Files to the Custodian on
behalf of the Trustee. With
respect to the representations and warranties described in this Section which
are made to the best of the Master Servicer's knowledge, if it is discovered
by any of the Company, the Master Servicer, the Certificate Insurer, the
Surety or the Trustee that the substance of such representation and warranty
is inaccurate, then notwithstanding the Master Servicer's lack of knowledge
with respect to the substance of such representation and warranty being
inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty. Upon discovery by either the Company, the Master Servicer, the
Certificate Insurer, the Surety or the Trustee of a breach of any of the
foregoing representations and warranties which materially and adversely
affects the value of a Mortgage Loan or the interest of the Certificate-
holders (or which materially and adversely affects the interests of the
Certificateholders, the Certificate Insurer or the Surety in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan), the party discovering such breach shall give
prompt written notice to the other parties and to the Certificate Insurer and
the Surety. The Company shall promptly (and in any event within no more than
five Business Days) request that the Master Servicer cure such breach. The
Master Servicer shall within 90 days from the date the Master Servicer was
notified of or otherwise discovers such breach cure such breach in all
material respects, substitute a Mortgage Loan pursuant to the provisions of
Section 3.02 or purchase such Mortgage Loan from the Trustee at the Purchase
Price. The Company shall send a copy of such notice to the Trustee, the
Certificate Insurer and to the Surety. The Purchase Price for the purchased
Mortgage Loan shall be deposited by the Master Servicer in the Certificate
Account and, upon receipt by the Trustee of written notification of such
deposit in the form of an Officer's Certificate signed by a Servicing
Officer, the Trustee shall promptly authorize the Custodian, upon its receipt
of a request for release of documents from the Master Servicer, to release to
the Master Servicer the related Mortgage File and execute and deliver such
endorsements, instruments of transfer or assignment, without recourse, as
shall be necessary to vest in the Master Servicer or its designee, any
interest of the Trustee in any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Master Servicer
to purchase or substitute for any Mortgage Loan as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to Certificateholders or the Trustee on behalf of
Certificateholders, the Certificate Insurer or the Surety.
Section 3.02. Option to Substitute. Subject to Section 5.28(b), if
--------------------
the Master Servicer is required to repurchase any Mortgage Loan pursuant to
Section 2.02 or 3.01, then within the period of time specified in each such
Section, the Master Servicer may, at its option, but only during the
applicable specified period, remove such deficient Mortgage Loan from the
terms of this Agreement and substitute another mortgage loan for such
deficient Mortgage Loan, in lieu of repurchasing such deficient Mortgage
Loan. Any substitute Mortgage Loan shall (i) have a Principal Balance at the
time of substitution not in excess of the Principal Balance of the deficient
Mortgage Loan (the amount of any difference being deemed to be a
Principal Prepayment to be credited to or deposited in the Certificate
Account by the Master Servicer), (ii) have a Mortgage Rate not less than the
Mortgage Rate of the deficient Mortgage Loan, and not more than one
percentage point greater than the Mortgage Rate of the deficient Mortgage
Loan, (iii) bear interest based on the same Index, have a Margin (assuming
the Margin is subtracted from the Index to arrive at the Mortgage Rate) that
is not greater than the Margin of the deficient Mortgage Loan, have a Margin
(assuming the Margin is added to the Index) that is not less than the Margin
of the deficient Mortgage Loan and have the same frequency for adjustment of
the Mortgage Rate and Monthly Payment, (iv) have a remaining maturity not
later than, and not more than one year earlier than, the remaining maturity
of the deficient Mortgage Loan, (v) be, in the reasonable determination of
the Master Servicer, of the same type, quality and character as the deficient
Mortgage Loan as if the breach had not occurred, (vi) have a Loan-to-Value
Ratio not more than that of the deficient Mortgage Loan, (vii) be in
compliance with the representations and warranties contained in Section 3.01
as of the date of substitution (including the representation and warranties
in Section 3.01(b)) and (viii) not be an Additional Collateral Mortgage Loan
unless the deficient Mortgage Loan is an Additional Collateral Mortgage Loan.
If the Principal Balance of the substitute Mortgage Loan is less than the
Principal Balance of the deficient Mortgage Loan, the Master Servicer shall
deposit such differential amount in the Certificate Account, which amount
shall be deemed to be a Principal Prepayment. Notwithstanding anything in
this Agreement to the contrary, the Master Servicer shall not substitute a
mortgage loan for a deficient Mortgage Loan at any time after two years after
the Closing Date.
The Master Servicer shall amend the Mortgage Loan Schedule to reflect
the withdrawal of the deficient Mortgage Loan from this Agreement and the
substitution of such substitute Mortgage Loan therefor. Upon such amendment,
the Master Servicer shall be deemed to have made as to such substitute
Mortgage Loan the representations and warranties set forth in Section 3.01 as
of the date of such substitution and to have represented and warranted that
such substitute Mortgage Loan satisfies the requirements of this Section
3.02.
Section 3.03. Representation and Warranty of the Company. The
------------------------------------------
Company represents and warrants that it has transferred to the Trustee (for
inclusion in the Trust Fund) each Mortgage Loan free of any liens, claims,
charges or other encumbrances created by the Company and there has been no
other sale or assignment thereof by the Company.
Section 3.04. Index Convertible Mortgage Loans and Convertible
------------------------------------------------
Mortgage Loans; Certain Procedures and Purchases. (a) The Master Servicer
- ------------------------------------------------
shall determine the fixed interest rates or new Index and Margin, as
applicable, into which Mortgagors under Index Convertible Mortgage Loans and
Convertible Mortgage Loans may convert the adjustable interest rates on their
Mortgage Notes in accordance with the terms thereof. The Master Servicer
agrees to make such determinations and otherwise administer the program
contemplated in the Mortgage Notes for the Index Convertible Mortgage Loans
until the last
date on which Mortgagors have the option to convert the adjustable interest
rates on their Mortgage Notes to new Indices and related Margins. The Master
Servicer agrees to make such determinations and otherwise administer the
program contemplated in the Mortgage Notes for the Convertible Mortgage Loans
until the later to occur of (i) the date on which all the Convertible
Mortgage Loans have become fixed rate Mortgage Loans and (ii) the last date
on which Mortgagors have the option to convert the adjustable interest rates
on their Mortgage Notes to fixed interest rates or new Indices and related
Margins. In addition, the Master Servicer agrees to comply with the
provisions of the Mortgage Notes to service the Index Convertible Mortgage
Loans and the Convertible Mortgage Loans in accordance with the terms of the
related Mortgage Notes.
(b) Upon receiving notice of the conversion of any Convertible
Mortgage Loan to a fixed interest rate, the Master Servicer will promptly
notify the Trustee (if it holds the related Mortgage File) or the Custodian.
Subject to Section 3.04(f), prior to the day on which a Convertible Mortgage
Loan has become a fixed rate Mortgage Loan, the Master Servicer shall be
obligated to purchase such Converting Mortgage Loan at the Conversion Price.
All amounts paid by the Master Servicer in connection with the purchase of a
Converting Mortgage Loan or Converted Mortgage Loan, as the case may be, will
be deposited in the Certificate Account. The Master Servicer shall not be
obligated under this Section to purchase a Mortgage Loan that converts to a
different Index.
(c) Notwithstanding that a Mortgage Loan becomes a Converting
Mortgage Loan in any month, such Converting Mortgage Loan shall remain in the
Trust Fund and all payments in respect thereof shall remain in the Trust Fund
unless and until, if the Master Servicer is obligated to purchase such
Converting Mortgage Loan, such Converting Mortgage Loan is purchased by the
Master Servicer pursuant to Section 3.04(b).
(d) In the event that any Converting Mortgage Loan is not
purchased as provided in Section 3.04(b), the amount of the conversion fee,
if any, paid by the Mortgagor in connection with the conversion of the
adjustable rate on such Converting Mortgage Loan into a fixed rate or a
different Index shall be deposited by the Master Servicer into the
Certificate Account on the Business Day immediately preceding the
Distribution Date on which the proceeds of the purchase of such Converting
Mortgage Loan were to be distributed to Certificateholders. The obligation
of the Master Servicer to deposit the amounts, if any, required by this
subsection (d) shall not limit or affect any purchase under subsection (b)
above.
(e) Upon any purchase of a Converting Mortgage Loan by the Master
Servicer pursuant to Section 3.04(b) and the deposit in the Certificate
Account of the Conversion Price, the Master Servicer shall give the Trustee
written notice thereof and, based thereon, the Trustee shall release, or
cause any Custodian to release, the related
Mortgage File and convey such Mortgage Loan to the Master Servicer whereupon
such purchased Converting Mortgage Loan shall cease to be part of the Trust
Fund.
(f) If a Master Servicer's duties as Master Servicer are
terminated pursuant to Section 9.01, Section 8.04 or the third paragraph of
Section 8.02, then such Master Servicer shall not be obligated to purchase
any Mortgage Loan that becomes a Converting Mortgage Loan after such
termination. A successor Master Servicer (including, without limitation, the
Trustee as a successor Master Servicer ) shall not be obligated to purchase
Convertible Mortgage Loans that become Converting Mortgage Loans pursuant to
Section 3.04(b) unless, upon becoming a successor Master Servicer, such
successor Master Servicer elects in its sole discretion, by giving written
notice of such election to the Trustee at or about the time of its
succession, to be obligated to make such purchases.
(End of Article III)
ARTICLE IV
THE CERTIFICATES
---------------
Section 4.01. The Certificates. The Class A Certificates, Class B
----------------
Certificates, Class C Certificates and Class R Certificate shall be substan-
tially in the forms annexed hereto as Exhibits C, D, E and F, respectively,
and shall, on original issue, be executed by the Company and authenticated by
the Trustee upon the assignment to the Trustee of the documents specified in
Section 2.01, and delivered to or upon the order of the Company. The Class A
and Class B Certificates shall be issuable in the minimum original dollar
denominations (and integral multiples of approximately $1,000 in excess of
such amount, except for one Certificate for each Class representing the
balance of such Class) and aggregate original dollar denominations per Class
as set forth in the following table:
<TABLE>
<CAPTION> Aggregate
Minimum Approximate Original
Original Denominations of all
Class Denomination Certificates of Class
----- ------------ ---------------------
<S> <C> <C> <C>
A $ 25,000 $308,089,000
B $500,000 $ 4,692,441
</TABLE>
So long as the Class A Certificates are Book-Entry Certificates, the
Class A Certificates that are Book-Entry Certificates shall be evidenced by
one or more certificates representing Class A Certificates in denominations
acceptable to the Depository. Beneficial ownership of the Class A Certifi-
cates that are Book-Entry Certificates may be held in minimum dollar
denominations of $25,000 and integral multiples of $1,000 in excess thereof.
The minimum Percentage Interest for a Class C or Class R Certificate shall be
20%.
The Certificates shall be signed by manual or facsimile signature on
behalf of the Company by one of its officers. Certificates bearing the
manual or facsimile signatures of individuals who were at the time of
signature proper officers of the Company shall bind the Company, notwith-
standing that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did
not hold such offices at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a manual authentication by an
authorized officer of the Trustee and such authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
The rights of the Certificateholders to receive payments with respect to
the Trust Fund in respect of the Certificates, and all ownership interests of
the Certificateholders in such payments, shall be as set forth in this
Agreement.
Section 4.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at its Corporate Trust Office, or at
the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided.
(b) Subject to Section 4.02(c), upon surrender for registration of
transfer of any Certificate at any office or agency of the Trustee maintained
for such purpose, the Company shall execute and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate or Certificates of a like Class and aggregate
denomination and dated the date of authentication by the Trustee.
(c) No transfer of a Class B, Class C or Class R Certificate shall be
made unless such transfer is made pursuant to an effective registration
statement or in accordance with an exemption from the requirements under the
Securities Act of 1933, as amended (the "Act"). If such a transfer is to be
made in reliance upon an exemption from the Act, (i) the Trustee shall, if
not otherwise directed by the Company, require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Company that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the Act or is being made pursuant to
the Act, which Opinion of Counsel shall not be an expense of the Trustee, the
Company or the Master Servicer, and (ii) the Trustee shall require the
transferee to execute a certification, substantially in the form of Exhibit L
hereto, acceptable to and in form and substance satisfactory to the Company
and the Trustee setting forth the facts surrounding such transfer; 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.
Such Opinion of Counsel and certification shall not be an expense of the
Trustee, the Company or the Master Servicer. The Trustee, the Master
Servicer and the Company may, without the consent of any Certificateholder,
add provisions (which shall include a form of certificate to be attached
hereto as an exhibit that must be delivered by the proposed transferee) to
this Section 4.02(c) to permit transfers pursuant to Rule 144A of the
Securities and Exchange Commission, in which case transfers pursuant to such
provisions shall not require an Opinion of Counsel.
(d) No transfer (exclusive of any transfer to a Depository or a
securitization trustee) of a Class B, Class C or Class R Certificate shall be
made unless the Trustee shall have received either (i) a representation
letter (substantially in the form attached hereto as Exhibit N) from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Company, to the effect that such
transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a Person acting on behalf of any such plan or acquiring such
Certificate with funds of such a plan (including without limitation any
insurance company using funds that may constitute "plan assets"), which
representation letter shall not be an expense of the Trustee, the Company or
the Master Servicer, or (ii) in the case of any such Certificate presented
for registration in the name of an employee benefit plan subject to ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel
satisfactory to the Trustee and the Company to the effect that the purchase
or holding of such Certificate will not result in the assets of the Trust
Fund being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the
Trustee, the Company or the Master Servicer to any obligation in addition to
those undertaken in this Agreement or cause the Trustee, the Company or the
Master Servicer to be a fiduciary of such Plan, which Opinion of Counsel
shall not be an expense of the Trustee, the Company or the Master Servicer.
During the Pre-Funding Period, each Certificate Owner shall be deemed to have
made the representation in clause (i) of this paragraph.
(e) At the option of the Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of authorized denominations
of a like Class and Percentage Interest, upon surrender of the Certificate to
be exchanged at any office or agency of the Trustee maintained for such
purpose. Whenever a Certificate is so surrendered for exchange, the Company
shall execute and the Trustee shall authenticate and deliver, the Certificate
which the Certificateholder making the exchange is entitled to receive.
Every Certificate presented or surrendered for transfer or exchange shall (if
so required by the Trustee) be duly endorsed by, or be accompanied by a
written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment by the
affected Certificateholders of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of the Certificate.
(g) All Certificates surrendered for transfer and exchange shall be
cancelled and retained or destroyed by the Trustee in accordance with its
standard procedures.
(h) Notwithstanding anything to the contrary contained herein, unless
and until the Company shall have received an Independent Opinion of Counsel,
satisfactory in form and substance to the Company, to the effect that the
absence of the transfer restrictions contained in this Section 4.02(h) would
not result in the imposition of federal income tax upon the Trust Fund or
cause the Trust Fund (exclusive of the Mortgage 100(Service Mark) Pledge
Agreements, the Parent Power(Registered Trademark) Agreements and the Pre-
Funding Account (including the funds therein and
Pre-Funding Earnings)) to fail to qualify as two REMICs, no transfer, sale or
other disposition of the Class R Certificate (including a beneficial interest
therein) may be made without the express written consent to be granted in the
sole discretion of the Master Servicer and the Trustee.
(i) As a condition to the granting of the consent referred to in
Section 4.02(h), prior to the transfer, sale or other disposition of the
Class R Certificate, the Master Servicer shall require that the proposed
transferee deliver to the Master Servicer and the Trustee an affidavit
stating that as of the date of such transfer (i) such transferee is not and
has no intention of becoming either (A) the United States, any state or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing (other
than an instrumentality that is a corporation all of whose activities are
subject to tax under the Code and, except in the case of the Federal Home
Loan Mortgage Corporation, a majority of the board of directors of which
corporation is not selected by the United States, any state or political
subdivision thereof), (B) any organization that is exempt from any tax
imposed by Chapter 1 of Subtitle A of the Code, other than (x) a tax-exempt
farmers' cooperative within the meaning of section 521 of the Code or (y) an
organization that is subject to the tax imposed by section 511 of the Code on
"unrelated business income" or (C) a corporation operating on a cooperative
basis that is engaged in furnishing electric energy or providing telephone
service to persons in rural areas (within the meaning of section
1381(a)(2)(C) of the Code) (any Person described in (A), (B), or (C) being
referred to herein as a "Disqualified Organization"), (ii) such transferee is
not acquiring such Certificates as an agent, broker, nominee, or middleman
for a Disqualified Organization and (iii) such transferee is not a Non-U.S.
Person. The Master Servicer and a Responsible Officer of the Trustee shall
not grant the consent referred to in Section 4.02(h) if either has actual
knowledge that any statement made in the affidavit issued pursuant to the
preceding sentence is not true. Notwithstanding any transfer, sale or other
disposition of such Certificates to a Disqualified Organization or Non-U.S.
Person, such transfer, sale or other disposition shall be deemed to be of no
legal force or effect whatsoever and such Disqualified Organization or Non-
U.S. Person shall not be deemed to be a Holder of such Certificates for any
purpose hereunder, including, but not limited to, the receipt of
distributions on such Certificates. If any purported transfer shall be in
violation of the provisions of Section 4.02(h), then the prior Holder of such
Certificates shall, upon discovery that the transfer of such Certificates was
not in fact permitted in Section 4.02(h), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer of such
Certificates. The Trustee and the Master Servicer shall be under no
liability to any Person for any registration or transfer of a Class R
Certificate that is not permitted by Section 4.02(h) or for making payments
due on any such Certificate to the purported Holder thereof or taking any
other action with respect to such purported Holder under the provisions of
this Agreement so long as the transfer was registered under the written
certification of the Master Servicer as described in Section 4.02(h). The
prior Holder shall be entitled to recover from any purported Holder of any
such Certificate that was in fact not a permitted
transferee under Section 4.02(h) at the time it became a Holder all payments
made on such Certificate; provided that neither the Master Servicer nor the
Trustee shall be responsible for such recovery. Each such Certificateholder,
by the acceptance of a Class R Certificate, shall be deemed for all purposes
to have consented to the provisions of Section 4.02(h) and to any amendment
of this Agreement deemed necessary by counsel of the Master Servicer, as
evidenced by an Opinion of Counsel, to ensure that either such Certificate is
not transferred to a Disqualified Organization or Non-U.S. Person and that
any transfer of such Certificate will not cause the imposition of a tax upon
the Trust Fund or cause the Trust Fund (exclusive of the Mortgage 100(Service
Mark) Pledge Agreements, the Parent Power(Registered Trademark) Agreements
and the Pre-Funding Account (including the funds therein and Pre-Funding
Earnings)) to fail to qualify as two REMICs. The restrictions on transfer of
either such Certificate will cease to apply and be void upon receipt by the
Trustee of the Opinion of Counsel as described in Section 4.02(h) or shall be
modified as indicated in such Opinion of Counsel. If any Person that is not
permitted to acquire any beneficial interest in a Class R Certificate under
this Section 4.02(i) acquires any beneficial interest in a Class R
Certificate in violation of the restrictions in this Section 4.02(i), then
the Trustee, based on information provided to it by the Master Servicer, will
provide to the Internal Revenue Service, and to the persons specified in
Section 860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
(j) Notice of the transfer of any Class B or Class C Certificate shall
be given to the Rating Agency by the Trustee.
(k) Except as provided in paragraph (l) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of the Class A
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 Class A Certificates; (iii) ownership and transfers of registration
of the Class A 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 Class A 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.
(l) If (x)(i) the Depository or the Company advises the Trustee in
writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (ii) the Company is unable
to locate a qualified successor, (y) the Company at its option advises the
Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the occurrence of an Event of Default,
Certificate Owners representing at least 50% of the principal balance of the
Class A Certificates and the Certificate Insurer and the Surety 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 such Certificate Owners and the
Certificate Insurer and the Surety, as applicable, the Trustee shall notify
all Certificate Owners of such Class, through the Depository, of the
occurrence of any such event and of the availability of definitive, fully
registered Class A Certificates (the "Definitive Certificates"), as
applicable, to Certificate Owners -----------------------
requesting the same. Upon surrender to the Trustee of the Class A
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer, the Company 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. The Master
Servicer shall provide the Trustee with an adequate inventory of certificates
to facilitate the issuance and transfer of Definitive Certificates. Upon the
issuance of Definitive Certificates all applicable 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.
In addition, the Class A Certificates shall be in the form of Definitive
Certificates up to the time the Class A Certificates are transferred to
public investors.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of
any Certificate, and (b) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence
of notice to the Trustee that such Certificate has been acquired by a bona
fide purchaser, the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like tenor and Class. Upon the issuance of any new
Certificate under this Section, the Trustee may require of the
Certificateholder 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 connected therewith.
Any replacement Certificate of any Class issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership of the
Percentage Interest in the distributions to which the Certificateholders of
such Class are entitled, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time,
and such mutilated, destroyed, lost or stolen Certificate shall be of no
force or effect under this Agreement.
Section 4.04. Persons Deemed Owners. The Company, the Master
---------------------
Servicer, the Certificate Insurer, the Surety and the Trustee may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate and the Percentage Interest in the distributions to the
Certificateholders of such Class are entitled, for the purpose of receiving
remittances pursuant to Section 6.01 and for all other purposes whatsoever,
and neither the Company, the Master Servicer, the Certificate Insurer, the
Surety nor the Trustee shall be affected by notice to the contrary.
Section 4.05. Appointment of Paying Agent. The Master Servicer may
---------------------------
appoint a Paying Agent hereunder. In the event of any such appointment, no
later than 12:00 noon New York City time, on the Business Day preceding each
Distribution Date, the Master Servicer shall withdraw from the Certificate
Account and transfer to the Paying Agent for deposit in the Distribution
Account a sum which, together with other amounts deposited in the
Distribution Account, will be sufficient to make the payments to
Certificateholders in the amounts and in the manner provided for in Section
6.01. The Master Servicer shall cause the Paying Agent to perform each of
the obligations of the Paying Agent set forth herein and shall be liable to
the Trustee, the Certificateholders and the Surety for failure of the Paying
Agent to perform such obligations. The Master Servicer designates Bankers
Trust Company of California, N.A. as the initial Paying Agent. The Master
Servicer shall notify each Rating Agency, the Certificate Insurer and the
Surety of any appointment of an additional or successor Paying Agent.
The Master Servicer shall cause each Paying Agent other than itself or
the Trustee to execute and deliver to the Master Servicer an instrument in
which such Paying Agent shall agree with the Master Servicer that such Paying
Agent will hold all sums held by it for the payment to Certificateholders in
trust for the benefit of the Trustee on behalf of the Certificateholders (or
the Certificate Insurer and the Surety) entitled thereto until such sums
shall be paid to such Certificateholders (or the Certificate Insurer and the
Surety).
(End of Article IV)
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
----------------------------------------------
Section 5.01. Master Servicer to Service Mortgage Loans. (a) The
-----------------------------------------
Master Servicer shall service and administer the Mortgage Loans in accordance
with its customary and prudent servicing procedures for residential mortgage
loans. The Master Servicer shall have full power and authority, acting alone
or through Sub-Servicers as provided in Section 5.02, to do any and all
things which it may deem necessary or desirable in connection with such
servicing and administration. Without limiting the generality of the
foregoing, the Master Servicer in its own name or in the name of a
Sub-Servicer is hereby authorized and empowered by the Trustee when the
Master Servicer or the Sub-Servicer, as the case may be, believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Certificateholders, the Trustee, the Certificate Insurer and the Surety 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. At the written request of the Master Servicer, the Trustee shall
execute any limited powers of attorney and other documents necessary or
appropriate to enable the Master Servicer to service and administer the
Mortgage Loans and the Trustee shall not be liable for the Master Servicer's
or any Sub-Servicer's application thereof and shall be indemnified by the
Master Servicer for its use of such powers of attorney.
In connection with the servicing and administration of the Mortgage
Loans, the Master Servicer may at the request of a Mortgagor or at its own
initiative agree to modify the Mortgage Note or Mortgage relating to the
Mortgage Loan of such Mortgagor or, subject to the provisions of this
Agreement, waive compliance by the Mortgagor with any provision of such
Mortgage Note or Mortgage, provided, however, that any such modification or
waiver shall not (i) extend the scheduled maturity date of, modify the
Mortgage Rate payable under (except as required by law or as contemplated by
the Mortgage Note), or constitute a cancellation or discharge of the
outstanding principal balance of, such Mortgage Loan, (ii) be inconsistent
with the Master Servicer's then current practice respecting comparable
mortgage loans held in its own portfolio, or (iii) materially and adversely
affect the security afforded by the Mortgaged Property (any modification,
waiver or change of the nature described in Section 5.07 being deemed not to
violate clause (i) or clause (iii) above).
The foregoing clauses (i) and (iii) in the preceding paragraph are
subject to the proviso that the Master Servicer may agree to changes to the
terms of a Mortgage Note or Mortgage which would otherwise be violative
thereof if (i) the Master Servicer has determined that such changes are
necessary to avoid prepayment of the related Mortgage Loan or to accommodate
the request of a Mortgagor to extend the scheduled maturity date of the
related Mortgage Loan beyond the period of the original term to maturity and
such changes are consistent with prudent business practice as evidenced by a
certificate signed by
a Servicing Officer to such effect, (ii) the Master Servicer shall purchase
the related Mortgage Loan for the Purchase Price on the Determination Date
immediately following the Due Period during which such changes were made and
deposit such Purchase Price in the Certificate Account on or prior to such
Determination Date and (iii) such changes and subsequent purchase will not
affect the status of the Trust Fund (exclusive of the Mortgage 100(Service
Mark) Pledge Agreements, the Parent Power(Registered Trademark) Agreements
and the Pre-Funding Account (including the funds therein and Pre-Funding
Earnings)) as two REMICs as evidenced by an Opinion of Counsel (provided at
the expense of the Master Servicer) to such effect delivered to the Trustee;
provided, however, that the purchase of the related Mortgage Loan pursuant to
the foregoing clause (ii) shall occur on the second Business Day following
the date on which such changes were made if the short-term credit rating of
the Merrill Lynch & Co. Inc. (or its successor interest) is downgraded below
A-1/P-1. Any such repurchase shall be accomplished in the same manner and
subject to the same conditions set forth in Section 2.02. Upon making any
such repurchase 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.
Nothing herein shall be deemed to constitute a joint venture or
partnership between the Master Servicer and the Trustee.
All Servicing Advances made by the Master Servicer in effecting the
timely payment of taxes and assessments on the properties subject to the
Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan
so permit, and such Servicing Advances shall be recoverable by the Master
Servicer to the extent permitted by Sections 5.09 and 5.23.
(b) Notwithstanding anything to the contrary in this Agreement
(including without limitation the termination of the servicing rights and/or
obligations of any Master Servicer under Article IX), MLCC shall service and
administer in accordance with this Agreement each Mortgage 100(Service Mark)
Pledge Agreement, Parent Power(Registered Trademark) Guaranty and Securities
Agreement for Securities Account and Parent Power(Registered Trademark)
Guaranty Agreement for Real Estate (collectively, "Additional Collateral
Agreements") at the direction of the Master Servicer if MLCC is no longer the
Master Servicer; provided, however, that only MLCC shall service and
administer the related securities accounts, lines of credit, mortgages and
guarantors with respect to Additional Collateral Agreements.
Section 5.02. Sub-Servicing Agreements Between Master Servicer and
----------------------------------------------------
Sub-Servicers; Enforcement of Sub-Servicer's Obligations. (a) The Master
- --------------------------------------------------------
Servicer may enter into Sub-Servicing Agreements with Sub-Servicers for the
servicing and administration of all or part of the Mortgage Loans if the
Master Servicer delivers to the Trustee an Officer's Certificate of the
Company, the Certificate Insurer and the Surety consenting to the appointment
of the
Sub-Servicer and the entering into of the Sub-Servicing Agreement and a
written confirmation from each Rating Agency to the effect that entering into
such Sub-Servicing Agreement would not result in the reduction or withdrawal
of the then current ratings of the Class A Certificates. The Master Servicer
shall deliver a copy of any such Sub-Servicing Agreement to each Rating
Agency. References in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Mortgage Loans include actions taken or to
be taken by a Sub-Servicer on behalf of the Master Servicer. Each Sub--
Servicing Agreement will be based upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the
Sub-Servicer have agreed. The Master Servicer shall notify the Trustee, the
Certificate Insurer and the Surety in writing promptly upon the appointment
of any Sub-Servicer. For purposes of this Agreement, the receipt by the
Sub-Servicer of any amount with respect to a Mortgage Loan (other than
amounts representing servicing compensation or reimbursement for an advance)
shall be treated as the receipt by the Master Servicer of such amount.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee, the Certificateholders, the Certificate
Insurer and the Surety, shall enforce the obligations of each Sub-Servicer
under the related Sub-Servicing Agreement. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of
Sub-Servicing Agreements as appropriate, and the pursuit of other remedies,
shall be in such form and carried out to such an extent and at such time as
the Master Servicer, in its good faith business judgment, would require were
it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense but shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement
only to the extent, if any, that such recovery exceeds all amounts due in
respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
Section 5.03. Successor Sub-Servicers. The Master Servicer shall be
-----------------------
entitled to terminate any Sub-Servicing Agreement that may exist in
accordance with the terms and conditions of such Sub-Servicing Agreement and
without any limitation by virtue of this Agreement. Each Sub-Servicing
Agreement shall contain provisions that provide that a successor Master
Servicer shall have the option to terminate such agreement without cause or
penalty upon its succession as Master Servicer.
Section 5.04. Liability of the Master Servicer. Notwithstanding any
--------------------------------
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer or a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the Master
Servicer shall remain obligated and liable to the Trustee, the Certificate-
holders, the Certificate Insurer and the Surety for the servicing and
administration of the Mortgage Loans in accordance with the provisions of
this Agreement without diminution of such obligation or liability by virtue
of such Sub-Servicing Agreements
or arrangements or by virtue of indemnification from the Sub-Servicer or the
Mortgage Loan Seller and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering
the Mortgage Loans. The Master Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Master Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Section 5.05. No Contractual Relationship Between Sub- Servicer and
-----------------------------------------------------
Trustee, the Certificateholders, the Certificate Insurer or the Surety.
- ----------------------------------------------------------------------
Any Sub-Servicing Agreement that may be entered into and other transactions
or services relating to the Mortgage Loans involving a Sub-Servicer in its
capacity as such and not as an originator shall be deemed to be between the
Sub-Servicer and the Master Servicer alone and the Trustee, the
Certificateholders, the Certificate Insurer and the Surety shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to the Sub-Servicer.
Section 5.06. (Reserved)
Section 5.07. Collection of Mortgage Loan Payments. Continuously
------------------------------------
from the date hereof until the principal and interest on all Mortgage Loans
are paid in full, the Master Servicer will proceed diligently to collect all
payments due under each of the Mortgage Loans when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement, follow such collection procedures as it follows with respect
to comparable mortgage loans held in its own portfolio; provided, however,
that the Master Servicer may not waive any increase in the Mortgage Rate
permitted by the terms of any Mortgage Note (unless such increase is not
permitted by applicable law). Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any assumption fee, late payment
charge or other charge in connection with a Mortgage Loan and (ii) if the
Mortgagor is in default or about to be in default because of the Mortgagor's
financial condition, arrange a schedule, running for no more than 180 days
after the Due Date for the initial delinquent installment on the related
Mortgage Note, for the liquidation of delinquent items. The foregoing clause
(ii) is subject to the proviso that the Master Servicer may in its discretion
arrange with the Mortgagor a schedule for the payment of interest and
principal due and unpaid for a period that exceeds 180 days if such
arrangement is determined by the Master Servicer to be reasonable and
consistent with its then current practices 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 such arrangements shall not diminish or
otherwise affect the Master Servicer's obligation to make Advances pursuant
to Section 6.03.
At its sole discretion, the Master Servicer may, but shall not be
obligated to, purchase a Seriously Delinquent Mortgage Loan at its Purchase
Price. For purposes of this
Agreement, any Seriously Delinquent Mortgage Loan so purchased by the Master
Servicer shall be deemed to be a Liquidated Mortgage Loan that became
liquidated at the time of such purchase, and the Purchase Price paid by the
Master Servicer shall be treated in the same manner as Liquidation Proceeds.
The Master Servicer shall deposit such purchase price in the Certificate
Account at the time of such purchase and shall be entitled to receive an
instrument of assignment or transfer from the Trustee in the same manner as
provided in Section 2.02.
Section 5.08. Establishment of Certificate Account; Deposits in
-------------------------------------------------
Certificate Account. With respect to all of the Mortgage Loans, the
- -------------------
Master Servicer shall establish and maintain a Certificate Account (the
"Certificate Account") which is an Eligible Account, titled "Merrill Lynch
-------------------
Credit Corporation, as Master Servicer, in trust for Bankers Trust Company of
California, N.A., as Trustee, for the benefit of registered holders of MLCC
Mortgage Investors, Inc., Mortgage Loan Asset Backed Pass-Through
Certificates, Series 1997-B"; provided, however, that if the Certificate
Account is opened under a different name, the Master Servicer shall, within
90 days after the Closing Date, cause the Certificate Account to be re-titled
under the aforementioned name; and provided further, that if (x) the long-
term unsecured debt of Merrill Lynch & Co., Inc. is rated by Moody's, and is
at any time rated by Moody's below A3 or (y) if such debt is rated by
Standard & Poor's, and is at any time rated by Standard & Poor's below A-,
the Certificate Account shall thereafter be maintained by the Trustee and
such account shall at such time be titled "Bankers Trust Company of
California, N.A., as trustee for the benefit of the holders of MLCC Mortgage
Investors, Inc., Mortgage Loan Asset Backed Pass-Through Certificates, Series
1997-B". Such Certificate Account shall be established with the Trustee or a
commercial bank, a mutual savings bank, or a savings and loan association. At
such time as either MLCC or the Trustee obtains actual knowledge of such
change in the rating of such debt, the party obtaining such knowledge shall
promptly give written notice of such event to the other party and to the
Certificate Insurer and the Surety; provided, however, that the foregoing
notice requirement shall be deemed to be satisfied by the notice provided
pursuant to the fifth paragraph in Section 2.01 and vice versa. The Master
Servicer may invest, or cause the institution maintaining the Certificate
Account to invest, moneys in the Certificate Account in Eligible Investments,
which shall mature not later than the Business Day next preceding the Distr-
ibution Date next following the date of such investment and shall not be sold
or disposed of prior to its maturity. The proceeds of the sale or other
disposition of all Eligible Investments shall be deposited in the Certificate
Account. All such Eligible Investments shall be made in the name of the
Trustee. All net income and gain realized from any such investment shall be
for the benefit of the Master Servicer as additional servicing compensation
and shall be subject to its withdrawal or order from time to time. The
Master Servicer shall be entitled to retain any net interest paid on funds
deposited in the Certificate Account other than the interest on any funds
required by applicable law to be paid to a Mortgagor, and, to the extent
required by applicable law, the Master Servicer shall pay, without
reimbursement from the Certificate Account, interest on such funds to the
Mortgagor notwithstanding that the
Certificate Account is non-interest bearing or that interest paid thereon is
insufficient for such purposes. The amount of any losses incurred in respect
of any such investments (to the extent not offset by income from other such
investments) shall be deposited in the Distribution Account by the Master
Servicer out of its own funds immediately as realized, without reimbursement
from the Certificate Account; provided, however, that if the Trustee becomes
Master Servicer, the Trustee shall not be required to deposit the amount of
any loss incurred prior to its becoming Master Servicer. The creation of the
Certificate Account shall be evidenced by a certification in the form of
Exhibit H. A copy of such certification shall be furnished to the Trustee.
The Master Servicer shall deposit or cause to be deposited in the
Certificate Account on a daily basis, no later than the later of the Closing
Date and one Business Day after the receipt thereof, and retain therein:
(i) All payments received which were due after the Cut-off Date
with respect to the Initial Mortgage Loans and the Subsequent Cut-off
Date with respect to the Subsequent Mortgage Loans on account of
principal on the Mortgage Loans, and all Principal Prepayments collected
after the Cut-off Date or Subsequent Cut-off Date, as applicable;
(ii) All payments received on account of interest which are due
after the Cut-off Date with respect to the Initial Mortgage Loans and
the Subsequent Cut-off Date with respect to the Subsequent Mortgage
Loans net of the related Servicing Fee and Correspondent Trailing
Premium, if any;
(iii) Net Liquidation Proceeds;
(iv) All Insurance Proceeds received by the Master Servicer under
any title, hazard or other insurance policy, including amounts required
to be deposited pursuant to Sections 5.16 and 5.20, other than proceeds
to be held in the Escrow Account or applied to the restoration or repair
of the Mortgaged Property or released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures or otherwise
applied or held as required by applicable law;
(v) All awards or settlements in respect of condemnation
proceedings affecting any Mortgaged Property which are not released to
the Mortgagor in accordance with the Master Servicer's normal servicing
procedures;
(vi) All Repurchase Proceeds;
(vii) All amounts representing revenues under the insurance
provided pursuant to Section 5.19 to the extent of any losses borne by
any Certificateholder;
(viii) All revenues from any Mortgaged Property acquired by the
Master Servicer by foreclosure or deed in lieu of foreclosure net of any
Servicing Advances with respect to such Mortgaged Property; and
(ix) Any other amounts required to be deposited therein pursuant
to this Agreement.
The foregoing requirements for deposit in the Certificate Account shall be
exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment fees, late
payment charges and assumption fees need not be deposited by the Master
Servicer in the Certificate Account and may be retained by the Master
Servicer as additional servicing compensation. The Master Servicer shall
maintain or cause to be maintained accounting records on a loan-by-loan basis
with respect to the Certificate Account.
The Master Servicer shall give notice to the Trustee, the Company, each
Rating Agency, the Certificate Insurer and the Surety of any change in the
Certificate Account, prior to the use thereof.
Section 5.09. Permitted Withdrawals from the Certificate Account.
--------------------------------------------------
The Master Servicer may, from time to time, withdraw funds from the
Certificate Account for the following purposes:
(i) to make payments to Certificateholders, the Certificate
Insurer or the Surety in the amounts and in the manner provided for in
Section 6.01, or if applicable, to transfer moneys to the Distribution
Account maintained by the Paying Agent in accordance with Sections 4.05
and 6.01;
(ii) to reimburse itself and the Trustee for Advances made
pursuant to Section 6.03 (including amounts to reimburse the related
Sub-Servicer for advances made pursuant to the applicable Sub-Servicing
Agreement), the Master Servicer's, the Sub-Servicer's and the Trustee's
right to receive reimbursement pursuant to this subclause (ii) being
limited to amounts received on particular Mortgage Loans which represent
Late Collections (net of the Servicing Fee) with respect to those
particular Mortgage Loans;
(iii) to reimburse itself for unpaid Servicing Fees and
unreimbursed Servicing Advances, to pay the related Sub-Servicer any
portion of unpaid Servicing Fees and unreimbursed Servicing Advances,
the Master Servicer's right to reimburse itself or make payments to the
Sub-Servicers pursuant to this subclause (iii) with respect to
any Mortgage Loan being limited to related Liquidation Proceeds,
Insurance Proceeds, and condemnation awards;
(iv) to reimburse itself (or the related Sub-Servicer) or the
Company for expenses incurred by and recoverable by or reimbursable to
it pursuant to Section 5.01, 5.16, 5.21 or 8.03 or to the Company
pursuant to Section 8.03 (provided that reimbursements pursuant to
Section 8.03 shall be made only out of funds that would otherwise be
distributable to the Class C and Class R Certificateholders);
(v) to reimburse itself (or the related Sub-Servicer) and the
Trustee for any Nonrecoverable Advances;
(vi) to pay to itself (or the related Sub-Servicer) any net income
earned on the investment of funds deposited in the Certificate Account;
and
(vii) to make payments to itself or others pursuant to any
provision of this Agreement, and to clear and terminate the Certificate
Account upon the termination of this Agreement.
Section 5.10. Establishment of Escrow Account; Deposits in Escrow
---------------------------------------------------
Account. With respect to those Mortgage Loans on which the Master
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Servicer or any Sub-Servicer collects Escrow Payments, the Master Servicer
shall, and shall cause any Sub-Servicer to, segregate and hold all funds
collected and received pursuant to each such Mortgage Loan which constitute
Escrow Payments separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Escrow Accounts. Such
Escrow Account(s) shall be established with a commercial bank, a mutual
savings bank, or a savings and loan association, the deposits of which are
insured by the FDIC, in a manner which shall provide maximum available
insurance thereunder and which may be drawn on by the Master Servicer.
Subject to compliance with applicable law, one Escrow Account may relate to
multiple Mortgage Loans and other mortgage loans serviced by the Master
Servicer. The Master Servicer shall give notice to the Trustee of the
location of any Escrow Account, and of any change thereof, prior to the use
thereof.
The Master Servicer shall deposit, or cause to be deposited, in any
Escrow Account(s) on a daily basis, and retain therein, all Escrow Payments
collected on account of any Mortgage Loans, for the purpose of effecting
timely payment of any such items as required under the terms of this
Agreement. The Master Servicer shall make withdrawals therefrom only to
effect such payments as are required under this Agreement, and for such other
purposes as are set forth in Section 5.11. The Master Servicer or the
Sub-Servicer shall be entitled to retain any interest paid on funds deposited
in the Escrow Account(s) by the depository institution other than interest on
escrowed funds required by law to be paid to the Mortgagors and, to the
extent required by law, the Master Servicer shall pay interest on
escrowed funds to the Mortgagors notwithstanding that the Escrow Account(s)
may be non-interest-bearing or that interest paid thereon may be insufficient
for such purposes.
Section 5.11. Permitted Withdrawals from Escrow Account.
-----------------------------------------
Withdrawals from any Escrow Account or Accounts may be made by the Master
Servicer only (i) to effect timely payments of ground rents, taxes,
assessments, water rates, or other items constituting Escrow Payments for the
related Mortgage, (ii) to reimburse the Master Servicer for any Servicing
Advance made by the Master Servicer, with respect to an Escrow Payment for a
related Mortgage Loan but only from amounts received on the related Mortgage
Loan which represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan, (iv)
for transfer to the Certificate Account in accordance with the terms of the
related Mortgage Loan, (v) for application to restoration or repair of the
property subject to the Mortgage, (vi) to pay to the Master Servicer, or to
the Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, or (vii) to clear and terminate the Escrow
Account on the termination of this Agreement.
Section 5.12. Payment of Taxes, Insurance and Other Charges. (a)
---------------------------------------------
With respect to each Mortgage Loan, the Master Servicer shall maintain, or
cause to be maintained, accurate records reflecting the status of ground
rents, taxes, assessments, water rates and other charges which are or may
become a lien upon the Mortgaged Property and shall effect payment thereof to
ensure the lien of the Mortgage remains in full force and effect by applying
deposits of the Mortgagor in the Escrow Account, where such an account is
maintained in connection with a Mortgage Loan, to the extent permitted under
the terms of the Mortgage and applicable law. In the event the Master
Servicer does not or is prohibited by law from enforcing the escrow
requirements under a Mortgage and does not require a Mortgagor to make
deposits into the Escrow Account, the Master Servicer shall ensure that all
ground rents, taxes, assessments, water rates and any other charges which are
or may become a lien upon the Mortgaged Property are paid and the lien of the
Mortgage remains in full force and effect, and shall advance its own funds,
if necessary, to effect payment of the same, subject to Section 5.21.
(b) With respect to each Mortgage Loan, the Master Servicer shall
maintain or cause to be maintained accurate records reflecting the status of
Standard Hazard Policy premiums, and shall effect payment thereof by applying
deposits of the Mortgagor in the Escrow Account, where such an account is
maintained in connection with a Mortgage Loan, to the extent permitted under
the terms of the Mortgage and applicable law. In the event the Master
Servicer does not or is prohibited by law from enforcing the escrow
requirements under a Mortgage and does not require a Mortgagor to make
deposits into the Escrow Account, the Master Servicer shall ensure that at
all times each Mortgaged Property affected thereby is insured by hazard
insurance to the extent required under Section 5.16, and
shall advance its own funds to effect payment of the same, if necessary, in
accordance with Section 5.16.
Section 5.13. Transfer of Accounts. The Master Servicer may
--------------------
transfer the Certificate Account or Escrow Account to a different depository
institution from time to time. Such transfer shall be made by the Master
Servicer only upon obtaining the consent of the Trustee, the Certificate
Insurer and the Surety, which consent shall not be unreasonably withheld.
Section 5.14. Establishment of Pre-Funding Account; Permitted
-----------------------------------------------
Withdrawals. (a) No later than the Closing Date, the Trustee will
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establish and thereafter maintain for the benefit of the Certificateholders
and the Certificate Insurer a segregated trust account (the "Pre-Funding
Account") which shall be an Eligible Account. On the Closing Date, the
Company shall remit or cause to remit to the Trustee from the proceeds of the
sale of the Class A Certificates, and the Trustee shall deposit, the Original
Pre-Funded Amount in the Pre-Funding Account. Any investment earnings on the
Pre-Funding Account shall be taxable to the Company. The Pre-Funding Account
(including the funds therein and Pre-Funding Earnings) shall not be an asset
of the two REMICs.
(b) On the Business Day preceding each Pre-Funding Distribution Date,
the Trustee shall withdraw from the Pre-Funding Account any Pre-Funding
Earnings on the amounts on deposit therein and deposit such Pre-Funding
Earnings into the Distribution Account. In addition, if such investments in
the Pre-Funding Account will not mature prior to the First Distribution Date,
the Master Servicer shall deposit into the Distribution Account an amount
equal to the Pre-Funding Earnings accrued (but not realized) from the Closing
Date, to but not including the First Distribution Date, which amount shall be
transferred for the benefit of the Master Servicer by the Trustee from future
Pre-Funding Earnings on the date of the maturity of the Eligible Investments
in the Pre-Funding Account. The Trustee shall invest moneys in the Pre-
Funding Account in Eligible Investments, which shall mature not later than
the Business Day next preceding the Distribution Date next following the date
of such investment, except that no investment needs to mature on or prior to
the First Distribution Date, and shall not be sold or disposed of prior to
its maturity. On each Subsequent Transfer Date, the Trustee shall withdraw
from the Pre-Funding Account an amount equal to 100% of the Principal Balance
of each Subsequent Mortgage Loan to be assigned to the Trustee on such
Subsequent Transfer Date and pay such amount to or at the direction of the
Company. On the Business Day immediately preceding the final Pre-Funding
Period Distribution Date, but in no event later than March 6, 1998, if any
amounts remain in the Pre-Funding Account after the withdrawals specified
above, the Trustee shall withdraw such amounts and deposit them into the
Distribution Account for distribution on account of principal to the Class A
Certificateholders on the final Pre-Funding Distribution Date and the Pre-
Funding Account shall be closed.
Section 5.15. (Reserved)
Section 5.16. Maintenance of Standard Hazard Policies. (a) The
---------------------------------------
Master Servicer shall cause to be maintained for each Mortgage Loan a
Standard Hazard Policy with extended coverage as is customary in the area
where the Mortgaged Property is located in an amount which is equal to (A)
the replacement cost of the improvements securing such Mortgage Loan or (B)
the principal balance owing on such Mortgage Loan, whichever is less. 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 Master
Servicer will cause to be maintained a flood insurance policy with a
generally acceptable insurance carrier, in an amount representing coverage
not less than the least of (i) the outstanding principal balance of the
Mortgage Loan, (ii) the full insurable value or (iii) the maximum amount of
flood insurance which is available under the national flood insurance
program. The Master Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, of any Mortgage Loan, fire
and hazard insurance with extended coverage in an amount which is not less
than the lesser of (i) the outstanding principal balance of the Mortgage Loan
or (ii) the maximum insurable value of the improvements which are a part of
such property, liability insurance, and, to the extent available, flood
insurance in an amount as provided above. Any amounts collected by the
Master Servicer under any such policies (other than amounts to be applied to
the restoration or repair of the property subject to the related Mortgage or
property acquired in liquidation of the Mortgage Loan, or released to the
Mortgagor in accordance with the Master Servicer's normal servicing
procedures) shall be deposited, subject to applicable law, in the Certificate
Account. It is understood and agreed that no earthquake or other additional
insurance need be required by the Master Servicer of any Mortgagor or
maintained on property acquired in respect of a Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such Standard
Hazard Policies and other policies shall be endorsed with standard mortgagee
clauses with loss payable to the Master Servicer or its designee. Any such
Standard Hazard Policies or any other policies may be in the form of blanket
policies; provided, however, that in the event of any claim arising in
connection with a hazard loss the Master Servicer shall be obligated, in the
case of blanket insurance policies, to deposit in the Certificate Account in
accordance with Section 5.08(iv) any amount not payable under such blanket
policy because of a deductible clause therein that would otherwise have been
payable under an individual policy complying with the first sentence of this
Section 5.16. The Master Servicer shall not interfere with the Mortgagor's
freedom of choice in selecting either his insurance carrier or agent,
provided, however, that the Master Servicer shall not accept any such
insurance policies from insurance companies unless such companies are
acceptable insurers with respect to the insurance coverage set forth in this
Section under the laws of, and are licensed to do business in, the state
wherein the property subject to the policy is located.
(b) Any cost incurred by the Master Servicer in maintaining any of the
foregoing insurance shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so permit.
Such costs (other than the costs of maintaining a blanket Hazard Insurance
Policy not attributable to a specific Mortgaged Property) shall be
recoverable by the Master Servicer from the Mortgagor or out of Insurance
Proceeds or Liquidation Proceeds or to the extent permitted by Section 5.09.
Section 5.17. (Reserved)
Section 5.18. (Reserved)
Section 5.19. Fidelity Bond and Errors and Omissions Insurance. The
------------------------------------------------
Master Servicer shall maintain, at its own expense, a blanket fidelity bond,
and errors and omissions insurance policy (or, in lieu thereof, a mortgage
interest insurance policy acceptable to FNMA), with broad coverage with
responsible companies on all officers, employees or other Persons acting in
any capacity with regard to the Mortgage Loans to handle funds, money,
documents and papers relating to the Mortgage Loans. Any such fidelity bond
and errors and omissions insurance (or, in lieu thereof, a mortgage interest
insurance policy acceptable to FNMA), shall protect and insure the Master
Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such Persons. No provision of
this Section 5.19 requiring such fidelity bond and errors and omissions
insurance (or, in lieu thereof, a mortgage interest insurance policy
acceptable to FNMA) shall diminish or relieve the Master Servicer from its
duties and obligations set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be in an amount that will
permit the Master Servicer to continue to be a FNMA-qualified
seller/servicer. Upon request of the Trustee, the Certificate Insurer or the
Surety, the Master Servicer shall cause to be delivered to the Trustee, the
Certificate Insurer or the Surety a certified true copy of such fidelity bond
and insurance policy. Promptly upon receipt of any notice from the surety or
the insurer that such fidelity bond or insurance policy has been terminated
or materially modified, the Master Servicer shall notify the Trustee, the
Certificate Insurer, the Surety and the Rating Agencies of any such
termination or modification.
Section 5.20. Collections under Insurance Policies; Enforcement of
----------------------------------------------------
Due-on-Sale Clauses; Assumption Agreements. (a) In connection with its
- ------------------------------------------
activities as administrator and servicer of the Mortgage Loans, the Master
Servicer agrees to present, on behalf of itself, the Trustee, the
Certificateholders, the Certificate Insurer and the Surety, claims to the
insurer under any Standard Hazard Policies and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any insur-
ance policies. Pursuant to Section 5.08, the Master Servicer shall deposit
Insurance Proceeds in the Certificate Account. In those cases in which a
Mortgage Loan is serviced by a Sub-Servicer, the Sub-Servicer, on behalf of
itself, the Master Servicer, the Trustee, the Certificateholders, the
Certificate Insurer and the Surety, shall, pursuant to a Sub-Servicing
Agreement, be required to present claims to the insurer under any such
Standard Hazard Insurance Policy and deposit all collections thereunder
initially in the Certificate Account to the extent not required or permitted
to be deposited in the Escrow Account pursuant to Section 5.10.
(b) When any Mortgaged Property is conveyed by the Mortgagor, the
Master Servicer may, but is not obligated to, enforce any due-on-sale clause
contained in any Mortgage Note or Mortgage consistent with its then current
practices and without regard to the fact that such Mortgage Loan is in the
Trust Fund rather than the Master Servicer's portfolio. Subject to the
preceding sentence, the Master Servicer will exercise any such due-on-sale
clause only to the extent permitted by such Mortgage Note or Mortgage,
applicable law and governmental regulations and only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any
insurance policy required by this Agreement. If the Master Servicer elects
not to exercise such due on sale clause in respect of a Mortgage Loan or if
it is prohibited from doing so by applicable law, the Master Servicer is
authorized to take or enter into an assumption or modification agreement from
or with the Person to whom such property has been or is about to be conveyed.
Under an assumption or modification agreement, the original mortgagor or
obligor remains liable for the payment of the Mortgage Loan unless released
in writing by the Master Servicer. In connection with such assumption or
modification, the Master Servicer shall follow such practice and procedures
as shall be normal and usual and as it applies to mortgage loans owned solely
by it.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of and
conveyance by the Mortgagor of the Mortgaged Property or any assumption of a
Mortgage Loan by operation of law which the Master Servicer in good faith
determines it may be restricted by law from preventing, for any reason
whatsoever.
(c) Subject to the Master Servicer's discretion to enforce any
due-on-sale clause as set forth in Section 5.20(b), in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage, the Master Servicer shall so
notify the Trustee and forward to the Custodian the original of each
assumption or substitution agreement, which shall be added by the Custodian
to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any such
assumption or substitution agreement, the interest rate of the related
Mortgage Note shall not be changed, and the principal amount of the Mortgage
Note shall not be increased or decreased and the maturity of the Mortgage
Note shall not be accelerated or extended. Any fee collected by the Master
Servicer for entering into an assumption or
substitution of liability agreement with respect to such Mortgage Loan shall
be retained by the Master Servicer as additional servicing compensation.
Section 5.21. Income and Realization from Defaulted Mortgage Loans.
----------------------------------------------------
Subject to Section 5.07, the Master Servicer shall foreclose upon or
otherwise comparably convert the ownership of Mortgaged Properties securing
such of the Mortgage Loans as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 5.07, shall manage, conserve, protect and
operate such Mortgaged Properties for the purposes of their prompt
disposition and sale, and shall dispose of such Mortgaged Properties on such
terms and conditions as it deems in the best interests of the
Certificateholders; provided that if the Master Servicer has actual knowledge
that a Mortgaged Property is affected by hazardous waste, then the Master
Servicer shall not cause the Trustee to acquire title to such Mortgaged
Property in a foreclosure or similar proceeding unless so instructed by the
Certificate Insurer and the Surety. For purposes of the proviso in the
preceding sentence, the Master Servicer shall not be deemed to have actual
knowledge that a Mortgaged Property is affected by hazardous waste unless it
shall have received written notice from a person with professional experience
with hazardous waste that such waste is present on such property and such
written notice has been made a part of the servicing file with respect to the
related Mortgage Loan. In addition, if an Additional Collateral Mortgage
Loan becomes a defaulted Mortgage Loan, the Master Servicer (or if MLCC is no
longer the Master Servicer, MLCC at the direction of the Master Servicer)
shall make all reasonable efforts to realize upon the related Additional
Collateral, and any proceeds from the realization of such Additional
Collateral, and not the Additional Collateral itself, shall be included in
Liquidation Proceeds and, to the extent of related Net Liquidation Proceeds,
deposited in the Certificate Account. Notwithstanding the foregoing, any
proceeds from the realization of Additional Collateral shall be included in
Liquidation Proceeds only when permitted by applicable state law and by the
terms of the related Mortgage 100(Service Mark) Pledge Agreement or Parent
Power(Registered Trademark) Agreement. The Master Servicer shall sell such
property within three years from such foreclosure or conversion or such
longer period as would not prevent such Mortgaged Property from constituting
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code.
In connection with such activities, the Master Servicer shall take all
actions necessary to ensure that such Mortgaged Property constitutes
foreclosure property (within the meaning of Section 860G(a)(8) of the Code)
including, if necessary, the hiring of independent contractors (within the
meaning of Section 856(d)(3) of the Code) to render any services with respect
to the property. The Master Servicer also shall follow such practices and
procedures as it shall deem necessary or advisable, as shall be normal and
usual in its general mortgage servicing activities, including its management
of foreclosed properties for a temporary period as contemplated herein. The
foregoing is subject to the provision that the Master Servicer shall not be
required to expend its own funds in connection with any management,
foreclosure or towards the restoration of any property unless it shall
determine that such management, restoration or foreclosure will increase the
Liquidation Proceeds of the Mortgage Loan to the Trust Fund after
reimbursement to itself for such expenses (respecting which it shall have
priority for purposes of withdrawals from the Certificate Account pursuant to
Section 5.09). The income earned from the management of such Mortgaged
Properties, net of reimbursement to the Master Servicer for expenses incurred
(including any taxes) in connection with such management, shall be applied to
the payment of principal of and interest on the related defaulted Mortgage
Loans (with interest accruing and principal amortizing as though such
Mortgage Loans were still current) and all such income shall be deemed, for
all purposes in this Agreement, to be payments on account of principal and
interest on the related Mortgage Notes and shall be deposited into the
Certificate Account.
Section 5.22. Custodian and Trustee to Cooperate; Release of
----------------------------------------------
Mortgage Files. (a) Upon becoming aware of the payment in full of any
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Mortgage Loan, the Master Servicer shall promptly deliver to the Custodian
(if the Custodian holds the related Mortgage File) an Officer's Certificate
(which shall include a statement to the effect that all amounts received in
connection with such payment which are required to be deposited in the
Certificate Account pursuant to Section 5.08 have been or will be so
deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the
Custodian, pursuant to the Custodial Agreement, shall promptly release the
related Mortgage File to the Master Servicer and shall execute and deliver to
the Master Servicer the deed of reconveyance or release or satisfaction of
Mortgage or other instruments releasing the lien of the Mortgage, together
with any other documents presented to it by the Master Servicer for such
purposes or to evidence the cancellation of indebtedness, and the Trustee
shall thereafter have no further responsibility with respect to said Mortgage
File. Upon any such payment in full, the Master Servicer is authorized to
procure from the trustee under the deed of trust which secured the Mortgage
Note, if any, a deed of full reconveyance covering the property encumbered by
such deed of trust, or, as the case may be, procure from the Trustee an
instrument of satisfaction or, if the Mortgagor so requests, an assignment
without recourse, which deed of reconveyance, instrument of satisfaction or
assignment shall be delivered by the Master Servicer to the Person or Persons
entitled thereto. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Master Servicer shall deliver to the
Custodian a certificate of a Servicing Officer in the form of an Officer's
Certificate (a form of which is attached to the Custodial Agreement)
requesting that possession of all, or any document constituting part of, the
Mortgage File be released to the Master Servicer and certifying as to the
reason for such release and that such release will not invalidate any
insurance coverage provided in respect of the Mortgage Loan under any of the
insurance policies required by this Agreement. With such certificate, the
Master Servicer shall request that the Custodian release the Mortgage File,
and the Custodian, pursuant to the Custodial Agreement, shall deliver the
Mortgage File or any document therein to the Master Servicer. The Master
Servicer shall cause each
Mortgage File or any document therein so released to be returned to the
Custodian when the need therefor by the Master Servicer no longer exists,
unless (i) the Mortgage Loan has been liquidated and the Net Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Certificate
Account or (ii) the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for
the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer maintains in its servicing records
for presentation to the Custodian upon request the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery.
(c) Upon written request of the Master Servicer, the Trustee shall
execute and deliver to the Master Servicer any court pleadings, requests for
trustee's sale or other documents necessary to the foreclosure or trustee's
sale in respect of a Mortgaged Property or to any legal action brought to
obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Together with such documents or pleadings, the Master Servicer shall
deliver to the Trustee a certificate of a Servicing Officer requesting that
such a pleadings or documents be executed by the Trustee and certifying as to
the reason such documents or pleadings are required and that the execution
and delivery thereof by the Trustee will not invalidate any insurance
coverage under the insurance policies required under this Agreement or
invalidate or otherwise adversely affect the lien of the Mortgage, except for
the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 5.23. Servicing and Other Compensation. The Master
--------------------------------
Servicer, as compensation for its activities hereunder, shall be entitled to
receive on or prior to each Distribution Date the amounts provided for as the
Servicing Fee and as reimbursement for Nonrecoverable Advances, Servicing
Advances and reimbursement for Advances, all as specified by Section 5.09.
The amount of compensation or reimbursement provided for shall be accounted
on an aggregate basis.
Additional servicing compensation in the form of assumption fees,
prepayment fees, late payment charges or, to the extent not required to be
deposited in the Certificate Account pursuant to Section 5.08, 5.20 or 5.21
or to the extent permitted to be withdrawn pursuant to Section 5.09, other
amounts shall be retained by the Master Servicer. The Master Servicer shall
be required to pay all expenses incurred by it in connection with its
servicing activities hereunder (including the fees and expenses of the
Trustee) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 5.09 and 5.21.
Section 5.24. File Review Rights of the Certificate Insurer and the
-----------------------------------------------------
Surety. The Certificate Insurer or the Surety shall have the right to
- ------
review the files of the Trustee and the
Master Servicer relating to the Certificates upon reasonable notice and
during ordinary business hours.
Section 5.25. Annual Statement as to Compliance. The Master
---------------------------------
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 (i) a review of the activities of the Master Servicer during
the preceding calendar year and of performance under this Agreement has been
made under such officer's supervision, (ii) to the best of such officer's
knowledge, based on such review the Master Servicer has fulfilled all 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 and (iii) to the best of such
officer's knowledge, each Sub-Servicer has fulfilled its obligation under its
Sub-Servicing Agreement in all material respects, or if there has been a
material default in the fulfillment of such obligations in any material
respect, specifying such default known to such officers and the nature and
status thereof. Copies of such statement shall be provided to each Rating
Agency, the Certificate Insurer and the Surety. Copies of such statement
shall also be provided by the Master Servicer to any Certificateholder upon
request. If the Master Servicer shall fail to provide such copies and the
Trustee is aware that the Master Servicer has not so provided copies, the
Trustee shall provide such copies at the Master Servicer's expense if the
Trustee has received such statement.
Section 5.26. 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 Master
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 Master 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 Master 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, the Surety, and, upon request, to the
Certificateholders, by the Master Servicer, or by the Trustee at the Master
Servicer's expense if the Trustee has received such report and the Master
Servicer shall fail to provide such copies and the Trustee is aware that the
Master Servicer has not so provided copies.
Section 5.27. Access to Certain Documentation; Rights of the Company
------------------------------------------------------
in Respect of the Master Servicer. The Master Servicer shall provide
- ---------------------------------
access to the Certificate Insurer, the Surety, the Trustee,
Certificateholders which are savings and loan associations, banks or
insurance companies, the Office of Thrift Supervision, the FDIC and the
Supervisory Agents and examiners of the Office of Thrift Supervision and the
FDIC or examiners of any other federal or state banking or insurance
regulatory authority to the documentation regarding the Mortgage Loans if so
required by applicable regulations of the Office of Thrift Supervision or
other regulatory authority, such access to be afforded subject to
reimbursement for expenses but only upon reasonable request and during normal
business hours at the offices of the Master Servicer designated by it. The
Company may, but is not obligated to, enforce the obligations of the Master
Servicer under this Agreement and may, but is not obligated to, appoint and
cause a designee to perform, any defaulted obligations of the Master Servicer
hereunder or exercise the rights of the Master Servicer hereunder; provided
that the Master Servicer shall not be relieved of any of its obligations
hereunder by virtue of the appointment of a designee by the Company or its
designee. The Company shall not assume any responsibility or liability for
any action or failure to take any action by the Master Servicer and is not
obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
Section 5.28. REMIC-Related Covenants. For as long as the Trust
-----------------------
Fund shall exist, the Master Servicer shall act in accordance herewith to
assure continued treatment of the Trust Fund (exclusive of the Mortgage
100(Service Mark) Pledge Agreements, Parent Power(Registered Trademark)
Agreements and the Pre-Funding Account (including the funds therein and Pre-
Funding Earnings)) as two REMICs. In particular:
(a) The Master Servicer shall not create, or permit the creation
of, any "interests" in the Trust Fund (exclusive of the Mortgage
100(Service Mark) Pledge Agreements, Parent Power(Registered Trademark)
Agreements and the Pre-Funding Account (including the funds therein and
Pre-Funding Earnings)) within the meaning of Section 860G of the Code
other than the interests represented by the Certificates;
(b) As of all times as may be required by the Code, the Master
Servicer will ensure that substantially all of the assets of the Trust
Fund (exclusive of the Mortgage 100(Service Mark) Pledge Agreements,
Parent Power(Registered Trademark) Agreements and the Pre-Funding
Account (including the funds therein and Pre-Funding Earnings)) will
consist of "qualified mortgages" as defined in Section 860G(a)(3) of the
Code and "permitted investments" as defined in Section 860G(a)(5) of the
Code. The Master Servicer shall maintain records that are sufficient to
indicate the Trust Fund's compliance with applicable requirements of the
Code (or applicable Treasury Regulations) relating to the assets
(exclusive of the Mortgage 100(Service Mark) Pledge Agreements, Parent
Power(Registered Trademark) Agreements and the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings)) held by the
Trust Fund. Further, the Master Servicer shall not
permit and the Trustee shall not accept the transfer or substitution of
any Mortgage Loan two years or more after the Closing Date unless the
Master Servicer and the Trustee have received an Opinion of Counsel,
which shall be an expense of the Master Servicer, that such transfer or
substitution would not adversely affect the REMIC status of the Trust
Fund (exclusive of the Mortgage 100(Service Mark) Pledge Agreements,
Parent Power(Registered Trademark) Agreements and the Pre-Funding
Account (including the funds therein and Pre-Funding Earnings)) or would
not otherwise be prohibited by this Agreement;
(c) The Master Servicer shall ensure that the Trust Fund does not
receive a fee or other compensation for services and that the Trust Fund
does not receive any income from assets other than "qualified mortgages"
within the meaning of Section 860G(a)(3) of the Code or "permitted
investments" within the meaning of Section 860G(a)(5) of the Code, and
shall take whatever action it deems necessary to avoid any material tax
imposed by the Code on the Trust Fund;
(d) The Trustee shall not sell or permit the sale of all or any
portion of the Mortgage Loans or of any Eligible Investment unless such
sale is as a result of a repurchase of the Mortgage Loans by the Master
Servicer or the Mortgage Loan Seller pursuant to the Agreement or the
Trustee has received an Opinion of Counsel to the effect that such sale
(i) is in accordance with a qualified liquidation as defined in Section
860F(a)(4) of the Code and as described in Section 11.01 hereof, or (ii)
would not be treated as a prohibited transaction within the meaning of
Section 860F(a)(2) of the Code, which prohibited transaction results in
the realization of a material amount of gain or loss for federal income
tax purposes; and
(e) Notwithstanding anything to the contrary in this Agreement,
the Master Servicer and the Trustee, at the direction and at the expense
of the Master Servicer, shall take any other action or may fail to take
any action otherwise required where the Master Servicer deems such
action or inaction reasonably necessary to preserve or ensure the REMIC
status of the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding
Earnings)) or to avoid the imposition of any material tax liability on
the Trust Fund other than the tax imposed pursuant to Section 24872 of
the California Revenue and Taxation Code.
Section 5.29. Prohibited Transactions and Other Taxes. In the event
---------------------------------------
that any tax is imposed on the Trust Fund (including "prohibited
transactions" of the Trust Fund as defined in Section 860F of the Code), such
tax shall be charged first against amounts distributable to the Class C and
Class R Certificateholders and then against amounts otherwise distributable
to the Class B Certificateholders on a pro rata basis. The Master Servicer
is hereby authorized to direct the Paying Agent to retain and, upon such
direction, the Paying Agent is
hereby authorized to retain from amounts otherwise distributable to the Class
R Certificateholder, the Class C Certificateholders and the Class B
Certificateholders, as appropriate, sufficient funds to pay or provide for
the payments of, and to actually pay, such tax as is legally owed by the
Trust Fund (but such authorization shall not prevent the Trustee or the
Master Servicer from contesting any such tax in appropriate proceedings, if
either of them elects to so contest such tax or proceeding, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings).
(End of Article V)
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
----------------------------------
Section 6.01. Distributions. (a) On each Distribution Date, the
-------------
Paying Agent shall distribute funds from the Distribution Account, to the
extent deposited therein, in the following amounts and in the following order
of priority (subject to the requirement that Insured Payments shall only be
distributed to the Class A Certificateholders):
(i) to the Class A Certificateholders, the Class A Interest
Formula Distribution Amount;
(ii) to the Class A Certificateholders, on account of principal,
the Class A Formula Principal Distribution Amount until the Class A
Principal Balance is reduced to zero;
(iii) to the Certificate Insurer, the Premium Amount for the
Certificate Insurance Policy;
(iv) to the Certificate Insurer, any Reimbursement Amount;
(v) to the Class B Certificateholders, the Class B Interest
Formula Distribution Amount;
(vi) to the Class A Certificateholders, on account of principal,
the Unrecovered Principal Amounts, if any, for such Distribution Date
and all prior Distribution Dates that have not previously been
distributed pursuant to this clause until the Class A Principal Balance
is reduced to zero;
(vii) to the Class B Certificateholders, interest for the related
Accrual Period at the Class B Pass-Through Rate (to the extent legally
permitted) on any Class B Unpaid Interest Shortfall for such
Distribution Date ;
(viii) to the Class B Certificateholders, on account of principal,
the Class B Formula Principal Distribution Amount until the Class B
Principal Balance is reduced to zero;
(ix) to the Class B Certificateholders, the Class B Loss Amounts
not previously distributed to them pursuant to this clause, together
with the Class B Loss Amount Interest Requirement;
(x) to the Class C Certificateholders, the Class C Interest
Formula Distribution Amount; and
(xi) to the Class R Certificateholder any remaining balance;
provided, however, that until the Class A Principal Balance is reduced to
zero, distributions on account of principal otherwise allocable to the Class
B Certificateholders in accordance with the above priorities will instead be
made to the Class A Certificateholders (A) to the extent, if any, that such
distribution would, if made to the Class B Certificateholders, reduce the
Class B Principal Balance to less than 1.00% of the Original Pool Principal
Balance or (B) if the Class B Principal Balance is less than 1.00% of the
Original Pool Principal Balance; and provided further that the aggregate
amounts distributed on account of principal to the Class A and Class B
Certificateholders (whether out of the Available Distribution Amount, the
Certificate Insurance Policy or the Certificate Guaranty Surety Bond) shall
not exceed the Original Class A and Class B Principal Balance, respectively.
On the Business Day immediately preceding the final Pre-Funding Period
Distribution Date, but in no event later than March 6, 1998, if any amounts
remain in the Pre-Funding Account after the withdrawals specified in Section
5.14(b), the Trustee shall withdraw such amounts and deposit them into the
Distribution Account for distribution on account of principal to the Class A
Certificateholders on the final Pre-Funding Distribution Date and the Pre-
Funding Account shall be closed.
As provided in the definitions of "Class A Interest Formula Distribution
Amount" and "Class B Interest Formula Distribution Amount", the interest
entitlement above for the Class A and Class B Certificates with respect to
each Distribution Date shall be reduced by the amount of Net Interest
Shortfall for such Distribution Date allocable to each such Class. Net
Interest Shortfall on any Distribution Date will be allocated pro rata among
the Class A and Class B Certificates based on the amount of interest each
such Class of Certificates would otherwise be entitled to receive on such
Distribution Date.
On the Business Day preceding the First Distribution Date, the Company
will cause to be deposited into the Distribution Account an amount equal to
interest accrued for 22 days on the Pre-Funded Amount at the initial Class A
Pass-Through Rate.
(b) The Trustee shall calculate LIBOR for each Distribution Date. The
Master Servicer shall make all necessary calculations and provide the Paying
Agent with the information necessary to make the above distribution to each
Class of Certificateholders by the third Business Day prior to each
Distribution Date. The Paying Agent shall not be responsible for recom-
puting, recalculating or verifying information provided to it by the Master
Servicer. All distributions made to Certificateholders of any Class on such
Distribution Date will be made to the Certificateholders of the respective
Class of record on
the next preceding Record Date, except that on the final distribution,
distributions shall be made as provided in the form of Certificate. All
distributions made to Certificateholders shall be based on the Percentage
Interest represented by their respective Certificates, and shall be made
either by wire transfer in immediately available funds to the account of such
Holder at a bank or other financial or depository institution having
appropriate facilities therefor, if such Holder has so notified the Paying
Agent in writing at least five Business Days prior to the Record Date for the
relevant Distribution Date and such Holder's Certificates of such Class in
the aggregate evidence an original denomination of not less than $5,000,000
or, if not, by check mailed to the address of the Person entitled thereto as
it appears on the Certificate Register, except that the final distribution in
retirement of the Certificates will be made only upon presentation and
surrender of the Certificates at the Corporate Trust Office or such other
agency of the Trustee specified in the final distribution notice to
Certificateholders. If on any Determination Date, the Master Servicer
determines that there are no Mortgage Loans outstanding and no other funds or
assets in the Trust Fund other than the funds in the Certificate Account or
the Distribution Account, the Master Servicer shall direct the Trustee
promptly to send the final distribution notice to each Certificateholder
specifying the manner in which the final distribution will be made. Except
as otherwise provided in Section 11.01, whenever the Master Servicer expects
that a final distribution with respect to any Class of Certificates will be
made on the next Distribution Date and has so notified the Trustee in writing
on or prior to the related Determination Date, the Trustee shall, no later
than three (3) days after the related Determination Date, mail to each Holder
on such date of such Class of Certificates a notice to the effect that: (i)
the Master Servicer expects that the final distribution with respect to such
Class of 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 such
Certificates from and after the end of the related 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 the final paragraph of Section 11.01.
(c) No later than 12:00 noon, New York City time, on the Business Day
preceding each Distribution Date, the Master Servicer shall transfer from the
Certificate Account to the Distribution Account a sum, which, together with
any Advances deposited in the Distribution Account as of the related Advance
Deposit Date pursuant to Section 6.03, will equal the Available Distribution
Amount for such Distribution Date to enable the Paying Agent to make the
distributions provided for in this Section 6.01. The Distribution Account
shall be established and maintained by and with the Paying Agent, and shall
be an Eligible Account in the form of a non-interest bearing trust account,
titled "Bankers Trust Company of California, N.A., as Paying Agent and Agent
for the benefit of Bankers Trust Company of California, N.A., as Trustee on
behalf of the holders of MLCC Mortgage Investors, Inc. Mortgage Loan Asset
Backed Pass-Through Certificates, Series 1997-B" and the Paying Agent shall
deliver to the Trustee, the Certificate Insurer, the Surety and the Master
Servicer
a "Distribution Account Certification" substantially in the form of Exhibit J
attached hereto. The Master Servicer may cause the Paying Agent to invest
moneys in the Distribution Account in Eligible Investments, which shall
mature not later than the Business Day prior to the Distribution Date
following the date of such investment and shall not be sold or disposed of
prior to its maturity. All such Eligible Investments shall be made in the
name of the Trustee. The proceeds of the sale or other disposition of all
Eligible Investments shall be deposited in the Distribution Account. All net
income and gain realized from any such investment shall be for the benefit of
the Master Servicer as additional servicing compensation and shall be paid by
the Paying Agent to the Master Servicer on the Business Day following each
Distribution Date. The amount of any losses incurred in respect of any such
investments (to the extent not offset by income from other such investments)
shall be deposited in the Distribution Account by the Master Servicer out of
its own funds immediately as realized without reimbursement; provided,
however, that if the Trustee becomes Master Servicer, the Trustee shall not
be required to deposit the amount of any loss incurred prior to its becoming
Master Servicer.
Section 6.02. Statements to the Certificateholders. Not later than
------------------------------------
12:00 noon California time on the third Business Day prior to each
Distribution Date, the Master Servicer shall deliver to the Trustee and the
Paying Agent for mailing by the Trustee to each holder of the related Class
of Certificates, each Rating Agency, the Certificate Insurer and the Surety a
statement setting forth the following information:
(i) with respect to each Class of Certificates, the amount of such
distribution to Holders of such Class allocable to principal. Such
statement shall separately identify, in the aggregate and not on a Class
by Class basis, the aggregate amount of any Principal Prepayments, Net
Liquidation Proceeds and Repurchase Proceeds included in the
distribution to all Classes;
(ii) with respect to each Class of Certificates, the amount of
such distribution to Holders of such Class allocable to interest,
identifying those cases in which the applicable Pass-Through Rate was
based on the Alternate Certificate Rate;
(iii) the amounts (stated separately) of any Class A Interest
Shortfall and Class B Interest Shortfall for such Distribution Date and
the amounts (stated separately) of Class A Unpaid Interest Shortfall and
Class B Unpaid Interest Shortfall;
(iv) the amount, if any, by which the sum of the Formula Principal
Distribution Amount and the Unrecovered Principal Amounts for such
Distribution Date exceeds the amount distributed on account of principal
to the related Certificateholders on such Distribution Date;
(v) the amount of any Advances by the Master Servicer and by the
Trustee pursuant to Section 6.03 and the amount of delinquencies of
Mortgage Loans during the related Due Period;
(vi) the amount to be paid to the Certificate Insurer pursuant to
Section 6.01(a) (the information required by this clause (vi) shall not
be included in the statement to Certificateholders);
(vii) the Pool Principal Balance, after giving effect to the
Formula Principal Distribution Amount and the Unrecovered Principal
Amounts for such Distribution Date;
(viii) the related amount of the Servicing Fees retained or
withdrawn from the Certificate Account by the Master Servicer and the
amount of additional servicing compensation received by the Master
Servicer attributable to penalties, fees and other items;
(ix) the amount of Servicing Advances paid by the Master Servicer
and any Sub-Servicer;
(x) the number and aggregate principal amounts of Mortgage Loans
(A) delinquent (1) one Monthly Payment and (2) two Monthly Payments, (3)
three or more Monthly Payments and (B) in foreclosure;
(xi) 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;
(xii) the Aggregate Net Principal Liquidation Losses for Mortgage
Loans that became Liquidated Mortgage Loans during the related Principal
Prepayment Period;
(xiii) all Advances recovered during the related Principal
Prepayment Period;
(xiv) the Distribution Account Shortfall, if any, the Preference
Amount, if any, and the Required Surety Payment, if any, for such
Distribution Date;
(xv) if such Distribution Date is a Pre-Funding Distribution Date,
the amount transferred to the Distribution Account from the Pre-Funding
Account;
(xvi) the aggregate Principal Balance of the Additional Collateral
Mortgage Loans;
(xvii) the Class A Principal Balance and the Class B Principal
Balance after giving effect to the distribution on such Distribution
Date; and
(xviii) the Class B Loss Amount for such Distribution Date.
Not later than two Business Days prior to each Distribution Date, the
Master Servicer shall deliver to the Paying Agent a statement, and on the
following Distribution Date the Paying Agent shall also send to the Class R
Certificateholder, the Company, the Trustee (if other than the Paying Agent),
the Certificate Insurer, the Surety and the Rating Agency such statement,
setting forth the amount, if any, distributed to such Holders on such
Distribution Date.
The Paying Agent's responsibility for distributing the above information
to the Certificateholders is limited to the availability, timeliness and
accuracy of the statement received from the Master Servicer. If the Paying
Agent fails to distribute such statements as specified in this Section 6.02,
it shall be the responsibility of the Trustee to make the required
distribution of such statements.
Upon reasonable advance notice in writing, if required by federal
regulation, the Master Servicer will provide to each Certificateholder which
is a savings and loan association, bank or insurance company certain reports
and access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the Office of Thrift Supervision or other regulatory authori-
ties with respect to investment in the Certificates; provided, that the
Master Servicer shall be entitled to be reimbursed by each such
Certificateholder for the Master Servicer's actual expenses incurred in
providing such reports and access.
Section 6.03. Advances by the Master Servicer. (a) If, on any
-------------------------------
Determination Date, the Master Servicer determines that any Monthly Payments
due on the immediately preceding Due Date have not been received, the Master
Servicer shall, to the extent it determines in good faith that such amounts
will be recoverable from Late Collections, Liquidation Proceeds or otherwise,
make an advance on or before the related Advance Deposit Date in an amount
equal to the amount of such delinquent Monthly Payments, after adjustment of
any delinquent interest payment for the Servicing Fee. For purposes of this
Section 6.03, the delinquent Monthly Payments referred to in the preceding
sentence shall be deemed to include an amount equal to the Monthly Payment
that would have been due on the Mortgage Loans which have been foreclosed or
otherwise terminated and, in connection therewith, the Master Servicer or the
Trust Fund acquired and continues to own the Mortgaged Properties on behalf
of the Certificateholders. If the Master Servicer makes an Advance, it shall
on or prior to such Advance Deposit Date deposit in the Distribution Account
an amount equal to the Advance, if any. Any such Advance shall be included
with the distribution to the Certificateholders on the related Distribution
Date. The Master Servicer shall be entitled to
be reimbursed from funds in the Certificate Account for all Advances and
Nonrecoverable Advances as provided in Section 5.09.
The Master Servicer may make an Advance by: (i) depositing its own
funds in the Certificate Account, (ii) applying funds that are not part of
the Available Distribution Amount in respect of which the Advance is being
made or (iii) effecting a combination of clauses (i) and (ii). Any portion
of the funds so used pursuant to clause (ii) shall be replaced by the Master
Servicer by deposit in the Certificate Account on or before 12:00 noon New
York City time on the Business Day preceding any future Distribution Date to
the extent that funds that are available in the Certificate Account on such
date shall be less than the Available Distribution Amount for such
Distribution Date.
(b) If the Master Servicer determines not to make an Advance under the
provisions of this Section, it shall on the related Advance Deposit Date
furnish to the Trustee, the Certificate Insurer, the Surety and each Rating
Agency written notice of such determination. In the event that the Master
Servicer fails to make an Advance required to be made pursuant to Section
6.03(a) and such failure continues unremedied on the close of business on the
Business Day prior to the related Distribution Date, the Trustee shall, on or
before the related Distribution Date, deposit in the Distribution Account an
amount equal to the excess of (i) Advances required to be made by the Master
Servicer under Section 6.03(a) over (ii) the amount of Advances made by the
Master Servicer with respect to such Distribution Date; provided that the
Trustee shall not be required to make such Advances if prohibited by law or
regulation, or if the Master Servicer determines that such Advance would be a
Nonrecoverable Advance. In the event the Trustee and the Paying Agent are
not the same Person, the Paying Agent shall promptly notify the Trustee of
all amounts transferred by the Master Servicer from the Certificate Account
to the Distribution Account. Until such time as the Master Servicer receives
a notice of termination pursuant to Section 9.01, the Trustee shall be en-
titled to be reimbursed directly from the Master Servicer within five (5)
Business Days for any Advance and Nonrecoverable Advances make by the Trustee
pursuant to this Section 6.03(b). After such time as the Master Servicer
receives a notice of termination pursuant to Section 9.01 and the Trustee, as
successor to the Master Servicer pursuant to Section 8.05, has made any
Advances and Nonrecoverable Advances pursuant to this Section 6.03(b), the
Trustee, in its capacity as successor Master Servicer, shall be entitled to
be reimbursed for such Advances and Nonrecoverable Advances from the
Certificate Account in the manner provided by Section 5.09.
(c) (i) In the event that any Mortgage Loan is the subject of a
Prepayment Interest Shortfall, the Master Servicer shall, to the extent of
the Servicing Fee for such Distribution Date, deposit into the Certificate
Account, as a reduction of the Servicing Fee (but not in excess thereof) for
such Distribution Date, no later than the close of business on the second
Business Day prior to the related Distribution Date, an amount equal to the
Prepayment Interest Shortfall; and in the case of such deposit, the Master
Servicer shall not be entitled to
any recovery or reimbursement from the Company, the Trustee or the
Certificateholders. Such deposited amount shall be part of the Available
Distribution Amount for such Distribution Date.
The balance, if any, of the Servicing Fee in respect of a month (after
giving effect to the preceding paragraph) shall be deposited into the
Certificate Account (as a reduction in the Servicing Fee) to the extent of
the amount, if any, by which (i) the interest accrued on the Class A and
Class B Certificates (calculated on the basis that the sum of the Class A
Principal Balance and the Class B Principal Balance shall not be greater than
the Pool Principal Balance at the end of such month) at the weighted average
of the applicable Class A Pass-Through Rate and the Class B Pass-Through Rate
for the related Accrual Period exceeds (ii) the interest due on the Mortgage
Loans on the Due Date during such Accrual Period (calculated on the
assumption that there were no prepayments of the Mortgage Loans during the
month preceding such Due Date) at the then respective Net Mortgage Rates and
during the Pre-Funding Period, one month's interest on the amount in the Pre-
Funding Account at the weighted average Net Mortgage Rate for the Mortgage
Loans. Such deposited amount shall be part of the Available Distribution
Amount for the Distribution Date following such month. The preceding
sentence is intended to apply to the situation where, if the Class A and
Class B Pass-Through Rates for an Accrual Period are equal to the related
Alternate Certificate Rate, the amount in clause (i) could be greater than
the amount in clause (ii) because interest will accrue on the Mortgage Loans
on the basis of a year consisting of twelve 30-day months and interest on the
Class A and Class B Certificates will accrue on the basis of the actual
number of days in the Accrual Period (which could be more than 30) divided by
360.
Section 6.04. The Certificate Insurance Policy. (a) If the
--------------------------------
statement delivered to the Trustee pursuant to Section 6.02 indicates that
there will be a Distribution Account Shortfall for the related Distribution
Date, the Trustee shall complete the notice in the form of Exhibit A to 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 second
Business Day preceding such Distribution Date as a claim for an Insured
Amount in an amount equal to the sum of the Distribution Account Shortfall.
(b) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Class A Certificateholders, the Trustee shall deposit such Insured
Payments in the Distribution Account and shall distribute such Insured
Payments, or the proceeds thereof, to the Class A Certificateholders in
accordance with Sections 6.01(a).
(c) The Trustee shall (i) receive as attorney-in-fact of each Holder of
any Class A Certificates any Insured Payment from the Certificate Insurer and
(ii) disburse the same to the Holders of such Certificates as set forth in
Section 6.01(b). Insured Payments disbursed by the Trustee from proceeds of
a Certificate Insurance Policy shall be considered payment
by the Certificate Insurer and not 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 6.01(a)(iv). The Trustee
hereby agrees on behalf of each Class A 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 6.01(a)(iv).
(d) Subject only to the priority of payment provisions of this
Agreement, each of the Company 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 Class A Certificates to
any moneys paid or payable in respect of the Class A Certificates under this
Agreement or otherwise. Each of the Company 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 are necessary to
evidence such subrogation and, subject to the priority of payment provision
of this Agreement, to perfect the rights of the Certificate Insurer to
receive any moneys paid or payable in respect of the Class A Certificates
under this Agreement or otherwise.
Section 6.05. The Certificate Guaranty Surety Bond. (a) On the
------------------------------------
11th Business Day prior to each Distribution Date, the Master Servicer shall
notify the Trustee of the Required Surety Payment, if any, due in respect of
any Additional Collateral Mortgage Loan that became a Liquidated Mortgage
Loan at least ten Business Days (or such shorter period as the Master
Servicer shall determine in its discretion) prior to such 11th Business Day
and that has not been previously reported to the Trustee pursuant to this
sentence. Upon its receipt of such notice, the Trustee shall complete the
notice in the form of Attachment 1 to the Certificate Guaranty Surety Bond.
The Trustee shall submit such notice to the Surety no later than 12:00 noon
New York City time on the tenth Business Day preceding such Distribution Date
as a claim for a Required Surety Payment.
(b) Upon receipt of a Required Surety Payment from the Surety on behalf
of the Holders of Class A Certificates, the Trustee shall deposit such
Required Surety Payment in the Distribution Account and shall distribute such
Required Surety Payment, or the proceeds thereof, in accordance with Section
6.01(a).
(c) The Trustee shall (i) receive as attorney-in-fact of each Holder of
Class A Certificates any Required Surety Payment from the Surety and (ii)
disburse the same to the Holders of such Certificates as set forth in Section
6.01(a).
(End of Article VI)
ARTICLE VII
REPORTS TO BE PREPARED BY MASTER SERVICER
-----------------------------------------
Section 7.01. Master Servicer Shall Provide Information as
--------------------------------------------
Reasonably Required. The Master Servicer shall furnish to the Trustee,
- -------------------
the Certificate Insurer and the Surety and during the term of this Agreement,
such periodic, special, or other reports or information, whether or not
provided for herein, as shall be necessary, reasonable, or appropriate in re-
spect to the Trustee, the Certificate Insurer or the Surety, as the case may
be, or otherwise in respect to the purposes of this Agreement, all such
reports or information to be as provided by and in accordance with such
applicable instructions and directions as the Trustee, the Certificate
Insurer or the Surety, as the case may be, may reasonably require. The
Master Servicer shall file, as necessary, financing statements and
continuation statements as required by the Uniform Commercial Code and any
other applicable law sufficient to create and maintain a valid perfected
security interest in the Trust for the benefit of the Certificateholders.
Section 7.02. Federal Information Returns and Reports to
------------------------------------------
Certificateholders. (a) For federal income tax purposes, the taxable
- ------------------
year of the Trust Fund shall be a calendar year and the Master Servicer shall
maintain or cause the maintenance of books of the Trust Fund on the accrual
method of accounting. The books of the Trust Fund shall reflect all payments
made with respect to the Mortgage Loans, and amounts attributable to the
Class A Certificateholders, the Class B Certificateholders, the Class C
Certificateholders and the Class R Certificateholder.
(b) The Master Servicer shall prepare and file or cause to be filed
with the Internal Revenue Service at the times and in the manner required by
the Code or applicable Treasury Regulations all Federal tax or information
returns with respect to the Trust Fund and the Certificates, which tax or
information returns contain such information as may be required by the Code
or applicable Treasury Regulations. The Master Servicer also shall furnish
to Holders of Certificates such statements or information at the times and in
the manner as the Code or applicable Treasury Regulations may require such
holders to be furnished, regardless of by whom. For this purpose, the Master
Servicer may, but need not, rely on any proposed regulations of the United
States Department of the Treasury. The Master Servicer shall indicate the
election to treat the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
as two REMICs in such manner as the Code or applicable Treasury regulations
may prescribe. The Trustee shall sign all required tax or information
returns, and the Master Servicer shall indemnify the Trustee for executing
such tax or information returns to the extent such returns contain errors or
omissions. The initial Class R Certificateholder is hereby designated as the
initial "tax matters person" (within the meaning of Temp. Treas. Reg.
Section 1.860F-4T(d)). In the event that the Code or applicable Treasury
Regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Master Servicer from acting as tax matters person
(as an agent or otherwise), the Master Servicer shall take whatever
action that in its sole good faith judgment is necessary for the proper
filing of such information returns or for the provision of a tax matters
person, including designation of the Class R Certificateholder to sign such
returns. The Class R Certificateholder shall be bound by this Section 7.02.
(End of Article VII)
ARTICLE VIII
THE COMPANY AND THE MASTER SERVICER
-----------------------------------
Section 8.01. Indemnification; Third Party Claims. (a) The Master
-----------------------------------
Servicer agrees to indemnify the Company, the Certificate Insurer, the Surety
and the Trustee and hold the Company, the Certificate Insurer, the Surety and
the Trustee harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs,
fees and expenses that the Company, the Certificate Insurer, the Surety or
the Trustee may sustain as a result of the failure of the Master Servicer to
perform its duties and service the Mortgage Loans in compliance with the
terms of this Agreement; provided that no such indemnification shall be re-
quired of a successor Master Servicer with respect to acts of a prior Master
Servicer. The Master Servicer shall immediately notify the Company, the
Certificate Insurer, the Surety and the Trustee if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, assume (unless
otherwise directed by the Company, the Certificate Insurer, the Surety and
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against it, the Company or the
Trustee in respect of such claim.
In addition, MLCC shall indemnify the Company, the Certificate Insurer,
the Surety and the Certificateholders and hold each of them harmless against
MLCC's failure to pay a Correspondent Trailing Premium in accordance with the
definition "Correspondent Trailing Premium".
(b) Should any claim or action by a third party arise after the Closing
Date for which the Company, the Certificate Insurer, the Surety or the
Trustee intends to seek indemnification under the terms of Section 8.01(a),
the Company shall notify the Master Servicer in writing within ten (10)
Business Days, and the Trustee, the Certificate Insurer or the Surety shall
notify the Master Servicer in writing promptly, after each such party
receives notice of such claim or action, or notice of a threat that is
reasonably likely to result in such claim or action. The party seeking
indemnification shall give the Master Servicer a reasonable opportunity to
participate in any proceedings to settle or defend any such claim or action.
If the Master Servicer wishes to assume the defense of such claim or action,
it shall give written notice to the party seeking indemnification and the
Master Servicer shall thereafter assume the defense at its own expense. In
the event that the Master Servicer assumes the defense of a claim or action,
the party seeking indemnification will assert or empower the Master Servicer
to assert on behalf of the party seeking indemnification any rights to
indemnification that the party seeking indemnification may have in connection
with such claim or action. The Master Servicer shall have the right to
settle any such action provided that the Master Servicer obtains the consent
of the party seeking indemnification, which consent shall not be unreasonably
withheld. The Company, the Certificate Insurer, the Surety and the Trustee
agree to respond to the Master Servicer's request for consent as promptly as
possible and agree that a failure by the Company, the Certificate
Insurer, the Surety or the Trustee to respond within thirty (30) Business
Days shall be taken as consent.
Section 8.02. Merger or Consolidation of the Company or the Master
Servicer; Status of Master Servicer. Subject to the following paragraphs of
this Section 8.02, the Company and the Master Servicer will each keep
in full effect its existence, rights and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its duties under
this Agreement. The Master Servicer agrees to remain an approved
seller/servicer for FNMA or FHLMC in good standing.
Any person into which the Company or the Master Servicer may be merged
or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Company or the Master Servicer shall be a party,
or any Person succeeding to the business of the Company or the Master
Servicer, shall be the successor of the Company or the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall satisfy the requirements of Section 8.05 with
respect to the qualifications of a successor to the Master Servicer.
Notwithstanding anything else in this Section 8.02 and Section 8.04 to
the contrary, the Master Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that the Person
accepting such assignment or delegation shall be a Person which is qualified
to service mortgage loans on behalf of FNMA or FHLMC, is approved by the
Trustee, the Certificate Insurer, the Surety and the Company, is willing to
service the Mortgage Loans and executes and delivers to the Company, the
Certificate Insurer, the Surety and the Trustee an agreement, in form and
substance reasonably satisfactory to the Company, the Certificate Insurer,
the Surety and 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 Master Servicer under this
Agreement; provided further that each Rating Agency's respective ratings of
the Classes of Certificates that have been rated in effect immediately prior
to such assignment and delegation will not be qualified or reduced as a
result of such assignment and delegation. The Master Servicer shall give
notice to the Certificate Insurer and the Surety of any such assignment and
delegation. In the case of any such assignment and delegation, the Master
Servicer shall be released from its obligations as Master Servicer under this
Agreement, except that the Master Servicer shall remain liable for all
liabilities and obligations incurred by it as Master Servicer hereunder prior
to the satisfaction of the conditions to such assignment and delegation set
forth in the second preceding sentence.
Section 8.03. Limitation on Liability of the Company, the Master
--------------------------------------------------
Servicer, the Trustee and Others. Neither the Company, the Master
- --------------------------------
Servicer nor any of the directors, officers, employees or agents of the
Company or the Master Servicer shall be under any liability to the Trustee,
the Certificateholders, the Certificate Insurer or the Surety for any action
taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Company, the Master Servicer or any such person against
any breach of warranties or representations made herein, or failure to per-
form its obligations in compliance with this Agreement, or any liability
which would otherwise be imposed by reason of any breach of the terms and
conditions of this Agreement. The Company, the Master Servicer, the Trustee
and any director, officer, employee or agent of the Company, the Master
Servicer or the Trustee may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any mat-
ters arising hereunder. Neither the Company nor the Master Servicer shall be
under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its respective duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expenses or liability; provided, however, that the Company or the Master
Servicer may in its discretion undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and duties
of the parties hereto. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities payable from the Certificate Account and the Company or the
Master Servicer shall be entitled to be reimbursed therefor out of the
Certificate Account as provided by Section 5.09; provided that no such right
of reimbursement shall exist with respect to the Master Servicer when such
claim results from the failure of the Master Servicer to service the Mortgage
Loans in strict compliance with the terms of this Agreement or a breach of a
representation or warranty made by the Master Servicer hereunder or as
Mortgage Loan Seller under the Sale Agreement or the failure of the Master
Servicer to deliver the Mortgage Files to the Custodian in accordance with
this Agreement.
Section 8.04. Company and Master Servicer Not to Resign. Except as
-----------------------------------------
described in Section 8.02, neither the Company nor the Master Servicer shall
assign this Agreement or resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company, the Master Servicer,
the Certificate Insurer, the Surety, the Trustee and Holders of Certificates
of each Class evidencing, as to such Class, Percentage Interests aggregating
at least 662/3% unless the determination is made that its duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Company or the Master Servicer. Any such determination
permitting the resignation of the Company or the Master Servicer shall be
evidenced by an Opinion of independent Counsel to such effect delivered to
the Trustee, the Certificate Insurer and the Surety which Opinion of Counsel
shall be in form and substance acceptable to the Trustee, the Certificate
Insurer and the Surety. A copy of all consents and any Opinion of Counsel
shall be promptly delivered to the Rating Agencies. Upon any such assignment
or resignation, the Company, or the Master Servicer, as appropriate, shall
send notice to all Certificateholders, the Certificate Insurer and the Surety
of the effect of such assignment or resignation upon the then current rating
of the class of Certificates by the Rating Agency whose rating on such class
is then in effect. No such resignation shall become effective until a
successor shall have assumed the Company's or the Master Servicer's
responsibilities and obligations hereunder in the manner provided in Section
8.05. Any purported assignment or resignation which does not comply with the
requirements of this Section shall be of no effect.
Section 8.05. Successor to the Master Servicer. In connection with
--------------------------------
the termination of the Master Servicer's responsibilities and duties under
this Agreement pursuant to Section 8.04 or 9.01, the Trustee shall (i)
succeed to and assume all of the Master Servicer's responsibilities, rights,
duties and obligations as Master Servicer arising thereafter (but not in any
other capacity) under this Agreement (except that the Trustee shall not be
obligated to make Advances if prohibited by applicable law or regulation and
except that the Trustee makes no representations and warranties of the Master
Servicer pursuant to Section 3.01 or otherwise hereunder) and shall have no
duty or obligation to purchase or repurchase any Mortgage Loans (except that
the Trustee, as successor Master Servicer, may elect pursuant to Section
3.04(f) to be obligated to make such purchases) and shall have the same
indemnities and be entitled to all Servicing Fees and funds to which the
Master Servicer would have been entitled as Master Servicer or (ii) appoint a
successor having a net worth of not less than $10,000,000 and which is a FNMA
or FHLMC approved seller/servicer or FHA approved mortgagee in good standing
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Master Servicer under this Agreement prior to
the termination of Master Servicer's responsibilities, duties and liabilities
under this Agreement. A successor Master Servicer other than the Trustee
shall make the representations and warranties in Section 3.01(a) to the
extent that such representations and warranties relate to its corporate
existence or its servicing of the Mortgage Loans hereunder. Neither the
Trustee nor any other successor Servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making any
distribution hereunder or any portion thereof caused by (i) the failure of
the Master Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Master Servicer. If the Trustee has become the
successor to the Master Servicer in accordance with this Section or Section
9.03, then notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established
housing and home finance institution having a net worth of not less than
$15,000,000 and which is a FNMA or FHLMC approved seller/servicer or FHA
approved mortgagee in good standing as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer hereunder. In connection with
any 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 or such court shall determine; provided,
however, that no such compensation shall be in excess of that permitted under
this Agreement without the consent of all of the Certificateholders, the
Certificate Insurer and the Surety. If the Master Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to Section 8.02, 8.04, 9.01 or 11.02, the Master Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair
or prejudice the rights or financial condition of its successor. The
resignation or removal of the Master Servicer pursuant to Section 8.02, 8.04,
9.01 or 11.02 shall not become effective until a successor shall be
appointed pursuant to this Section and shall in no event relieve the Master
Servicer of liability for breach of the representations and warranties made
pursuant to Section 3.01.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Master Servicer and to the Trustee an instrument accepting
such appointment, whereupon such successor shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of
the Master Servicer, with like effect as if originally named as a party to
this Agreement and the Certificates. Any termination or resignation of the
Master Servicer or this Agreement pursuant to Section 8.02, 8.04, 9.01, or
11.02 shall not affect any claims that the Trustee may have against the
Master Servicer arising prior to any such termination or resignation.
The Master Servicer shall timely deliver to the successor the funds that
were, or were required to be, in the Certificate Account and the Escrow
Account, if any, and all Mortgage Files and related documents and statements
held by it hereunder and the Master Servicer shall account for all funds and
shall execute and deliver such instruments and do such other things as may
reasonably be required to more fully and definitely vest and confirm in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Master Servicer.
Upon a successor's acceptance of an appointment as such, the Master
Servicer shall notify in writing the Trustee, the Certificateholders, the
Rating Agency, the Certificate Insurer and the Surety of such appointment.
Section 8.06. Maintenance of Ratings. The Master Servicer shall
----------------------
cooperate with the Company and take any action that may be reasonably
necessary to maintain the current rating or ratings on the Class A
Certificates. To the extent not otherwise provided herein, the Master
Servicer shall provide to each Rating Agency notice with respect to any (i)
insurance claims and recoveries, (ii) monthly Mortgage Loan reports, (iii)
accounting and compliance reports with respect to the Mortgages, (iv)
Mortgage Loan repurchases or substitution, (v) monthly shortfalls as a result
of a failure to make advances, (vi) final payment to Certificateholders,
(vii) transfers of the Class B, Class C or Class R Certificates and (viii)
the reports and statements delivered pursuant to Sections 5.25 and 5.26.
(End of Article VIII)
ARTICLE IX
DEFAULT
-------
Section 9.01. Events of Default. If one or more of the following
-----------------
Events of Default shall occur and be continuing:
(i) any failure by the Master Servicer to remit to the Trustee or
the Paying Agent, or any failure to cause the Paying Agent to make, any
payment or Advance required to be made or distributed under the terms of
this Agreement (including but not limited to an Advance pursuant to
Section 6.03); provided that if the Master Servicer is using its
reasonable best efforts to so remit, or cause the Trustee or Paying
Agent to make, any such payment or Advance, then such failure shall be
an Event of Default only if such failure continues unremedied for a
period of five days after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee, the Certificate Insurer, the Surety or
the Company or to the Master Servicer, the Trustee, the Certificate
Insurer, the Surety and the Company by the Holders of Certificates of
all Classes evidencing not less than 25% of the Trust Fund (based on the
outstanding principal balances of the Certificates), the Certificate
Insurer or Surety; or
(ii) if the written notice described in paragraph (i) above has
been given twice during any twelve-month period, any subsequent failure
during such twelve-month period to remit to the Trustee or the Paying
Agent, or cause the Paying Agent to make, any payment required to be
made or distributed under the terms of this Agreement other than for
reasons outside of the Master Servicer's control; or
(iii) failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Master Servicer set forth in this Agreement, which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer by the Trustee, the Certificate
Insurer, the Surety or the Company or to the Master Servicer, the
Trustee, the Certificate Insurer, the Surety and the Company by the
Holder of Certificates of Classes evidencing not less than 25% of the
Trust Fund (based on the outstanding principal balances of the
Certificates), the Certificate Insurer or the Surety; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a trustee,
conservator, receiver, liquidator, assignee, custodian or sequestrator
(or other similar official) for the Master Servicer or any substantial
part of its property in any federal or state bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60
days; or
(v) the Master Servicer shall consent to the appointment of a
trustee, conservator, receiver, liquidator, assignee, custodian or
sequestrator (or other similar official) in, or commence a voluntary
case under any federal or state bankruptcy insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or
substantially all of the Master Servicer's property; or
(vi) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every such case, so long as an Event of Default shall
not have been remedied, the Trustee shall notify the Certificateholders, the
Certificate Insurer, the Surety and each Rating Agency of such Event of De-
fault. Subject to Section 5.01(b), the Trustee may (with the consent of the
Certificate Insurer and the Surety), and at the written direction of the
Certificate Insurer, the Surety or the Holders of Certificates evidencing not
less than 25% of the Trust Fund (with the consent of the Certificate Insurer
and the Surety), shall, by notice in writing to the Master Servicer, in
addition to whatever rights the Trustee may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the
rights and obligations of the Master Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof. On or after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 8.05. Upon written request from the Trustee, the Master
Servicer shall prepare, execute and deliver, any and all documents and other
instruments, place in such successor's possession all Mortgage Files and do
or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise, at the Master Servicer's sole expense. The Master Servicer agrees
to cooperate with the Trustee and such successor in effecting the termination
of the Master Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to such successor for administration by it
of all cash amounts which shall at the time be credited by the Master
Servicer to the Certificate Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 9.02. Waiver of Defaults. The Trustee may, with the consent
------------------
of the Certificate Insurer and the Surety, and shall at the direction of the
Certificate Insurer and the Surety, waive any default by the Master Servicer
in the performance of its obligations hereunder and its consequences, except
that a default in the making of any required distribution on any of the
Certificates may only be waived by the affected Certificateholders, the
Certificate Insurer and the Surety. Upon any such waiver of a past default,
such default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right contingent thereon except to the extent expressly so waived.
Section 9.03. Trustee or Company to Act; Appointment of Successor.
---------------------------------------------------
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 9.01, the Trustee or its appointed agent shall be the
successor in all respects to the Master Servicer to the extent provided in
Section 8.05.
Section 9.04. Notification to Certificateholders. (a) Upon any
----------------------------------
such termination pursuant to Section 9.01, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register and to each Rating Agency, the
Certificate Insurer and the Surety.
(b) Within 60 days after obtaining actual knowledge of the occurrence
of any Event of Default, the Trustee shall transmit by mail to all Holders of
Certificates notice of each such Event of Default hereunder known to the
Trustee, unless such Event of Default has been cured or waived.
(End of Article IX)
ARTICLE X
CONCERNING THE TRUSTEE
----------------------
Section 10.01. 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, and is empowered to, perform
such duties and only such duties as are specifically set forth in this
Agreement. Any permissive right of the Trustee as enumerated in this
Agreement shall not be construed as a duty; provided that in case 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 such man's 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 intentional misconduct, and, if the Trustee is acting as the
successor Master Servicer pursuant to Section 8.05 or 9.03, its own willful
misconduct with respect to its servicing obligations; 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 liable for an error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of Certificateholders of any Class holding
Certificates which evidence at least 25% of the Trust Fund (on the basis
of the outstanding principal balances of the Certificates) with the
consent of the Certificate Insurer and the Surety as to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement.
Section 10.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 10.01:
(i) The Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(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 trusts 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 obligation, 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 person would exercise or use under
the circumstances in the conduct of such person's own affairs;
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder 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 fact or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by Holders
of Certificates of any Class evidencing at least 25% of the Trust Fund
(on the basis of the outstanding principal balances of the
Certificates); provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer, if an Event of Default
shall have occurred and is continuing, and otherwise by the
Certificateholder requesting the investigation; 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.
Section 10.03. Trustee Not Liable for Certificates or Mortgage
-----------------------------------------------
Loans. The recitals contained herein and in the Certificates shall be
- -----
taken as the statements of the Company or the Master Servicer, as the case
may be, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations or warranties as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly authenticated by it) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for
the use or application by the Company or the Master Servicer of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Company or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the
Certificate Account by the Company or the Master Servicer.
Section 10.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee.
Section 10.05. Master Servicer to Pay Trustee's Fees and Expenses.
--------------------------------------------------
The Master Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust) for all services rendered by it in the
execution of the trust hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee, and the Master
Servicer will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by
the Trustee in connection with the appointment of an office or agency
pursuant to Section 10.11) and indemnify and hold the Trustee harmless from
any such loss, liability or expense except any such expense, disbursement or
advance as may arise from its negligence or bad faith. The Trustee and any
officer, director, agent or employee of the Trustee shall be indemnified by
the Master Servicer and held harmless against any loss, liability or expense
incurred in connection with any claim or legal action relating to this
Agreement, the Insurance Agreement or the Certificates, or the performance of
any of the Trustee's duties in accordance with the terms of this Agreement or
the Insurance Agreement, other than any loss, liability or expense that is
incurred by reason of wilful misfeasance, bad faith or negligence of the
Trustee. Notwithstanding anything to the contrary in this Agreement, the
provisions of this Section shall survive the termination or assignment of
this Agreement and the resignation or removal of the Trustee herein. Upon
the resignation or removal of the Trustee, the Trustee shall only be entitled
to its trustee's fees accrued up to the time of such resignation or removal
and shall thereafter not be entitled to any additional trustee's fees.
Section 10.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a corporation or association having its
principal office in a state and city acceptable to the Company 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. The Trustee shall
not be an affiliate of the Mortgage Loan Seller or the Company. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 10.07.
Section 10.07. Resignation and Removal of the Trustee. The Trustee
--------------------------------------
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Company, the Master Servicer, any Sub-
Servicer, the Certificate Insurer, the Surety and the Rating Agency. Upon
receiving such notice of resignation, the Company 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 that such appointment does not result in a
reduction or withdrawal of the rating of the Class A Certificates, and
provided further, that, so long as such consent is not unreasonably withheld,
the Certificate Insurer and the Surety consents to such appointment. The
Company shall make a good faith effort to appoint a successor within 30 days
of its receipt of such notice. If the Company 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 or the Surety may
appoint a successor Trustee. The Master Servicer shall indemnify the Trustee
for any loss, liability, or expense incurred as a result of the Company's
failure to make a good faith effort to appoint a successor Trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 10.06, (ii) the Company has delivered to the
Trustee a letter from any Rating Agency to the effect that the rating of the
Class A 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 Company and the
Master Servicer to enter into an agreement with the Trustee, and the Company
and the Master Servicer, each in its sole discretion, elect to enter into
such agreement and (b) such agreement is consented to by the Certificate
Insurer and the Surety Provider and is satisfactory to the Rating Agencies
without resulting in a reduction in or withdrawal of any rating of the Class
A Certificates, then upon the execution and delivery of such agreement the
Company shall not request such resignation pursuant to this clause (ii)), and
the Trustee shall fail to resign after written request therefor by the
Company, or (iii) the Trustee shall become incapable of acting, or shall be
adjudged bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Company may remove the Trustee and appoint a
successor trustee 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.
The Holders of Certificates evidencing in the aggregate more than 50% of
the Trust Fund (on the basis of the outstanding principal balances of the
Certificates) may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Company, one complete set to the
Trustee so removed and one complete set to the successor so appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 10.08.
Section 10.08. Successor Trustee. Any successor trustee appointed
-----------------
as provided in Section 10.07 shall execute, acknowledge and deliver to the
Company 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 the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder, and the Company,
the Master Servicer and the predecessor trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 10.06 and the Company shall have
received written notice from the Rating Agency that the appointment of the
successor trustee will not result in reduction of the then current rating on
the Class A Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Company shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register, and to each Rating Agency, the Master Servicer, any
Sub-Servicer, the Certificate Insurer, and the Surety. If the Company 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 Company.
Section 10.09. Merger or Consolidation of Trustee. Any corporation
----------------------------------
or national banking association into which the Trustee may be merged or
converted or with which it may be
consolidated or any corporation or national banking association resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation or national banking association succeeding to the
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 10.06, 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 10.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Company 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, of any
part of the Trust Fund, and to vest in such Person or Persons, in such
capacity, such title to the Trust Fund, or any part thereof, and, subject to
the other provisions of this Section 10.10, such powers, duties, obligations,
rights and trusts as the Company and the Trustee may consider necessary or
desirable. If the Company shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, or in case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 10.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall
be required under Section 10.08 hereof. No co-trustee shall be obligated to
make any Advances required pursuant to Section 6.03(b).
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 10.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article X. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of it 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 10.11. Appointment of Office or Agency. The Trustee may
-------------------------------
appoint an office or agency in the City of New York where Certificates may be
surrendered for registration of transfer or exchange. The Trustee will
maintain an office at the address stated in Section 12.07 hereof where
notices and demands to or upon the Trustee in respect of the Certificates may
be served.
(End of Article X)
ARTICLE XI
TERMINATION
-----------
Section 11.01. Termination. The respective obligations and
-----------
responsibilities of the Company, the Master Servicer and the Trustee (except
the duty to pay the Trustee's fees and expenses and indemnification
hereunder) shall terminate (i) upon the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
or the disposition of all property acquired upon foreclosure or deed in lieu
of foreclosure of any Mortgage Loan and the remittance of all funds due
hereunder (including without limitation any Distribution Account Shortfall)
or (ii) at the option of the Master Servicer, on any Distribution Date which
occurs in the month next following a Due Period in which the aggregate unpaid
Principal Balance of all Outstanding Mortgage Loans is less than 10% of the
aggregate unpaid Principal Balance of the Mortgage Loans on the Cut-off Date,
so long as the Master Servicer deposits or causes to be deposited in the
Certificate Account during the Due Period related to such Distribution Date
an amount equal to the greatest of (A) the Purchase Price for each Mortgage
Loan, and, with respect to all property acquired in respect of any Mortgage
Loan remaining in the Trust Fund, an amount equal to the appraised value of
such property (less, if the purchaser is the Master Servicer, any
unreimbursed Advances made by the Master Servicer, which Advances shall
thereupon be deemed reimbursed to the Master Servicer), such appraisal to be
conducted by an appraiser selected by the Master Servicer, (B) the aggregate
fair market value (as determined by the Master Servicer as of the close of
business on the last Business Day of such Due Period) of all of the assets of
the Trust Fund (less, if the purchaser is the Master Servicer, any
unreimbursed Advances made by the Master Servicer, which Advances shall
thereupon be deemed reimbursed to the Master Servicer), plus, in each case,
one month's interest at the applicable Net Mortgage Rate on the Principal
Balance of each Mortgage Loan (including any Mortgage Loan as to which title
to the underlying Mortgaged Property has been acquired) and (C) the sum of
(1) the aggregate of the Class A Principal Balance, together with one month's
interest on the Class A Principal Balance at the Class A Pass-Through Rate,
and any Class A Unpaid Interest Shortfall, (2) the sum of the Class B
Principal Balance, together with one month's interest on the Class B
Principal Balance at the Class B Pass-Through Rate and any Class B Unpaid
Interest Shortfall, and (3) any amounts owed to the Certificate Insurer and
the Surety hereunder; 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's, living on the
date hereof. The amount calculated pursuant to clause (ii)(C) above does not
include any Class C Unpaid Interest Shortfall.
Notice of any termination, specifying the Distribution Date upon which
all Certificateholders may surrender their Certificates to the Trustee for
payment and cancellation, shall be given promptly by the Trustee (upon
direction by the Company 10 days prior to the date such notice is to be
mailed) by letter to Certificateholders, the Certificate Insurer, the Surety
and the Rating Agency mailed no later than the 25th day of the month
preceding the month of such final distribution specifying (i) the
Distribution Date upon which final payment on the Certificates
will be made upon presentation and surrender of Certificates at the office or
agency of the Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Distr-
ibution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Trustee
therein specified. Such notice shall be accompanied by an Opinion of Counsel
provided by the Master Servicer at its expense that such plan is a "qualified
liquidation" under the REMIC Provisions and shall constitute the adoption by
the Trustee on behalf of the Certificateholders of a plan of complete
liquidation within the meaning of section 860F(a)(4) of the Code. After
giving such notice, the Trustee shall not register the transfer or exchange
of any Certificates. If such notice is given in connection with the Master
Servicer's election to repurchase, the Master Servicer shall cause to be
deposited in the Distribution Account during the applicable Due Period an
amount equal to the above-described purchase price and on the Distribution
Date on which such termination is to occur, Certificateholders will be
entitled to the amount of such purchase price but not amounts in excess
thereof, all as provided herein. Upon presentation and surrender of the
Certificates, the Trustee shall notify the Paying Agent and the Paying Agent
shall distribute from the Distribution Account to Certificateholders an
amount equal to (a) the amount otherwise distributable on such Distribution
Date, if not in connection with a purchase; or (b) if the Master Servicer
elected to so purchase, the purchase price calculated as provided above.
Following such final deposit the Custodian, pursuant to the Custodial
Agreement, shall promptly release to the Master Servicer the Mortgage Files
for the remaining Mortgage Loans, and the Trustee shall execute all
assignments, endorsements and other instruments necessary to effectuate such
transfer and shall have no further responsibility with regard to said
Mortgage Files.
If all of the Certificateholders shall not surrender their Certificates
for cancellation within three months after the time specified in the above-
mentioned written notice, the Paying Agent shall on such date cause all funds
in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for
the benefit of such Certificateholders, and the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within three months after the second notice all the Certificates
shall not have been surrendered for cancellation, the Trustee shall appoint
an agent to take appropriate and reasonable steps to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain in the
Trust Fund hereunder. Subject to applicable laws with respect to escheat of
funds, any money held in the separate escrow account for the benefit of the
remaining Certificateholders and remaining unclaimed for one year after the
second notice has been given shall be discharged from the Trust Fund and be
paid to the Class R Certificateholder; and the remaining Certificateholders
shall thereafter, as unsecured general creditors, look only to the Class R
Certificateholder for payment thereof (but only to the extent of the amounts
so paid to the Class R Certificateholder), and all liability of the Trustee
and the Paying Agent with respect to such trust money shall thereafter cease.
Section 11.02. Additional Termination Requirements. (a) In the
-----------------------------------
event the Master Servicer exercises its repurchase option as provided in
Section 11.01, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless
the Trustee has received an Opinion of Independent Counsel to the effect that
the failure of the Trust Fund to comply with the requirements of this Section
11.02 will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in Section 860F of the Code, or
(ii) cause the Trust Fund (exclusive of the Mortgage 100(Service Mark) Pledge
Agreements, the Parent Power(Registered Trademark) Agreements and the Pre-
Funding Account (including the funds therein and Pre-Funding Earnings)) to
fail to qualify as two REMICs at any time that any Certificates are
outstanding:
(i) The Master Servicer shall establish a 90-day liquidation
period in a statement attached to the final tax returns of the Trust
Fund pursuant to Treasury Regulation Section 1.860F-1. The Master
Servicer shall satisfy all requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by
an Independent Opinion of Counsel obtained at the expense of the Master
Servicer;
(ii) During such 90-day liquidation period, and at or prior to the
Distribution Date for the final distribution, the Trustee shall sell all
of the assets of the Trust Fund to the Master Servicer for cash; and
(iii) At the time of the final payment on the Class A and Class B
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholder all remaining
available cash (other than cash retained to meet claims) and property in
the Trust Fund, and the Trust Fund shall terminate at that time.
(b) By their acceptance of the Class R Certificate, the Holder thereof
hereby authorizes the Master Servicer to specify the 90-day liquidation
period, which authorization shall be binding upon all successor Holders of
the Class R Certificate.
Section 11.03. Termination By Certificate Insurer or Surety. In the
--------------------------------------------
event the Master Servicer does not exercise its option to terminate the Trust
Fund pursuant to this Article, the Certificate Insurer or the Surety may do
so on the same terms.
(End of Article XI)
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
Section 12.01. Severability of Provisions. If any one or more of
--------------------------
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement.
Section 12.02. 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
proceeding in any court for a partition or winding-up of the Trust Fund, nor
otherwise affect the rights, obligations, and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third 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 of any provision of
this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, the Certificate
Insurance Policy or the Certificate Guaranty Surety Bond, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and the Holders of Cer-
tificates evidencing in the aggregate not less than 25% of the Trust Fund (on
the basis of the principal balances of the Certificates) shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates of any Class shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates of such Class or any other Class, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the common
benefit of Certificateholders of such Class or all Classes, as the case may
be. For the protection and enforcement of the provisions of this Section,
each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.03. Amendment. This Agreement may be amended from time
---------
to time by the Company, the Master Servicer and the Trustee, with the consent
of the Certificate Insurer and the Surety so long as such consent is not
unreasonably withheld and without the consent of any of the
Certificateholders, (i) to cure or correct any ambiguity, mistake or error,
(ii) to correct or supplement any provisions herein which may be inconsistent
with any other provisions herein or with the Prospectus Supplement or
Prospectus pursuant to which the Class A Certificates were offered, (iii) to
obtain a rating by a nationally recognized rating agency or to maintain or
improve the rating of the Class A Certificates then given by a rating agency
(it being understood that, after obtaining the rating of the Class A
Certificates at the Closing Date, none of the Trustee, the Company or the
Master Servicer is obligated to obtain, maintain or improve any rating of any
Class of Certificates), or (iv) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
materially inconsistent with the provisions of this Agreement, including
without limitation provisions relating to the issuance of Definitive
Certificates to Certificate Owners if book-entry registration of the Class A
Certificates is no longer permitted; provided that, in the case of clause
(iv), such action shall not, as evidenced by an Opinion of Independent
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
This Agreement may also be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Holders of
Certificates of each Class affected thereby, evidencing, as to each such
Class, Percentage Interests aggregating not less than 66% and the consent of
the Certificate Insurer and the Surety, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate or (ii)
reduce the aforesaid percentage of Certificates of any class the Holders of
which are required to consent to any such amendment, without the consent of
the Holders of all Certificates of such Class then outstanding.
The Company, the Master Servicer and the Trustee, may from time to time
amend this Agreement without the consent of any of the Certificateholders,
the Certificate Insurer or the Surety to modify, eliminate or add to any of
the provisions hereof to the extent necessary to maintain the qualification
of the Trust Fund (exclusive of the Mortgage 100(Service Mark) Pledge
Agreements, the Parent Power(Registered Trademark) Agreements and the Pre-
Funding Account (including the funds therein and Pre-Funding Earnings)) as
two REMICs or to avoid the imposition of any material tax liability thereon
at all times that any Certificate is outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification of such amendment to each Certificateholder, the
Certificate Insurer, the Surety and the Rating Agencies (with a copy of the
amendment itself to Standard & Poor's).
It shall not be necessary for the consent of Certificateholders under
this Section 12.03 to approve the particular form of any proposed amendment
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Notwithstanding any provisions of this Agreement, the Trustee shall not
consent to any amendment to this Agreement unless it shall first receive an
Opinion of Counsel to the effect that such amendment will not result in the
imposition of a tax on the Trust Fund or cause the Trust Fund (exclusive of
the Mortgage 100(Service Mark) Pledge Agreements, the Parent Power(Registered
Trademark) Agreements and the Pre-Funding Account (including the funds
therein and Pre-Funding Earnings)) to fail to qualify as two REMICs at any
time that any Certificates are outstanding. In no event shall any Opinion of
Counsel provided pursuant to this Section 12.03 be an expense of the Trustee.
Section 12.04. The Certificate Insurer; Surety. 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 Certi-
ficate Insurer's rights thereunder shall vest in the Holders of the Class A
Certificates and shall be exercisable by the Holders of at least a majority
in Percentage Interest of the Class A Certificates then Outstanding. At such
time as the Class A 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.
The Surety is a third-party beneficiary of this Agreement. Any right
conferred to the Surety shall be suspended during any period in which the
Surety is in default in its payment obligations under the Certificate
Guaranty Surety Bond. During any period of suspension the Surety's rights
hereunder shall vest in the Holders of the Certificates and shall be
exercisable by the Holders of at least a majority in Percentage Interest of
each Class of Certificates then Outstanding. At such time as the
Certificates are no longer Outstanding hereunder, the Surety's rights
hereunder shall terminate.
Section 12.05. Recordation of Agreement; Counterparts. To the
--------------------------------------
extent permitted by applicable law, this Agreement is subject to recordation
in all appropriate public offices for real property records in all the
counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the Master Servicer's expense on direction
of the Trustee accompanied by an Opinion of Counsel (which shall not be an
expense of the Trustee) to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary
for the administration or servicing of the Mortgage Loans.
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 12.06. Duration of Agreement. This Agreement shall continue
---------------------
in existence and effect until terminated as herein provided.
Section 12.07. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 12.08. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given
when delivered to (i) in the case of the Company, MLCC Mortgage Investors,
Inc., 4802 Deer Lake Drive East, Jacksonville, Florida 32246, Attention:
President, (ii) in the case of the Master Servicer, Merrill Lynch Credit
Corporation, 4802 Deer Lake Drive East, Jacksonville, Florida 32246,
Attention: President, with a copy at the same address to the General
Counsel of the Master Servicer, (iii) in the case of the Trustee, at the
Corporate Trust Office, Attention: MLCCMI Mortgage Loan Asset Backed
Certificates Series 1997-B, (iv) in the case of Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007, Attention: Structured
Finance Surveillance, (v) in the case of Standard & Poor's, 26 Broadway, 15th
Floor, New York, New York, Attention: Mortgage Surveillance Group, (vi) in
the case of the Certificate Insurer and the Surety, Ambac Assurance
Corporation, One State Street Plaza, New York, New York 10004, Attention:
Mr. Howard Pfeffer, or (vii) in the case of any of the foregoing persons,
such other addresses as may hereafter be furnished by any such persons to the
other parties to this Agreement. Notice to a Certificateholder shall be sent
U.S. mail first class postage prepaid and shall be deemed given when mailed
addressed to the address shown in the Certificate Register.
(End of Article XII)
IN WITNESS WHEREOF, the Company, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
MLCC MORTGAGE INVESTORS,
INC., as the Company
By: /s/ Laurel A. Davis
----------------------------------------
Name: Laurel A. Davis
Title: Vice President
and Assistant Secretary
MERRILL LYNCH CREDIT CORPORATION,
as Master Servicer
By: /s/ Linzy S. Banks
-----------------------------------------
Name: Linzy S. Banks
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By: /s/ Melanie Anbarci
-----------------------------------------
Name: Melanie Anbarci
Title: Assistant Secretary
STATE OF FLORIDA
COUNTY OF DUVAL
The foregoing instrument was acknowledged before me this 8th day of
December, 1997, by Laurel A. Davis, as Vice President and Assistant Secretary
of MLCC Mortgage Investors, Inc., a Florida corporation, on behalf of the
corporation. He/She/They
(x ) is/are personally known to me; or
( ) produced a Florida driver's license as identification; or
( ) produced _________________ as identification.
/s/ Kathy Molitoris
-----------------------------
_____________________, Notary
Public, State of Florida
My commission expires: June 26, 1999
-------------
Serial No. CC476494
--------
(Notarial Seal)
STATE OF FLORIDA
COUNTY OF DUVAL
The foregoing instrument was acknowledged before me this 8th day of
December, 1997, by Linzy S. Banks, as Vice President of Merrill Lynch Credit
Corporation, a Florida corporation, on behalf of the corporation.
He/She/They
(x ) is/are personally known to me; or
( ) produced a Florida driver's license as identification; or
( ) produced _________________ as identification.
/s/ Kathy Molitoris
-----------------------------
_____________________, Notary
Public, State of Florida
My commission expires: June 26, 1999
-------------
Serial No. CC476494
--------
(Notarial Seal)
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 9th day of December 1997, before me, a notary public in and for
said State, personally appeared Melanie Anbarci, known to me to be an
---------------
Assistant Secretary of Bankers Trust Company of California, N.A., that
- -------------------
executed the within instrument, and also known to me to be the person who
executed it on behalf of said banking association, and acknowledged to me
that such banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first written.
/s/ Suzanne C. Patten
----------------------
Notary Public
(Notarial Seal)
My Commission expires: April 21,1998
-------------
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items:
1. Original Mortgage Note endorsed (by facsimile signature if so
authorized by the Mortgage Loan Seller), "Pay to the order of
Bankers Trust Company of California, N.A., as trustee, under that
certain Pooling and Servicing Agreement dated as of November 1,
1997, for Mortgage Loan Asset Backed Pass-Through Certificates,
Series 1997-B (MLCC Mortgage Investors, Inc., Seller) without
recourse" and signed in the name of the Mortgage Loan Seller by an
authorized officer.
2. Original recorded Mortgage, or if such original has been delivered
to the appropriate recorder's office for recording, a certified
copy thereof certified true and complete by the Mortgage Loan
Seller or the escrow agent acting in connection with the
origination of the Mortgage Loan, with the original to be delivered
within 180 days of the Closing Date (or the related Subsequent
Transfer Date in the case of a Subsequent Mortgage Loan).
3. Original Assignment of Mortgage in recordable form to "Bankers
Trust Company of California, N.A., as trustee, under that certain
Pooling and Servicing Agreement dated as of November 1, 1997, for
Mortgage Loan Asset Backed Pass-Through Certificates, Series
1997-B", executed by an authorized signatory of the Mortgage Loan
Seller. Subject to the foregoing, such assignments may, if
permitted by law, be in the form of blanket assignments for
Mortgage Loans covering Mortgaged Properties situated within the
same county. If the Assignment of Mortgage is in blanket form, a
copy of the Assignment of Mortgage shall be included in the
individual Mortgage File.
4. Originals of all assumption and modification agreements, if any.
5. Original policies of title insurance, or if the original policy of
title insurance is unavailable, a copy of the preliminary title
report, with the original title policy to be delivered within 150
days of the Closing Date (or the related Subsequent Transfer Date
in the case of a Subsequent Mortgage Loan). The policy must
affirmatively insure ingress and egress and insure against
encroachments by or upon the Mortgaged Property or any interest
therein. If the original title policy has been lost, stolen or
misplaced, a certified copy thereof certified true and complete by
the Mortgage Loan Seller shall be included in the individual
Mortgage File no later than 180 days after the Closing Date (or the
Subsequent Transfer Date in the case of Subsequent Mortgage Loans).
6. With respect to those Mortgage Loans which are cooperative loans,
the original Mortgage Note, endorsed (by facsimile signature if so
authorized by the Mortgage Loan Seller), "Pay to the order of
Bankers Trust Company of California, N.A., as trustee, under that
certain Pooling and Servicing Agreement dated as of November 1,
1997, for Mortgage Loan Asset Backed Pass-Through Certificates,
Series 1997-B (MLCC Mortgage Investors, Inc., Seller) without
recourse" and signed in the name of the Mortgage Loan Seller by an
authorized officer; the original stock certificate and related
stock power executed by the obligor in blank; the original loan
security agreement and the assignment of the note and loan security
agreement, if applicable, assigned to "Bankers Trust Company of
California, N.A. as trustee under that certain Pooling and
Servicing Agreement dated as of November 1, 1997 for Mortgage Loan
Asset Backed Pass-Through Certificates, Series 1997-B"; the
original proprietary lease and the assignment of the proprietary
lease, if applicable, executed by the obligor in blank; and any
financing statements relating thereto.
EXHIBIT C
FORM OF FACE OF CLASS A CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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 IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
CLASS A
MORTGAGE LOAN ASSET BACKED PASS-THROUGH CERTIFICATE
SERIES 1997-B
NUMBER: ______________
DATE OF POOLING ORIGINAL DENOMINATION:
AND SERVICING AGREEMENT: $_____________________
____________ 1, 199_
CUT-OFF DATE:
___________, 199_
FINAL MATURITY DATE: ORIGINAL CLASS A PRINCIPAL
__________ 15, 20__ BALANCE:
$______________________
FIRST DISTRIBUTION DATE: CUSIP__________________
_______ 15, 199_
evidencing a percentage interest in any distribution allocable to
the Class A Certificates with respect to a pool of adjustable rate
conventional one- to four-family mortgage loans formed and sold by
MLCC MORTGAGE INVESTORS, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
MLCC MORTGAGE INVESTORS, INC., THE MASTER SERVICER OR THE TRUSTEE REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY MLCC MORTGAGE
INVESTORS, INC. OR BY ANY OF ITS AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THE PRINCIPAL BALANCES OF THE MORTGAGE LOANS EVIDENCED BY THIS
CERTIFICATE ("CERTIFICATE BALANCE") WILL BE REDUCED BY A PORTION OF THE
PAYMENTS ON SUCH MORTGAGE LOANS. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF THE CERTIFICATES, THE CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE
TRUSTEE. ON THE DATE OF THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
TRUSTEE IS BANKERS TRUST COMPANY OF CALIFORNIA, N.A., 3 PARK PLAZA, IRVINE,
CALIFORNIA 92614.
This certifies that CEDE & CO. is the registered owner of a beneficial
interest in certain monthly distributions with respect to a pool (the
"Mortgage Pool") of conventional one- to four-family mortgage loans (the
"Mortgage Loans") formed and sold by MLCC Mortgage Investors, Inc.
(hereinafter called the "Company", which term includes any successor entity
under the Agreement referred to below) and certain other property held in
trust for the benefit of Certificateholders (collectively, the "Trust Fund").
The Mortgage Loans are serviced by Merrill Lynch Credit Corporation (the
"Master Servicer"). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Company, the Master 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 one of a duly authorized issue of Certificates,
designated as Mortgage Loan Asset Backed Pass-Through Certificates, Series
1997-B, Class A (the "Class A Certificates") and 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. Also issued under the Agreement
are Certificates designated as Mortgage Loan Asset Backed Pass-Through
Certificates, Series 1997-B, Class B (the "Class B Certificates"), Mortgage
Loan Asset Backed Pass-Through Certificates, Series 1997-B, Class C (the
"Class C Certificates"), Mortgage Loan Asset Backed Pass-Through
Certificates, Series 1997-B, Class C (the "Class C Certificates"), and a
residual interest Certificate designated as Mortgage Loan Asset Backed Pass-
Through Certificates, Series 1997-B, Class R (the "Class R Certificate").
The Class B Certificates, the Class C Certificates and the Class R
Certificate are subordinate to the Class A Certificates in right of payment
to the extent described in the Agreement. The Class A Certificates, the
Class B Certificates, the Class C Certificates and the Class R Certificate
are collectively referred to as the "Certificates". The interests of the
Class A Certificateholders in the Trust Fund will vary as described in the
Agreement.
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from certain funds in the Distribution Account on the 15th day of each month
or, if such 15th day is not a Business Day, the first Business Day
immediately following (the "Distribution Date"), commencing on _______ 15,
199_, to the Person in whose name this Certificate is registered on the
related Record Date, an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the Class A Distribution Amount
for such Distribution Date.
Distributions on this Certificate will be made by the Paying Agent
either by check mailed to the address of the Person entitled thereto, as such
name and address shall appear on the Certificate Register, or, by wire
transfer in immediately available funds to the account of such Holder at a
bank or other financial or depository institution having appropriate
facilities therefor, if such Holder has so notified the Paying Agent in
writing at least five Business Days prior to the Record Date for such
Distribution Date and such Holder's Class A Certificates evidence an original
denomination of not less than $5,000,000. 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 and specified in such notice of final distribution.
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 in 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 DTC, any transfer, pledge or other use hereof for value or
otherwise by or to any person is wrongful inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: December 9, 1997
MLCC MORTGAGE INVESTORS, INC.
By: ---------------------------------
Authorized Officer
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS A CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
----------------------------------------
Authorized Signatory
FORM OF REVERSE OF CLASS A CERTIFICATE
This Class A Certificate is one of a duly authorized issue of
Certificates, designated as Mortgage Loan Asset Backed Pass-Through
Certificates, Series 1997-B, issued in one Class of Class A Certificates, one
Class of Class B Certificates, one Class of Class C Certificates and one
Class of Class R Certificates, each evidencing an interest in certain
distributions, as specified in the Agreement, with respect to a pool of
adjustable rate conventional one- to four-family mortgage loans formed and
sold by the Company and certain other property conveyed by the Company to the
Trustee. The Class B, Class C and Class R Certificates represent subordinate
interests in the Trust Fund (to the extent provided in the Agreement) to
those of the Class A Certificates. The Class R Certificate represents the
residual interest in the Trust Fund.
The Trustee will cause to be kept at its Corporate Trust Office in
Irvine, California, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee will provide for the registration of Certificates and
of transfers and exchanges of Certificates. Upon surrender for registration
of transfer of any Certificate at any office or agency of the Trustee
maintained for such purpose, the Trustee will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like Class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Company, the Master Servicer,
the Certificate Insurer, the Surety and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose
of receiving distributions pursuant to the Agreement and for all other
purposes whatsoever, and neither the Company, the Master Servicer, the
Certificate Insurer, the Surety nor the Trustee will be affected by notice to
the contrary.
The Agreement may be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Certificate Insurer
and the Surety and without the consent of any of the Certificateholders, (i)
to cure or correct any ambiguity, mistake or error, (ii) to correct or
supplement any provisions therein which may be inconsistent with any other
provisions therein or with the Prospectus Supplement or Prospectus pursuant
to which the Class A Certificates were offered, (iii) to ensure continuing
treatment of the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
as two REMICs or to avoid the imposition of certain tax liabilities, (iv) to
obtain a rating by a nationally recognized rating agency or to maintain or
improve the ratings of the Class A Certificates then given by a rating agency
(it being understood that, after obtaining the ratings of the Class A
Certificates at the Closing Date, none of the Trustee, the Company or the
Master Servicer is obligated to obtain, maintain or improve any rating of any
Class of Certificates), and (v) to make any other provisions with respect to
matters or questions arising under the Agreement which are not
materially inconsistent with the provisions of the Agreement, including
without limitation provisions relating to the issuance of Definitive
Certificates to Certificate Owners if book-entry registration of the Class A
Certificates is no longer permitted; provided that, in the case of clause
(v), such action does not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interest of any Certificateholder.
The Agreement may also be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Holders of
Certificates of each Class affected thereby evidencing, as to each such
Class, Percentage Interests aggregating not less than 662/3% and the consent
of the Certificate Insurer and the Surety, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage of Certificates of any Class the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates of such Class then outstanding.
The Company intends to cause an election to be made to treat the Trust
Fund (exclusive of the Mortgage 100(Service Mark) Pledge Agreements, the
Parent Power(Registered Trademark) Agreements and the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings)) as two real estate
mortgage investment conduits (the "Lower-Tier REMIC" and the "Upper-Tier
REMIC"). The Class A Certificates, the Class B Certificates and the Class C
Certificates will constitute "regular interests" in the Upper-Tier REMIC.
The Class R Certificate will constitute the "residual interest" in the Upper-
Tier REMIC.
The respective obligations and responsibilities of the Company, the
Master Servicer and the Trustee under the Agreement will terminate upon: (i)
the later of the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder; or (ii) at the option of the
Master Servicer, the Certificate Insurer or the Surety, on any Distribution
Date which occurs in the month following a Due Date on which the aggregate
unpaid Principal Balance of all outstanding Mortgage Loans is less than 10%
of the aggregate unpaid Principal Balance of the Mortgage Loans on the Cut-
off Date in accordance with the provisions set forth in the Agreement;
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's, living on the date hereof.
Most of the Mortgage Loans are convertible to fixed rates or new Indices
in accordance with their terms.
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
FORM OF FACE OF CLASS B CERTIFICATE
(THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING
UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
TO THIS CERTIFICATE. FOR PURPOSES OF SUCH RULES, THE ISSUE DATE OF THIS
CERTIFICATE IS _________________. THE INITIAL INTEREST RATE PAYABLE ON
THIS CERTIFICATE IS ____. THIS CERTIFICATE HAS BEEN ISSUED WITH
$________ OF OID PER $1000 OF PRINCIPAL AMOUNT, AND THE YIELD TO
MATURITY IS _______. THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
SHORT ACCRUAL PERIOD IS $_____ PER $1000 OF PRINCIPAL AMOUNT CALCULATED
UNDER THE EXACT (APPROXIMATE) METHOD.)
THIS CLASS B CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
EXCHANGE 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 OR LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF
THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS B CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE CLASS
A CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE.
CLASS B ORIGINAL DENOMINATION:
SUBORDINATE $_____________________
NUMBER: ______________
DATE OF POOLING
AND SERVICING AGREEMENT: ORIGINAL CLASS B
________ 1, 199_ PRINCIPAL BALANCE:
$
------------------
CUT-OFF DATE:
________ 1, 199_
FINAL MATURITY DATE:
_________ 15, 20__
FIRST DISTRIBUTION DATE:
__________ 15, 199_
MORTGAGE LOAN ASSET BACKED PASS-THROUGH
CERTIFICATES, SERIES 1997-B
evidencing a percentage interest in any
distribution allocable to the Class B
Certificates with respect to a pool of
adjustable rate conventional one- to four-
family mortgage loans formed and sold by
MLCC MORTGAGE INVESTORS, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN MLCC
MORTGAGE INVESTORS, INC., THE MASTER SERVICER OR THE TRUSTEE REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY MLCC MORTGAGE
INVESTORS, INC. OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY.
THE PRINCIPAL BALANCES OF THE MORTGAGE LOANS EVIDENCED BY THIS
CERTIFICATE ("CERTIFICATE BALANCE") WILL BE REDUCED BY A PORTION OF THE
PAYMENTS ON SUCH MORTGAGE LOANS. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF THE CERTIFICATES, THE CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE
TRUSTEE. ON THE DATE OF THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
TRUSTEE IS BANKERS TRUST COMPANY OF CALIFORNIA, N.A., 3 PARK PLAZA, IRVINE,
CALIFORNIA 92614.
This certifies that ___________________ is the registered owner of a
beneficial interest in certain distributions with respect to a pool (the
"Mortgage Pool") of conventional one- to four-family mortgage loans (the
"Mortgage Loans") formed and sold by MLCC Mortgage Investors, Inc.
(hereinafter called the "Company", which term includes any successor entity
under the Agreement referred to below), and certain other property held in
trust for the benefit of Certificateholders (collectively, the "Trust Fund").
The Mortgage Loans are serviced by Merrill Lynch Credit Corporation (the
"Master Servicer"). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement"), among the
Company, the Master 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 one of a duly authorized issue of Certificates,
designated as Mortgage Loan Asset Backed Pass-Through Certificates, Series
1997-B, Class B (the "Class B Certificates") and 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. Also issued under the Agreement
are Certificates
designated as Mortgage Loan Asset Backed Pass-Through Certificates Series
1997-B, Class A (the "Class A Certificates"), Mortgage Loan Asset Backed
Pass-Through Certificates, Series 1997-B, Class C (the "Class C
Certificates"), and a residual interest certificate designated Mortgage Loan
Asset Backed Pass-Through Certificates, Series 1997-B, Class R (the "Class R
Certificate"). The Class A Certificates are senior to the Class B and the
Class C Certificates in right of payment to the extent described in the
Agreement. The Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class R Certificate are collectively referred to as the
"Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Distribution Account on the 15th day of each month or, if
such 15th day is not a Business Day, the first Business Day immediately
following (the "Distribution Date"), commencing on _________ 15, 199_, to the
Person in whose name this Certificate is registered on the related Record
Date, an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the applicable distribution amount for such Class on
such Distribution Date.
The rights of the Class B Certificateholders to receive distributions in
respect of the Class B Certificates on any Distribution Date are subordinate
to the rights of the Class A Certificateholders to receive distributions in
respect of such Class A Certificates to the extent set forth in the
Agreement. Distributions on this Certificate will be made by the Paying
Agent either by check mailed to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register, or, by
wire transfer in immediately available funds to the account of such Holder at
a bank or other financial or depository institution having appropriate
facilities therefor, if such Holder has so notified the Paying Agent in
writing at least five Business Days prior to the Record Date for such
Distribution Date and such Holder's Class B Certificates evidence an original
denomination of not less than $5,000,000. 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 and specified in such notice of final distribution.
The Trustee will cause to be kept at its Corporate Trust Office in
Irvine, California, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee will provide for the registration of Certificates and
of transfers and exchanges of Certificates. Upon surrender for registration
of transfer of any Certificate at any office or agency of the Trustee
maintained for such purpose, the Trustee will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Company, the Master Servicer,
the
Certificate Insurer, the Surety and the Trustee may treat the person in whose
name any Certificate is registered as the owner of such Certificate and the
Percentage Interest in the Trust Fund evidenced thereby for the purpose of
receiving distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Company, the Master Servicer, the Certificate
Insurer, the Surety nor the Trustee will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Certificate Insurer
and the Surety and without the consent of any of the Certificateholders, (i)
to cure or correct any ambiguity, mistake or error, (ii) to correct or
supplement any provisions therein which may be inconsistent with any other
provisions therein or with the Prospectus Supplement or Prospectus pursuant
to which the Class A Certificates were offered, (iii) to ensure continuing
treatment of the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
as two REMICs or to avoid the imposition of certain tax liabilities, (iv) to
obtain a rating by a nationally recognized rating agency or to maintain or
improve the ratings of the Class A Certificates then given by a rating agency
(it being understood that, after obtaining the ratings of the Class A
Certificates at the Closing Date, none of the Trustee, the Company or the
Master Servicer is obligated to obtain, maintain or improve any rating of any
Class of Certificates), and (v) to make any other provisions with respect to
matters or questions arising under the Agreement which are not materially
inconsistent with the provisions of the Agreement, including without
limitation provisions relating to the issuance of Definitive Certificates to
Certificate Owners if book-entry registration of the Class A Certificates is
no longer permitted; provided that, in the case of clause (v), such action
does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder.
The Agreement may also be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Holders of
Certificates of each Class affected thereby evidencing, as to each such
Class, Percentage Interests aggregating not less than 66% and the consent of
the Certificate Insurer and the Surety, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage of Certificates of any Class the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates of such Class then outstanding.
The Company intends to cause an election to be made to treat the Trust
Fund (exclusive of the Mortgage 100(Service Mark) Pledge Agreements, the
Parent Power(Registered Trademark) Agreements and the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings)) as two real estate
mortgage investment conduits (the "Lower-Tier REMIC" and the "Upper-Tier
REMIC"). The Class A Certificates, the Class B Certificates and the Class C
Certificates will constitute "regular
interests" in the Upper-Tier REMIC. The Class R Certificate will constitute
the "residual interest" in the Upper-Tier REMIC.
No transfer of a Class B Certificate will 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 pursuant to
an effective registration statement under said Act or laws. The Trustee
shall, if not otherwise directed by the Company, require an opinion of
counsel acceptable to and in form and substance satisfactory to the Company
that such transfer is exempt (describing the applicable exemption and the
basis therefor) from the registration requirements of the Securities Act of
1933, as amended, and from any applicable securities statute of any state,
and the transferee shall execute an investment letter in the form described
by the Agreement. Unless the Opinion of Counsel required by Section
4.02(d)(ii) has been delivered to the Trustee in connection with this
Certificate, the holder of this Certificate represents, by virtue of its
acceptance hereof, that it is not an employee benefit plan subject to Section
406 of ERISA or Section 4975 of the Code or a person acting on behalf of such
a plan or using funds of such a plan to acquire this Certificate.
The respective obligations and responsibilities of the Company, the
Master Servicer and the Trustee under the Agreement will terminate upon: (i)
the later of the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder; or (ii) at the option of the
Master Servicer, the Certificate Insurer or the Surety, on any Distribution
Date which occurs in the month following a Due Date on which the aggregate
unpaid Principal Balance of all outstanding Mortgage Loans is less than 10%
of the aggregate unpaid Principal Balance of the Mortgage Loans on the Cut-
off Date in accordance with the provision set forth in the Agreement;
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's, living on the date hereof.
Most of the Mortgage Loans are convertible to fixed rates or new Indices
in accordance with their terms.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
* * *
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: December 9, 1997
MLCC MORTGAGE INVESTORS, INC.
By:-----------------------------------
Authorized Officer
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS B CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
----------------------------------
Authorized Signatory
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 FACE OF CLASS C CERTIFICATE
(THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING
UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
TO THIS CERTIFICATE. FOR PURPOSES OF SUCH RULES, THE ISSUE DATE OF THIS
CERTIFICATE IS _________________. THE INITIAL INTEREST RATE PAYABLE ON
THIS CERTIFICATE IS ____. THIS CERTIFICATE HAS BEEN ISSUED WITH
$________ OF OID PER $1000 OF PRINCIPAL AMOUNT, AND THE YIELD TO
MATURITY IS _______. THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
SHORT ACCRUAL PERIOD IS $_____ PER $1000 OF PRINCIPAL AMOUNT CALCULATED
UNDER THE EXACT (APPROXIMATE) METHOD.)
THIS CLASS C CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
EXCHANGE 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 OR LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF
THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS C CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE CLASS
A AND CLASS B CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE.
CLASS C PERCENTAGE INTEREST:
SUBORDINATE __________%
NUMBER: ______________
DATE OF POOLING
AND SERVICING AGREEMENT:
________ 1, 199_
CUT-OFF DATE:
________ 1, 199_
FINAL MATURITY DATE:
_________ 15, 20__
FIRST DISTRIBUTION DATE:
__________ 15, 199_
MORTGAGE LOAN ASSET BACKED PASS-THROUGH
CERTIFICATES, SERIES 1997-B
evidencing a percentage interest in any
distribution allocable to the Class C
Certificates with respect to a pool of
adjustable rate conventional one- to four-
family mortgage loans formed and sold by
MLCC MORTGAGE INVESTORS, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN MLCC
MORTGAGE INVESTORS, INC., THE MASTER SERVICER OR THE TRUSTEE REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY MLCC MORTGAGE
INVESTORS, INC. OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY.
THE PRINCIPAL BALANCES OF THE MORTGAGE LOANS EVIDENCED BY THIS
CERTIFICATE ("CERTIFICATE BALANCE") WILL BE REDUCED BY A PORTION OF THE
PAYMENTS ON SUCH MORTGAGE LOANS. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF THE CERTIFICATES, THE CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE
TRUSTEE. ON THE DATE OF THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
TRUSTEE IS BANKERS TRUST COMPANY OF CALIFORNIA, N.A., 3 PARK PLAZA, IRVINE,
CALIFORNIA 92614.
This certifies that ___________________ is the registered owner of a
beneficial interest in certain distributions with respect to a pool (the
"Mortgage Pool") of conventional one- to four-family mortgage loans (the
"Mortgage Loans") formed and sold by MLCC Mortgage Investors, Inc.
(hereinafter called the "Company", which term includes any successor entity
under the Agreement referred to below), and certain other property held in
trust for the benefit of Certificateholders (collectively, the "Trust Fund").
The Mortgage Loans are serviced by Merrill Lynch Credit Corporation (the
"Master Servicer"). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement"), among the
Company, the Master 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 one of a duly authorized issue of Certificates,
designated as Mortgage Loan Asset Backed Pass-Through Certificates, Series
1997-B, Class C (the "Class C Certificates") and 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. Also issued under the Agreement
are Certificates
designated as Mortgage Loan Asset Backed Pass-Through Certificates Series
1997-B, Class A (the "Class A Certificates"), Mortgage Loan Asset Backed
Pass-Through Certificates, Series 1997-B, Class B (the "Class B
Certificates"), and a residual interest certificate designated Mortgage Loan
Asset Backed Pass-Through Certificates, Series 1997-B, Class R (the "Class R
Certificate"). The Class A Certificates are senior to the Class B and the
Class C Certificates in right of payment to the extent described in the
Agreement. The Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class R Certificate are collectively referred to as the
"Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Distribution Account on the 15th day of each month or, if
such 15th day is not a Business Day, the first Business Day immediately
following (the "Distribution Date"), commencing on _________ 15, 199_, to the
Person in whose name this Certificate is registered on the related Record
Date, an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the applicable distribution amount for such Class on
such Distribution Date.
The rights of the Class C Certificateholders to receive distributions in
respect of the Class C Certificates on any Distribution Date are subordinate
to the rights of the Class A and Class B Certificateholders to receive
distributions in respect of such Class A and Class B Certificates to the
extent set forth in the Agreement. All payments made under this Certificate
will be made in accordance with the terms of the Agreement. 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 and specified in such notice of
final distribution.
The Trustee will cause to be kept at its Corporate Trust Office in
Irvine, California, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee will provide for the registration of Certificates and
of transfers and exchanges of Certificates. Upon surrender for registration
of transfer of any Certificate at any office or agency of the Trustee
maintained for such purpose, the Trustee will, subject to the limitations set
forth in the Agreement, authenticate and deliver, in the name of the
designated transferee or transferees, a Certificate of a like class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Company, the Master Servicer,
the Certificate Insurer, the Surety and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose
of receiving distributions pursuant to the Agreement and for all other
purposes whatsoever, and neither the Company, the Master Servicer, the
Certificate Insurer, the Surety nor the Trustee will be affected by notice to
the contrary.
The Agreement may be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Certificate Insurer
and the Surety and without the consent of any of the Certificateholders, (i)
to cure or correct any ambiguity, mistake or error, (ii) to correct or
supplement any provisions therein which may be inconsistent with any other
provisions therein or with the Prospectus Supplement or Prospectus pursuant
to which the Class A Certificates were offered, (iii) to ensure continuing
treatment of the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
as two REMICs or to avoid the imposition of certain tax liabilities, (iv) to
obtain a rating by a nationally recognized rating agency or to maintain or
improve the ratings of the Class A Certificates then given by a rating agency
(it being understood that, after obtaining the ratings of the Class A
Certificates at the Closing Date, none of the Trustee, the Company or the
Master Servicer is obligated to obtain, maintain or improve any rating of any
Class of Certificates), and (v) to make any other provisions with respect to
matters or questions arising under the Agreement which are not materially
inconsistent with the provisions of the Agreement, including without
limitation provisions relating to the issuance of Definitive Certificates to
Certificate Owners if book-entry registration of the Class A Certificates is
no longer permitted; provided that, in the case of clause (v), such action
does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder.
The Agreement may also be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Holders of
Certificates of each Class affected thereby evidencing, as to each such
Class, Percentage Interests aggregating not less than 66% and the consent of
the Certificate Insurer and the Surety, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage of Certificates of any Class the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates of such Class then outstanding.
The Company intends to cause an election to be made to treat the Trust
Fund (exclusive of the Mortgage 100(Service Mark) Pledge Agreements, the
Parent Power(Registered Trademark) Agreements and the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings)) as two real estate
mortgage investment conduits (the "Lower-Tier REMIC" and the "Upper-Tier
REMIC"). The Class A Certificates, the Class B Certificates and the Class C
Certificates will constitute "regular interests" in the Upper-Tier REMIC.
The Class R Certificate will constitute the "residual interest" in the Upper-
Tier REMIC.
No transfer of a Class C Certificate will 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 pursuant to
an effective registration statement under said Act or laws. The Trustee
shall, if not otherwise directed by the Company, require an opinion of
counsel
acceptable to and in form and substance satisfactory to the Company that such
transfer is exempt (describing the applicable exemption and the basis
therefor) from the registration requirements of the Securities Act of 1933,
as amended, and from any applicable securities statute of any state, and the
transferee shall execute an investment letter in the form described by the
Agreement. Unless the Opinion of Counsel required by Section 4.02(d)(ii) has
been delivered to the Trustee in connection with this Certificate, the holder
of this Certificate represents, by virtue of its acceptance hereof, that it
is not an employee benefit plan subject to Section 406 of ERISA or Section
4975 of the Code or a person acting on behalf of such a plan or using funds
of such a plan to acquire this Certificate.
The respective obligations and responsibilities of the Company, the
Master Servicer and the Trustee under the Agreement will terminate upon: (i)
the later of the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder; or (ii) at the option of the
Master Servicer, the Certificate Insurer or the Surety, on any Distribution
Date which occurs in the month following a Due Date on which the aggregate
unpaid Principal Balance of all outstanding Mortgage Loans is less than 10%
of the aggregate unpaid Principal Balance of the Mortgage Loans on the Cut-
off Date in accordance with the provision set forth in the Agreement;
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's, living on the date hereof.
Most of the Mortgage Loans are convertible to fixed rates or new Indices
in accordance with their terms.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
* * *
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: December 9, 1997
MLCC MORTGAGE INVESTORS, INC.
By:
--------------------------------
Authorized Officer
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS C CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:___________________________
Authorized Signatory
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 F
FORM OF CLASS R CERTIFICATE
THIS CLASS R CERTIFICATE HAS NOT BEEN 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 OR LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 4.02 OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE
CLASS A, CLASS B AND CLASS C CERTIFICATES AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE.
NEITHER THIS CERTIFICATE NOR ANY BENEFICIAL INTEREST HEREIN MAY BE,
DIRECTLY OR INDIRECTLY, TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE ASSIGNED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE
MASTER SERVICER, ACTING ON BEHALF OF THE TRUST FUND, AND ANY
TRANSFER IN VIOLATION OF THIS RESTRICTION SHALL BE ABSOLUTELY NULL
AND VOID AND SHALL VEST NO RIGHTS IN ANY PURPORTED TRANSFEREE, AND
SHALL SUBJECT THE HOLDER HEREOF TO LIABILITY FOR ANY TAX IMPOSED
(AND RELATED EXPENSES, IF ANY) WITH RESPECT TO SUCH ATTEMPTED
TRANSFER.
CLASS R PERCENTAGE
RESIDUAL INTEREST INTEREST: 100%
NUMBER:
----------
DATE OF POOLING
AND SERVICING AGREEMENT:
______ 1, 199_
CUT-OFF DATE:
__________, 199_
FIRST DISTRIBUTION DATE:
________ 15, 199_
MORTGAGE LOAN ASSET BACKED PASS-THROUGH CERTIFICATE
Series 1997-B
evidencing a percentage interest in any distribution allocable to
the Class R Certificates with respect to a pool of adjustable rate
conventional one- to four-family mortgage loans formed and sold by
MLCC MORTGAGE INVESTORS, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN MLCC
MORTGAGE INVESTORS, INC., THE MASTER SERVICER OR THE TRUSTEE REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY MLCC MORTGAGE
INVESTORS, INC. OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY.
This certifies that ___________________ is the registered owner of a
beneficial interest in certain distributions with respect to a pool (the
"Mortgage Pool") conventional one- to four-family mortgage loans (the
"Mortgage Pool") formed and sold by MLCC Mortgage Investors, Inc.
(hereinafter called the "Company", which term includes any successor entity
under the Agreement referred to below), and certain other property held in
trust for the benefit of Certificateholders (collectively, the "Trust Fund").
The Mortgage Loans are serviced by Merrill Lynch Credit Corporation (the
"Master Servicer"). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above the "Agreement"), among the
Company, the Master 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 signed in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Mortgage Loan Asset Backed Pass-Through Certificates, Series
1997-B, Class R (the "Class R Certificate") and 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. Also issued under the Agreement
are Certificates designated as
Class A Certificates, Class B Certificates and Class C Certificates. The
Class A Certificates, Class B Certificates, Class C Certificates and Class R
Certificate are collectively referred to as the "Certificates". All payments
made under this Certificate will be made in accordance with the terms of the
Agreement.
The Agreement may be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Certificate Insurer
and the Surety and without the consent of any of the Certificateholders, (i)
to cure or correct any ambiguity, mistake or error, (ii) to correct or
supplement any provisions therein which may be inconsistent with any other
provisions therein or with the Prospectus Supplement or Prospectus pursuant
to which the Class A Certificates were offered, (iii) to ensure continuing
treatment of the Trust Fund (exclusive of the Mortgage 100(Service Mark)
Pledge Agreements, the Parent Power(Registered Trademark) Agreements and the
Pre-Funding Account (including the funds therein and Pre-Funding Earnings))
as two REMICs or to avoid the imposition of certain tax liabilities, (iv) to
obtain a rating by a nationally recognized rating agency or to maintain or
improve the ratings of the Class A Certificates then given by a rating agency
(it being understood that, after obtaining the ratings of the Class A
Certificates at the Closing Date, none of the Trustee, the Company or the
Master Servicer is obligated to obtain, maintain or improve any rating of any
Class of Certificates), and (v) to make any other provisions with respect to
matters or questions arising under the Agreement which are not materially
inconsistent with the provisions of the Agreement, including without
limitation provisions relating to the issuance of Definitive Certificates to
Certificate Owners if book-entry registration of the Class A Certificates is
no longer permitted; provided that, in the case of clause (v), such action
does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder.
The Agreement may also be amended from time to time by the Company, the
Master Servicer and the Trustee, with the consent of the Holders of
Certificates of each Class affected thereby evidencing, as to each such
Class, Percentage Interests aggregating not less than 66% and the consent of
the Certificate Insurer and the Surety, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage of Certificates of any Class the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates of such Class then outstanding.
The Company intends to cause an election to be made to treat the Trust
Fund (exclusive of the Mortgage 100(Service Mark) Pledge Agreements, the
Parent Power(Registered Trademark) Agreements and the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings)) as two real estate
mortgage investment conduits (the "Lower-Tier REMIC" and the "Upper-Tier
REMIC"). The Class A Certificates, the Class B Certificates and the Class C
Certificates will constitute "regular interests" in the Upper-Tier REMIC.
The Class R Certificate will constitute the "residual interest" in the Upper-
Tier REMIC.
No transfer of a Class R Certificate will 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 pursuant to
an effective registration statement under said Act or laws. The Company may
direct the Trustee to require an opinion of counsel acceptable to and in form
and substance satisfactory to the Company that such transfer is exempt
(describing the applicable exemption and the basis therefor) from the
registration requirements of the Securities Act of 1933, as amended, and from
any applicable securities statute of any state, and the transferee shall
execute an investment letter in the form described by the Agreement. Unless
the Opinion of Counsel required by Section 4.02(d)(ii) has been delivered to
the Trustee in connection with this Certificate, the holder of this
Certificate represents, by virtue of its acceptance hereof, that it is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code or a person acting on behalf of such a plan or using the funds of such a
plan to acquire this Certificate.
The respective obligations and responsibilities of the Company, the
Master Servicer and the Trustee under the Agreement will terminate upon: (i)
the later of the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder; or (ii) at the option of the
Master Servicer, the Certificate Insurer or the Surety, on any Distribution
Date which occurs in the month following a Due Date on which the aggregate
unpaid Principal Balance of all outstanding Mortgage Loans is less than 10%
of the aggregate unpaid Principal Balance of the Mortgage Loans on the Cut-
off Date in accordance with the provisions set forth in the Agreement;
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's, living on the date hereof.
Most of the Mortgage Loans are convertible to fixed rates or new Indices
in accordance with their terms.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: December 9, 1997
MLCC MORTGAGE INVESTORS, INC.
By:
-----------------------------------
Authorized Officer
FORM OF CERTIFICATE OF AUTHENTICATION
THIS IS THE CLASS R
CERTIFICATE REFERRED TO
IN THE WITHIN-MENTIONED AGREEMENT
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
------------------------
Authorized Signatory
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 G
(RESERVED)
EXHIBIT H
CERTIFICATE ACCOUNT CERTIFICATION
_________, 199_
Merrill Lynch Credit Corporation hereby certifies that it has
established the account described below as a Certificate Account pursuant to
Section 5.08 of the Pooling and Servicing Agreement, dated as of _________ 1,
199_.
Title of Account:
"Merrill Lynch Credit Corporation, as Master Servicer, in trust for Bankers
Trust Company of California, N.A., as Trustee, for the benefit of registered
holders of MLCC Mortgage Investors, Inc., Mortgage Loan Asset Backed Pass-
Through Certificates, Series 1997-B"
Account Number: ____________________________
Address of office ____________________________
or branch at which
Account is
maintained:
MERRILL LYNCH CREDIT CORPORATION
By:__________________________
Name:
Title:
EXHIBIT I
(RESERVED)
EXHIBIT J
DISTRIBUTION ACCOUNT CERTIFICATION
_________, 199_
Bankers Trust Company of California, N.A. (the "Paying Agent") hereby
certifies that it has established the account described below as a
Distribution Account pursuant to Section 6.01 of the Pooling and Servicing
Agreement dated as of ___________ 1, 199_ by and among MLCC Mortgage
Investors, Inc., Merrill Lynch Credit Corporation as the Master Servicer and
the undersigned as Trustee.
Title of Account: "Bankers Trust Company of California, N.A., as Trustee on
behalf of the holders of MLCC Mortgage Investors, Inc.
Mortgage Loan Asset Backed Pass-Through Certificates,
Series 1997-B"
Account Number: ____________________________
Address of office
or branch of the
Trustee at
which Account is
maintained: Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92614
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
By:__________________________
Name:
Title:
EXHIBIT K
FORM OF SUBSEQUENT TRANSFER AGREEMENT
-------------------------------------
SUBSEQUENT TRANSFER AGREEMENT, dated _______, 199_ (the "Subsequent
Transfer Date"), between MLCC MORTGAGE INVESTORS, INC. (the "Company") and
BANKERS TRUST OF CALIFORNIA, N.A., as trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Pooling and Servicing Agreement, dated _______ 1, 199_
(the "Pooling Agreement"), among the Company, Merrill Lynch Credit
Corporation, as master servicer, and the Trustee contemplated the sale of
Subsequent Mortgage Loans to the Trustee for inclusion in the Trust Fund by
the Company;
WHEREAS, the Company is acquiring Subsequent Mortgage Loans from
Merrill Lynch Credit Corporation ("MLCC") pursuant to the Subsequent Transfer
Agreement, dated the date hereof (the "MLCC Transfer Agreement"), between the
Company and MLCC; and
WHEREAS, the parties desire to consummate the purchase and sale of
the Subsequent Mortgage Loans identified on the Schedule of Subsequent
Mortgage Loans attached hereto;
NOW, THEREFORE, in consideration of the premises and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. For the consideration set forth in Paragraph 2 below, the
Company does hereby sell, transfer, assign, set over and convey to the
Trustee, on behalf of the Certificateholders and the Certificate Insurer,
without recourse (but subject to the obligations set forth herein) all right,
title and interest of the Company, and the Trustee, on behalf of the
Certificateholders and the Certificate Insurer, does hereby purchase and
acquire from the Company, (x) all right, title and interest of the Company in
and to each Subsequent Mortgage Loan listed on the Schedule of Subsequent
Mortgage Loans attached hereto, including its Principal Balance as of the
Subsequent Cut-off Date and all collections of such principal and all
payments of interest in respect of such Subsequent Mortgage Loans to the
extent such collections represent interest accrued from and including the
related Subsequent Transfer Date (interest accruing prior to such Subsequent
Transfer Date being property of the Mortgage Loan Seller) due after the
related Subsequent Cut-off Date and each related Mortgage 100(Service Mark)
Pledge Agreement and each related Parent Power(Registered Trademark)
Agreement and (y) all of the Company's rights, but none of its obligations,
under the MLCC Transfer Agreement. The transfer by the Company of the
Subsequent Mortgage Loans set forth on the Schedule of Subsequent Mortgage
Loans to the Trustee is absolute and is intended by all parties hereto to be
treated as a sale by the Company.
2. The cash consideration for the Subsequent Mortgage Loans sold
hereby shall be $________________, representing the aggregate outstanding
principal balance of the Subsequent Mortgage Loans as of the Subsequent
Cut-off Date.
3. The Company hereby represents that (a) it is solvent, will not
be rendered insolvent as a result of the sale of the Subsequent Mortgage
Loans sold pursuant to this Subsequent Transfer Agreement and is not aware of
any pending insolvency and (b) all of the conditions precedent to the
transfer accomplished hereby set forth in Section 1.07 of the Purchase
Agreement have been satisfied.
4. The Trustee acknowledges the assignment to it of the Subsequent
Mortgage Loans and the documents relating thereto referred to in Section 2.01
of the Pooling and Servicing Agreement and acknowledges that pursuant to the
Custodial Agreement upon the Custodian's receipt thereof the Custodian will
hold such related documents and any other documents constituting a part of
the related Mortgage Files delivered to the Custodian in trust for the use
and benefit and of all present and future Certificateholders, the Certificate
Insurer and the Surety.
5. This Subsequent Transfer Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws, without giving effect to principles of conflicts of law.
6. This Subsequent Transfer Agreement may be signed in
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
7. Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of the date first above written.
MLCC MORTGAGE INVESTORS, INC.
By:----------------------------------------
Name:
Title:
BANKERS TRUST OF CALIFORNIA, N.A.
as Trustee
By:----------------------------------------
Name:
Title:
EXHIBIT L
FORM OF INVESTMENT LETTER FOR HOLDER OF THE
CLASS B, CLASS C AND CLASS R CERTIFICATES
1. The Purchaser is acquiring the Class B, Class C or Class R
Certificate (the "Certificate") as principal for its own account for the
purpose of investment (neither Merrill Lynch nor any of its Affiliates need
represent that it is acquiring for purposes of investment) and not with a
view to or for sale in connection with any distribution thereof, subject
nevertheless to any requirement of law that the disposition of the
Purchaser's property shall at all times be and remain within its control.
2. The Purchaser has knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of its investment
in the Residual Interest and is able to bear the economic risk of such
investment. The Purchaser is an "accredited investor" within the meaning of
Rule 501(a) under the rules and regulations of the Securities and Exchange
Commission under the Securities Act of 1933, as amended (Affiliates of
Merrill Lynch need not make this representation). The Purchaser has been
given such information concerning the Certificate, the underlying Mortgage
Loans and the Master Servicer as it has requested.
3. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale by the Purchaser of
the Certificate.
4. The Purchaser understands that the Certificate has not been and will
not be registered under the Securities Act of 1933, as amended, or any state
securities laws and may be resold (which resale is not currently
contemplated) only if an exemption from registration is available, that
neither the Company, the Master Servicer nor the Trustee is required to
register the Certificate and that any transfer must comply with Section 4.02
of the Pooling and Servicing Agreement. In connection with any resale of the
Certificate, the Purchaser shall not make any general solicitation or
advertisement.
5. The Purchaser agrees that it will obtain from any purchaser of the
Certificate from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 4 and in this paragraph 5.
6. The Purchaser hereby directs the Trustee to register the Certificate
acquired by the Purchaser in the name of its nominee as follows:
____________.
Very truly yours,
NAME OF PURCHASER
By: ----------------------------------
Name: --------------------------------
Title: -------------------------------
EXHIBIT M
FORM OF TRANSFER AFFIDAVIT FOR CLASS R CERTIFICATES
STATE OF )
: ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _____________________ (the
"Transferee"), a corporation duly organized and existing under the laws of
the State of Delaware and on behalf of which the undersigned makes this
affidavit.
2. The Transferee is acquiring a beneficial ownership interest in
Mortgage Loan Asset Backed Pass-Through Certificates, Series 1997-B, Class R
(the "Class R Certificates"), issued pursuant to the Pooling and Servicing
Agreement, dated as of ____________ 1, 199_ (the "Agreement"), by and among
MLCC Mortgage Investors, Inc., as Seller (the "Seller"), Merrill Lynch Credit
Corporation, as Master Servicer, and Bankers Trust Company of California,
N.A., as Trustee. Capitalized terms used, but not defined herein, shall have
the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the
Transferee.
3. The Transferee is not, as of the date hereof, and will not be, as of
the date of the Transfer, a Disqualified Organization. The Transferee is
acquiring the Class R Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the form as this affidavit
attached hereto. The Transferee has no knowledge that any such affidavit is
false.
4. The Transferee has been advised of, and understands that: (i) a tax
shall be imposed on any Transfer to Persons that are Disqualified
Organizations; (ii) such tax is imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman)
for Persons that are Disqualified Organizations, on the agent; and (iii) the
Person otherwise liable for the tax shall be relieved of liability for the
tax if the subsequent transferee furnished to such Person an affidavit that
such subsequent transferee is not a Disqualified Organization and, at the
time of the Transfer, such Person does not have actual knowledge that the
affidavit is false.
5. The Transferee has been advised and understands that a tax shall be
imposed on a "pass-through entity" holding Class R Certificates if at any
time during the taxable year of the pass-through entity a Person that is a
Disqualified Organization is the record holder of an interest in such entity.
The Transferee understands that no tax will be imposed for any period for
which the record holder furnishes to the pass-through entity an affidavit
stating that the record holder is not a Disqualified Organization and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as nominees for other Persons.)
6. The Transferee has reviewed the provisions of Section 4.02 of the
Agreement, which is incorporated herein by reference, and understands the
legal consequences of the acquisition of the Class R Certificates including,
without limitations, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The
Transferee expressly agrees to be bound by and to abide by the provisions of
Section 4.02 of the Agreement. The Transferee understands and agrees that
any breach of any of the representations included herein shall render the
Transfer to the Transferee contemplated hereby null and void.
7. The Transferee does not have the intention to impede the assessment
or collection of any income tax legally required to be paid with respect to
the Class R Certificates and the Transferee hereby acknowledges that the
Class R Certificates may generate tax liabilities in excess of the cash flow
associated with the Class R Certificates and intends to pay such taxes
associated with the Class R Certificates when they become due.
8. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to make a Transfer and in connection
with any Transfer by a Person for whom the Transferee is acting as nominee,
trustee or agent, and the Transferee will not make a Transfer or cause any
Transfer to any Person that the Transferee knows is a Disqualified
Organization.
9. That the Purchaser (i) is not a Non-U.S. Person or (ii) is a Non-
U.S. Person that holds the Class R Certificate in connection with the conduct
of a trade or business in the United States and has furnished the transferor
and the Trustee with an effective Internal Revenue Service Form 4224 or
successor form at the time and in the manner required by the Code or (iii) is
a Non-U.S. Person that has delivered to both the transferor and the Trustee
an opinion of a nationally recognized tax counsel to the effect that the
transfer of the Class R Certificates to it is in accordance with the
requirements of the Code and the regulation promulgated thereunder and that
such transfer of the Class R Certificates will not be disregarded for federal
income tax purposes.
10. The following information as to the Transferee is true and correct:
Address:
Contact for Tax Matters:
Phone Number:
Form of Organization of Transferee:
Transferee's Federal Tax Identification Number:
Percentage of Residual Interest Acquired: __%
Price Paid for Residual Interest:
Date of Acquisition:
If security is being registered in the name of a nominee, please state
such name:
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its _________________, by
its duly authorized officer this _____ day of _____________.
(NAME OF TRANSFEREE)
By: ___________________________
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named __________,
-----------
known or proved to me to be the same person who executed the foregoing
instrument and to be the of
------------------
_______________________________, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this _______ of ___________.
_____________________________
NOTARY PUBLIC
My commission expires the ___
day of ________________, 19__.
EXHIBIT N
ERISA REPRESENTATION LETTER
(for Transfers of Class B, Class C and Class R Certificates)
The Purchaser is not an employee benefit plan (a "Plan") subject to
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") or a person acting on behalf of such a Plan or using the
assets of such a Plan to acquire a Class (R) (B) (C) Certificate.
EXHIBIT O
(RESERVED)
EXHIBIT P
Sale Agreement
See Tab 5
EXHIBIT Q
Form of Notice for Certificate Insurance Policy
EXHIBIT R
Form of Notice for Certificate Guaranty Surety Bond
