SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported): November 14, 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.)
4802 Deer Lake Drive East
Jacksonville, Florida 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 and
Ambac Assurance Corporation
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On October 30, 1997, MLCC Mortgage Investors, Inc. (the "Seller")
entered into a Pooling and Servicing Agreement dated as of October 1, 1997
(the "Pooling and Servicing Agreement"), by and among the Seller, as seller,
Merrill Lynch Credit Corporation, as servicer (the "Servicer"), and Bankers
Trust Company of California N.A., as trustee (the "Trustee"). The Pooling
and Servicing Agreement is annexed hereto as Exhibit 99.1.
The Seller is filing the certificate guaranty insurance policy which was
issued by Ambac Assurance Corporation (the "Policy") in connection with the
MLCC Mortgage Investors, Inc., ML Revolving Home Equity Loan Asset Backed
Certificates, Series 1997-1. The Policy is attached hereto as Exhibit 10.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
The following are filed herewith. The exhibit numbers
correspond with Item 601(b) of Regulations S-K.
Exhibit No. Description
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10 Ambac Assurance Policy
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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Name: Laurel A. Davis
Title: Vice President
Dated: November 13, 1997
EXHIBIT INDEX
Exhibit No. Page
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10 6
99 9
EXHIBIT 10
CERTIFICATE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #AB0129BE October 30, 1997
issued to:
Bankers Trust Company of California, N.A.,
as Trustee for the Holders of
ML Revolving Home Equity Loan Asset Backed
Certificates, Series 1997-1, Investor Certificates
For all purposes of this Policy, the following terms shall have the
following meanings:
"Additional Balances" shall mean, as to any Mortgage Loan and as of
any date, the unpaid balance of any principal advanced to the related
mortgagor after the date as of which the related Cut-off Date Trust Balance
was calculated.
"Agreement" shall mean the Pooling and Servicing Agreement dated as
of October 1, 1997 among MLCC Mortgage Investors, Inc., as Transferor,
Merrill Lynch Credit Corporation, as Servicer, and Bankers Trust Company of
California, N.A., as Trustee, as such Agreement may be amended, modified or
supplemented from time to time with the prior written consent of the Insurer.
"Alternative Principal Payment" shall mean, as to any Distribution
Date, the amount (which in no case shall be less than zero) equal to the
aggregate amount of Trust Principal Collections received during the related
Collection Period minus the total
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Additional Balances created during such Collection Period.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which national banks in the States of New York, Florida or
California are authorized or obligated by law to be closed.
"Certificate Account" shall mean the account created by the
Servicer and maintained with the Trustee for the benefit of the
Certificateholders and the holders of the Transferor Certificates pursuant to
Section 4.02 of the Agreement.
"Certificate Insurance Policy" or "Policy" shall mean this
Certificate Guaranty Insurance Policy together with each and every
endorsement hereto.
"Certificate Interest Collections" shall mean, as to any
Distribution Date, an amount equal to the Floating Allocation Percentage of
the aggregate amount of Trust Interest Collections for the related Collection
Period.
"Certificate Principal Balance" shall mean, as of any Distribution
Date, the Original Certificate Principal Balance minus
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the aggregate amount actually distributed as principal on the Certificates on
previous Distribution Dates.
"Certificates" or "Investor Certificates" or "Insured Obligations"
shall mean the ML Revolving Home Equity Loan Asset Backed Certificates,
Series 1997-1, substantially in the form set forth in Exhibits A and C of the
Agreement, executed and countersigned by the Trustee as provided in the
Agreement.
"Closing Date" shall mean October 30, 1997.
"Collection Period" shall mean (a) as to any Distribution Date and
collections other than scheduled payments of Interest Collections and
scheduled or unscheduled payments of Principal Collections by mortgagors, the
calendar month preceding the month in which such Distribution Date occurs,
and (b) as to any Distribution Date and such Interest Collections and
Principal Collections, the period from, and including, the 17th day of the
calendar month preceding the calendar month in which such Distribution Date
occurs to, and including, the 16th day of the calendar month in which such
Distribution Date occurs.
"Common Mortgage Loan" shall mean any Mortgage Loan for which any
portion of the principal balance thereof has been transferred and assigned
to, and is held by, a trust created prior to the Closing Date by a pooling
and servicing agreement other than the Agreement.
"Cut-off Date" shall mean, with respect to each Initial Mortgage
Loan, October 1, 1997 and, with respect to each Mortgage Loan substituted for
a Defective Mortgage Loan pursuant to Sections 2.02, 2.04 or 3.01 of the
Agreement, the day on which each such Mortgage Loan is transferred to the
Trust.
"Cut-off Date Pool Balance" shall mean the aggregate of the Cut-off
Date Trust Balances of the Initial Mortgage Loans.
"Cut-off Date Trust Balance" shall mean, as to any Mortgage Loan,
the unpaid principal balance thereof (which may be $0) transferred and
assigned to the Trust as of the applicable Cut-off Date (excluding, in the
case of any Common Mortgage Loan, the portion thereof owned by one or more
prior trusts).
"Defective Mortgage Loan" shall mean any Mortgage Loan that is
required to be repurchased or replaced by the Servicer pursuant to Sections
2.02, 2.04 or 3.01 of the Agreement.
"Dissolution Distribution Date" shall mean the date on which the
proceeds from the sale, disposition or liquidation of the Trust Balances are
distributed on Certificateholders pursuant to Article XI of the Agreement.
"Distribution Date" shall mean the 25th day of any month (or if
such 25th day is not a Business Day, the first Business Day immediately
following), beginning with the First Distribution Date.
"Due for Payment" shall mean the Distribution Date on which Insured
Amounts are due.
"First Distribution Date" shall mean November 25, 1997.
"Fixed Allocation Percentage" shall mean, as of any date, the
greater of (a) 98% and (b) the percentage equivalent (which in no case shall
exceed 100%) of a fraction, the numerator of which is the Invested Amount and
the denominator of which is the Pool Balance at the close of business on such
date.
"Floating Allocation Percentage" shall mean, as of any Distribution
Date, the percentage equivalent of a fraction determined by dividing the
Invested Amount at the close of business on the preceding Distribution Date
(or the Closing Date, in the case of the First Distribution Date) by the Pool
Balance as of the beginning of the first day of the month preceding the month
in which such Distribution Date occurs.
"Holder" or "Certificateholder" shall mean any person who is the
registered owner or beneficial owner of any Certificate.
"Initial Mortgage Loans" shall mean the Mortgage Loans (including
the rights to receive payments thereunder) transferred and assigned to the
Trust on the Closing Date pursuant to Section 2.01, together with the related
loan agreements and other mortgage file documents and the rights thereunder
conveyed to the Trust on the Closing Date pursuant to Section 2.01 of the
Agreement.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement, dated as of October 30, 1997, among MLCC Mortgage Investors, Inc.,
as Transferor, Merrill Lynch Credit Corporation, as Servicer, Bankers Trust
Company of California, N.A., as Trustee, and AMBAC, as Insurer, as such
Agreement may be amended, modified or supplemented from time to time.
"Insurance Proceeds" shall mean, with respect to any Mortgage Loan,
proceeds paid by any insurer pursuant to any insurance policy covering such
Mortgage Loan or the related mortgaged property, net of any component thereof
covering any expenses incurred by or on behalf of the Transferor or the
Servicer in connection with obtaining such proceeds.
"Insured Amount" shall mean, with respect to any Distribution Date
other than a Dissolution Distribution Date, the sum of (a) the amount, if
any, by which (i) the amount payable to the Certificateholders pursuant to
Section 5.01(a)(ii) of the Agreement on such Distribution Date exceeds (ii)
the amount of funds on deposit in the Certificate Account on such
Distribution Date and available to be distributed to the Certificateholders
pursuant to Section 5.01(a) of the Agreement, together, without duplication,
with the aggregate amount of Transferor Interest Collections and Transferor
Principal Collections to be applied pursuant to Section 5.01(c) of the
Agreement, (b) after the Transferor Subordinated Amount has been reduced to
zero, the amount, if any, by which (i) the Certificate Principal Balance as
of such Distribution Date exceeds (ii) the Invested Amount as of such
Distribution Date, in each case, after giving effect to all amounts
distributable or allocable to principal of the Certificates on such
Distribution Date (including, without limitation, amounts so distributable or
allocable, other than any portion thereof payable under the Policy, pursuant
to Sections 5.01(a) and 5.01(c) of the Agreement) and (c) any Preference
Amount that has not been previously paid to the Trustee by the Insurer prior
to such Distribution Date; provided that on the Distribution Date in
________
September 2027 the Insured Amount shall equal the sum of (x) any amounts with
respect to such Distribution Date calculated in accordance with the
foregoing clauses (a) and (c) and (y) an amount equal to the Certificate
Principal Balance as of such Distribution Date, after giving effect to all
other amounts distributable or allocable as principal of the Certificates.
The Insured Amount for any Distribution Date shall be determined after taking
into account all deposits to be made to the Certificate Account on or prior to
such Distribution Date, including, without limitation, any Monthly Advance, but
excluding any Insured Payment, for such Distribution Date.
"Insured Payments" shall mean, with respect to any Distribution
Date, the aggregate amount actually paid by the Insurer to the Trustee in
respect of Insured Amounts for such Distribution Date.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
"Interest Collections" shall mean, as to any payment on a Mortgage
Loan made by or on behalf of the related mortgagor during the related
Collection Period, the portion thereof allocable to accrued interest for the
related Interest Period in accordance with the terms of the related loan
agreement (net of interest at the Servicing Fee Rate on the Loan Balance
thereof for each day during such Interest Period), including Net Liquidation
Proceeds allocable to interest on such Mortgage Loan.
"Interest Period" shall mean, as to any payment of interest on a
Mortgage Loan, the period during which the interest covered by such payment
accrued, and which, for any Distribution Date, is the month preceding the
month in which such Distribution Date occurs.
"Invested Amount" shall mean, as of any date, an amount equal to
the Original Invested Amount minus the sum of (i) all Trust
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Principal Collections previously distributed to Certificateholders pursuant
to Section 5.01(b) of the Agreement and (ii) the total of the Investor Loss
Amounts for all prior Distribution Dates (other than any such amounts that
were reallocated pursuant to Section 5.01(c)(ii) of the Agreement).
"Investor Loss Amount" shall mean, with respect to any Distribution
Date, an amount equal to (a) the Floating Allocation Percentage as of such
Distribution Date multiplied by (b) the aggregate of the Liquidation Loss
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Amounts for such Distribution Date.
"Late Payment Rate" shall mean for any Distribution Date, the
greater of (a) the rate of interest, as it is publicly announced by Citibank,
N.A. at its principal office in New York, New York as its prime rate (any
change in such prime rate of interest to be effective on the date such change
is announced by Citibank, N.A.) plus 2% and (b) the then-applicable
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Certificate Rate. The Late Payment Rate shall be computed on the basis of
a year of 360 days and the actual number of days elapsed. In no event shall
the Late Payment Rate exceed the maximum rate permissible under any
applicable law limiting interest rates.
"Liquidated Mortgage Loan" shall mean, as to any Distribution Date,
any Mortgage Loan that was not previously liquidated, was in default during
the related Collection Period and with respect to which the Servicer has
determined that all Liquidation Proceeds that the Servicer expects to recover
from or on account of such Mortgage Loan have been recovered.
"Liquidation Expenses" shall mean, as to any Mortgage Loan,
expenses that are incurred by the Servicer in connection with the liquidation
of any defaulted Mortgage Loan and not recovered under any insurance policy
or from the related mortgagor, including, without limitation, legal fees and
expenses, real estate brokerage commissions, any unreimbursed amount expended
by the Servicer pursuant to Section 3.06 of the Agreement with respect to
such Mortgage Loan (including, without limitation, amounts advanced to
correct defaults on such Mortgage Loan prior to its becoming a defaulted
Mortgage Loan) and any related and previously unreimbursed property
protection expenses.
"Liquidation Loss Amount" shall mean, with respect to any
Distribution Date and any Mortgage Loan that becomes a Liquidated Mortgage
Loan during the related Collection Period, the unrecovered Trust Balance
thereof at the end of such Collection Period, after giving effect to the Net
Trust Liquidation Proceeds applied in reduction of such Trust Balance in
accordance with the related loan agreement and the Agreement.
"Liquidation Proceeds" shall mean cash or funds (including
Insurance Proceeds) received in connection with the liquidation of any
defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale or
otherwise.
"Loan Agreement" shall mean, as to any Mortgage Loan, any credit
agreement, note or other instrument pursuant to which Mortgage Loan Seller
(as such term is defined in the Agreement) agreed to make a Mortgage Loan to
a Mortgagor or a Mortgagor agrees to repay such Mortgage Loan on the terms
and conditions provided in such instrument.
"Loan Balance" shall mean, as to any Mortgage Loan and day, the
principal balance of such Mortgage Loan upon which interest accrued for such
day was calculated.
"Loan Rate" shall mean, as to any Mortgage Loan and day, the rate
of interest applicable to the calculation of interest for such day on the
Loan Balance.
"Managed Amortization Period" shall mean the period from the First
Distribution Date to the earlier of (a) the Distribution Date in October 2002
and (b) the date on which a Rapid Amortization Event occurs.
"Maximum Principal Payment" shall mean, as to any Distribution
Date, an amount equal to (a) the Fixed Allocation Percentage as of such date
multiplied by (b) the aggregate amount of Trust Principal Collections for the
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related Collection Period.
"Monthly Advance" shall mean, with respect to any Distribution
Date, the aggregate of the advances made by the Servicer on such Distribution
Date pursuant to Section 4.02 of the Agreement.
"Mortgage Loan" shall mean, as of any date, a home equity revolving
line of credit mortgage loan, the Trust Balance of which is transferred and
assigned to the Trustee, and held as part of the Trust Fund (as such term is
defined in the Agreement), for the benefit of the holders of ML Revolving
Home Equity Loan Asset Backed Certificates, Series 1997-1, pursuant to the
Agreement.
"Mortgagor" shall mean the obligor under a Loan Agreement.
"Net Liquidation Proceeds" shall mean, as to any Liquidated
Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses.
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"Net Loan Rate" shall mean, as to any Mortgage Loan and day, the
Loan Rate less the Servicing Fee Rate.
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"Net Trust Liquidation Proceeds" shall mean, as to any Liquidated
Mortgage Loan, (i) the lesser of (x) Net Liquidation Proceeds and (y) the
Trust Balance of such Mortgage Loan at the time of liquidation, together with
accrued and unpaid interest thereon at the Net Loan Rate from the last day on
which interest was paid in full on such Mortgage Loan to the end of the
Collection Period in which such Mortgage Loan became a Liquidated Mortgage
Loan, minus (ii) any amount which may be retained by the Servicer on account
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of any unreimbursed Monthly Advances under clause (iii) of Section 3.03 of
the Agreement.
"Nonpayment" shall mean, with respect to any Distribution Date, any
Insured Amount owing in respect of such Distribution Date.
"Original Certificate Principal Balance" or "Original Invested
Amount" shall mean $363,791,000.
"Pool Balance" shall mean, as of any date, the sum of the Trust
Balances as of such date.
"Preference Amount" shall mean any payment of principal or interest
that has been made to a Holder of any Insured Obligation by or on behalf of
the Trustee which has been deemed a preferential transfer and theretofore
recovered from the registered owner pursuant to the United States Bankruptcy
Code in accordance with a final, nonappealable order of a court having
competent jurisdiction.
"Premium Percentage" shall mean 0.07% per annum.
"Principal Collections" shall mean, as to any Mortgage Loan and any
Collection Period, all amounts (other than Insurance Proceeds and Liquidation
Proceeds) received from or on behalf of the related Mortgagor during such
Collection Period that, at the time of receipt, were applied in reduction of
the Loan Balance thereof in accordance with the terms of the related loan
agreement.
"Rapid Amortization Event" shall mean any event described as such
in Section 11.01 of the Agreement, as in effect on the Closing Date, without
regard to any subsequent amendment, modification or supplement thereto made
without the prior written consent of the Insurer.
"Rapid Amortization Period" shall mean the period following the
Managed Amortization Period until the termination of the Trust pursuant to
Section 10.01 of the Agreement.
"Reimbursement Amount" shall mean, as to any Distribution Date, the
sum of (x) (i) all Insured Payments paid by the Insurer, but for which the
Insurer has not been reimbursed prior to such Distribution Date pursuant to
Section 5.01(a) of the Agreement, plus
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(ii) interest accrued thereon, calculated at the Late Payment Rate from the
date the Trustee received the related Insured Payments, and (y) (i) any
amounts then due and owing to the Insurer under the Insurance Agreement plus
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(ii) interest on such amounts at the Late Payment Rate.
"Required Amount" shall mean, with respect to any of the first
thirty Distribution Dates, an amount equal to two percent of the Cut-off Date
Pool Balance and, with respect to any following Distribution Date, an amount
equal to the lesser of (a) two percent of the Cut-off Date Pool Balance and
(ii) four percent of the Pool Balance as of such Distribution Date; provided
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that in no event shall the Required Amount be less than a floor amount equal
to the greater of (i) one percent of the Cut-off Date Pool Balance and (ii)
fifty percent of the aggregate Trust Balances of all Mortgage Loans
delinquent 91 days or more (including, without limit, any Mortgage Loans in
foreclosure and any Mortgage Loans with respect to which the properties serving
as collateral security therefor have been acquired by the Trust Fund (as
such term is defined in the Agreement)) as of the end of the related
Collection Period.
Notwithstanding the foregoing, for each Distribution Date, if the cumulative
amount of all Liquidation Loss Amounts for such Distribution Date and all
prior Distribution Dates is more than 1.25% of the Cut-off Date Pool Balance,
then the Required Amount shall be 3.75% of the Cut-off Date Pool Balance.
"Scheduled Principal Collections Payment" shall mean (a) with
respect to any Distribution Date during the Managed Amortization Period, an
amount equal to the lesser of (i) the Maximum Principal Payment and (ii) the
Alternative Principal Payment, and (b) with respect to any Distribution Date
on or after the earlier of (i) the Distribution Date in November 2002 and
(ii) the Distribution Date next following the calendar month in which a Rapid
Amortization Event is deemed to occur pursuant to Section 11.01, an amount
equal to the Maximum Principal Payment.
"Servicer" shall mean Merrill Lynch Credit Corporation, a Delaware
corporation, its successor in interest or any successor thereto, appointed
pursuant to the terms of the Agreement.
"Servicing Fee Rate" shall mean 0.50% per annum.
"Transferor" shall mean MLCC Mortgage Investors, Inc., a Delaware
corporation, or its successor in interest appointed pursuant to the
Agreement.
"Transferor Certificates" shall mean the ML Revolving Home Equity
Loan Asset Backed Certificates, Series 1997-1, substantially in the form set
forth in Exhibits B and D to the Agreement, executed and countersigned by the
Trustee as provided in the Agreement.
"Transferor Interest Collections" shall mean, as to any
Distribution Date, Trust Interest Collections for the related Collection
Period that are not Certificate Interest Collections.
"Transferor Principal Collections" shall mean, as to any
Distribution Date, Trust Principal Collections for the related Collection
Period minus the amount of such Trust Principal Collections required to be
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distributed to Certificateholders pursuant to Section 5.01(b) of the Agreement.
"Transferor Subordinated Amount" shall mean, as of any Distribution
Date, an amount equal to the least of: (a) two percent of the Cut-off Date
Pool Balance minus the sum of (i) the aggregate amount of Trust Principal
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Collections allocable to the Transferor that have previously been
distributed to Certificateholders pursuant to Section 5.01(c)(i) of the
Agreement and (ii) the aggregate amount of Investor Loss Amounts previously
reallocated to the Transferor pursuant to Section 5.01(c)(ii) of the
Agreement; (b) the Transferor Subordinated Amount as of the immediately
preceding Distribution Date and (c) the Required Amount as of such Distribution
Date.
"Trust Balance" shall mean, as to any Mortgage Loan and as of any
date, other than a Liquidated Mortgage Loan, the related Cut-off Date Trust
Balance, plus any Additional Balances in respect of such Mortgage Loan
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arising during the Managed Amortization Period, minus the sum of (a) all
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Principal Collections credited against the Loan Balance thereof in accordance
with the related loan agreement prior to such date (excluding, in the case
of any Common Mortgage Loan, any such Principal Collections applied to reduce
any portion of the principal balance thereof not transferred and assigned to,
and held by, the Trust pursuant to the Agreement), and (b) any Trust Insurance
Proceeds received prior to such day in respect of such Mortgage Loan. For
purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Trust Balance equal to the Trust Balance of the related Mortgage Loan
immediately prior to the final recovery of related Liquidation Proceeds and a
Trust Balance of zero thereafter.
"Trust Insurance Proceeds" shall mean, as to any Mortgage Loan and
any Collection Period, an amount equal to the lesser of (i) Insurance
Proceeds paid to the Servicer during such Collection Period (reduced by any
related expenses of the Servicer in collecting such proceeds) that (a) are
not Liquidation Proceeds in respect of such Mortgage Loan, (b) are not
applied to the restoration or repair of the related mortgaged property or
released to the related Mortgagor in accordance with the normal servicing
procedures of the Servicer and (c) are applied by the Servicer in reduction
of the Loan Balance of such Mortgage Loan and (ii) the Trust Balance of such
Mortgage Loan at the end of Collection Period, together with accrued interest
thereon at the Net Loan Rate from the last day on which interest was paid in
full on such Mortgage Loan to the end of such Collection Period.
"Trust Interest Collections" shall mean, as to any payment on a
Mortgage Loan made by or on behalf of the related Mortgagor during any
Collection Period, the lesser of (i) the portion thereof allocable to accrued
interest for the related Interest Period in accordance with the terms of the
related loan agreement (net of interest at the Servicing Fee Rate on the Loan
Balance thereof for each day during such Interest Period) and (ii) accrued
interest at the Net Loan Rate on the Trust Balance for each day during such
Interest Period.
"Trust Principal Collections" shall mean, as to any Mortgage Loan
and any Collection Period, the sum of (a) all amounts (other than Insurance
Proceeds and Liquidation Proceeds) received from or on behalf of the related
Mortgagor during such Collection Period which, at the time of receipt, were
applied in reduction of the Loan Balance in accordance with the terms of the
related loan agreement (excluding, in the case of any Common Mortgage Loan,
any such Principal Collections applied to reduce any portion of the principal
balance thereof not transferred and assigned to, and held by, the Trust
pursuant to the Agreement), (b) the principal portion of any Net Trust
Liquidation Proceeds and Trust Insurance Proceeds and (c) any Transfer
Deposit Amount (as such term is defined in the Agreement) in respect of such
Mortgage Loan.
"Trustee" shall mean Bankers Trust Company of California, N.A. or
its successor-in-interest, in its capacity as trustee under the Agreement, or
if any successor trustee or any co-trustee shall be appointed as provided
therein, then "Trustee" shall also mean such successor trustee or such co-
trustee, as the case may be, subject to the provisions thereof.
AMBAC hereby agrees that if, as of any Distribution Date, it has
become subrogated to the rights of Holders by virtue of a previous payment
under this Policy, no recovery of such payment will occur unless the full
amount of the Holders' allocable distributions for such Distribution Date can
be made. In so doing, AMBAC does not waive its rights to seek full payment
of all Reimbursement Amounts owed to it under the Agreement.
The terms and provisions of the Agreement constitute the assignment
referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Distribution Date,
beginning with the first Distribution Date, in an amount equal to the product
of the (i) Premium Percentage and (ii) the Certificate Principal Balance on
such Distribution Date, prior to giving effect to any distributions to be
made on such Distribution Date, minus, in the case of the Distribution Date
in November 1997 only, $10,000; interest shall accrue on the amount of any
premium (or portion thereof) not paid on any Distribution Date at the Late
Payment Rate until the payment thereof in full (after as well as before
judgment).
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
If AMBAC were to become insolvent, any claims arising under the
Policy would be excluded from coverage by the California Insurance Guaranty
Association, established pursuant to the laws of the State of California.
The Policy to which this Endorsement is attached and of which it
forms a part is hereby amended to provide that there shall be no acceleration
payment due under the Policy unless such acceleration is at the sole option
of AMBAC. The Policy is further hereby amended, to the extent necessary, to
clarify that the reference to "loss of any prepayment or any other
acceleration payment" in the fourth paragraph of the face of the Policy does
not refer to that portion of any Certificate Account Shortfall resulting from
a shortfall, if any, in interest on any Trust Balance for any month in which
such Trust Balance is prepaid. Clause (b) of the first sentence of the
second paragraph of the Policy is also hereby amended to provide that any
payment by AMBAC to the Trustee pursuant to such clause shall be made by
11:00 a.m. provided that the related notification of Nonpayment was received
by AMBAC by noon on the Business Day prior to any such payment.
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or limitations of
the above mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of California (without giving effect to the
conflict of laws principles thereof).
In witness whereof, AMBAC has caused this Endorsement to the Policy
to be affixed with its corporate seal and to be signed by its duly authorized
officers in facsimile to become effective as their original signatures and
binding upon AMBAC by virtue of the countersignature of its duly authorized
representative.
President Secretary
Authorized Representative
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
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Policy No. AB0129BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: ( )
AMBAC ASSURANCE CORPORATION
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy
No. AB0129BE (the "Policy") issued by Ambac Assurance Corporation ("AMBAC").
Terms capitalized herein and not otherwise defined shall have the meanings
specified in the Policy unless the context otherwise requires.
The Trustee hereby certifies as follows:
i. The Trustee is the Trustee under the Agreement for the
Holders;
ii. The relevant Distribution Date is (date);
iii. Payment on the Certificates in respect of the Distribution
Date was due to be received on ____ under the Agreement, in an
amount equal to $_________;
iv. The Servicer has calculated the Nonpayment of an Insured
Amount to be $_________________________, of which the Servicer
has calculated that $_____________________ represent amounts
described in clauses (a) and (b), or (y), as the case may be,
of the definition thereof.
[v. $__________ has been designated as the Preference Amounts in
respect of _______ Distribution Dates by the000000 Servicer
pursuant to the Servicing Certificate; such amount is
therefore also due and owing pursuant to the terms of
the Agreement as a portion of the Insured Amount);
vi. The Trustee has not heretofore made a demand for the Insured
Amount in respect of the Distribution Date;
vii. The Trustee hereby requests the payment of the Insured Amount
be made by AMBAC under the Policy and directs that payment
under the Policy be made to the following account by bank wire
transfer of federal or other immediately available funds in
accordance with the terms of the Policy to:
_______________________ Trustee's account number
viii. The Trustee hereby agrees that, following receipt of the
Insured Amount from AMBAC, it shall: (a) hold such amounts in
trust and apply the same directly to the distribution payment
on the Certificates when due; (b) not apply such funds for any
other purpose; (c) not commingle such funds with other funds
held by the Trustee; and (d) maintain an accurate record of
such payments with respect to each Certificate and the
corresponding claim on the Policy and proceeds thereof.
Trustee
By: -----------------------------------------------------
(Officer)
Title: -----------------------------------------------------
Insured Obligations: MLCC Mortgage
Investors, Inc., $363,791,000 Policy Number:AB0129BE
ML Revolving Home Equity Loan
Asset Backed Certificates,
Series 1997-1, Investor Certificates
Premium: Calculated as set forth in
the Certificate Guaranty Insurance
Endorsement attached hereto
AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee
for the benefit of the Holders of the Insured Obligations, that portion of
the Insured Amounts which shall become Due for Payment but shall be unpaid by
reason of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later
of (a) one (1) Business Day following notification to Ambac of Nonpayment or
(b) the Business Day on which the Insured Amounts are Due for Payment. Such
payments of principal or interest shall be made only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac,
transferring to Ambac all rights under such Insured Obligations to receive
the principal of and interest on the Insured Obligation. Ambac shall be
subrogated to all the Holders' rights to payment on the Insured Obligations
to the extent of the insurance disbursements so made. Once payments of the
Insured Amounts have been made to the Trustee, Ambac shall have no further
obligation hereunder in respect of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any
payment of principal or interest on an Insured Obligation which has become
Due for Payment and which is made to a Holder by or on behalf of the Trustee
has been deemed a preferential transfer and theretofore recovered from its
Holder pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court of competent jurisdiction, such Holder
will be entitled to payment from Ambac to the extent of such recovery if
sufficient funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is
not refundable for any reason. This Policy does not insure against loss of
any prepayment or other acceleration payment which at any time may become due
in respect of any Insured Obligation, other than at the sole option of Ambac,
nor against any risk other than Nonpayment, including failure of the Trustee
to make any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such
rights and defenses may be available to Ambac, to avoid payment of its
obligations under thisPolicy in accordance with theexpress provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such
terms in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile
to become effective as their original signatures and binding upon Ambac by
virtue of the countersignature of its duly authorized representative.
President Secretary
Effective Date: October 30, 1997 Authorized Representative
- --------------
EXECUTION COPY
EXHIBIT 99
MERRILL LYNCH CREDIT CORPORATION,
as Servicer
MLCC MORTGAGE INVESTORS, INC.,
as Transferor
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
_______________________
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1997
______________________
ML Revolving Home Equity Loan Asset Backed Certificates
Series 1997-1
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . . . 26
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . 27
Section 2.02. Acceptance by Trustee; Retransfer
of Mortgage Loans; Substitution of
Eligible Substitute Mortgage Loans. . . . . . . . . . . . 32
Section 2.03. Representations and Warranties
Regarding the Servicer . . . . . . . . . . . . . . . . . . 35
Section 2.04. Representations and Warranties of the Servicer Regarding the
Mortgage Loans; Repurchase and Substitution Obligations . 37
Section 2.05. Execution and Authentication
of Certificates . . . . . . . . . . . . . . . . . . . . . 41
Section 2.06. Retransfers of Mortgage Loans
at Election of the Transferor . . . . . . . . . . . . . . 41
Section 2.07. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.08. Covenants of the Transferor . . . . . . . . . . . . . . . 44
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. MLCC to Act as Servicer . . . . . . . . . . . . . . . . . 45
Section 3.02. Collection of Certain Mortgage Loan
Payments; Mortgage Loan Payment Record . . . . . . . . . . 47
Section 3.03. Permitted Debits to the Mortgage Loan
Payment Record . . . . . . . . . . . . . . . . . . . . . . 49
Section 3.04. Hazard Insurance Policies; Property
Protection Expenses . . . . . . . . . . . . . . . . . . . 50
Section 3.05. Mortgagor Transfers of
Mortgaged Properties . . . . . . . . . . . . . . . . . . . 52
Section 3.06. Realization Upon Defaulted
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.07. Trustee to Cooperate . . . . . . . . . . . . . . . . . . . 54
Section 3.08. Servicing Compensation; Payment
of Certain Expenses by Servicer . . . . . . . . . . . . . 55
Section 3.09. Annual Statement as to Compliance . . . . . . . . . . . . 56
Section 3.10. Annual Independent Public
Accountants' Servicing Report . . . . . . . . . . . . . . 56
Section 3.11. Access to Certain Documentation
and Information Regarding the
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 57
Section 3.12. Maintenance of Certain Servicing Policies . . . . . . . . 57
Section 3.13. Reports to the Securities and Exchange
Commission . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 3.14. Information Required by the Internal Revenue Service Generally
and Reports of
Foreclosures and Abandonments of
Mortgaged Property . . . . . . . . . . . . . . . . . . . . 58
Section 3.15. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 58
Section 3.16. Further Assurances . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IV
Servicing Certificate; Certificate Account Deposit
Section 4.01. Servicing Certificate . . . . . . . . . . . . . . . . . . 60
Section 4.02. Certificate Account . . . . . . . . . . . . . . . . . . . 63
Section 4.03. Payments Under Support Agreement . . . . . . . . . . . . . 64
Section 4.04. The Certificate Insurance Policy . . . . . . . . . . . . . 64
ARTICLE V
Payments and Statements to
Certificateholders
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.02. Certain Calculations by the Trustee . . . . . . . . . . . 70
Section 5.03. Statements to Certificateholders . . . . . . . . . . . . . 70
Section 5.04. Rights of Certificateholders . . . . . . . . . . . . . . . 72
ARTICLE VI
The Certificates
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . 73
Section 6.02. Registration of Transfer and
Exchange of Certificates; Registrar . . . . . . . . . . . 74
Section 6.03. Mutilated, Destroyed, Lost
or Stolen Certificates . . . . . . . . . . . . . . . . . . 76
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 77
Section 6.05. Restrictions on Transfer
of Transferor Certificates . . . . . . . . . . . . . . . . 77
Section 6.06. Actions of Certificateholders . . . . . . . . . . . . . . 79
ARTICLE VII
The Servicer and the Transferor
Section 7.01. Liability of the Servicer . . . . . . . . . . . . . . . . 80
Section 7.02. Merger or Consolidation of,
or Assumption of the Obligations
of, the Servicer or Transferor . . . . . . . . . . . . . . 80
Section 7.03. Limitation on Liability of
the Servicer and Others . . . . . . . . . . . . . . . . . 81
Section 7.04. Servicer Not to Resign . . . . . . . . . . . . . . . . . . 81
Section 7.05. Limitation on Liability of Certain Persons . . . . . . . . 82
Section 7.06. Liability of Transferor . . . . . . . . . . . . . . . . . 83
Section 7.07. Transferor May Own Certificates . . . . . . . . . . . . . 83
ARTICLE VIII
Default
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . 85
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . . . . 87
Section 8.03. Notification to Certificateholders . . . . . . . . . . . . 88
Section 8.04. Waiver of Past Events of Default . . . . . . . . . . . . . 88
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 90
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . . . 91
Section 9.03. Trustee Not Liable for Certificates
or Mortgage Loans . . . . . . . . . . . . . . . . . . . . 93
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . . . . 93
Section 9.05. Servicer to Pay Trustee's Fees and Expenses . . . . . . . 93
Section 9.06. Eligibility Requirements for Trustee . . . . . . . . . . . 94
Section 9.07. Resignation or Removal of Trustee . . . . . . . . . . . . 94
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . 96
Section 9.09. Merger or Consolidation of Trustee . . . . . . . . . . . . 96
Section 9.10. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . . . . . . . . . 96
Section 9.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 98
Section 9.12. Streit Act . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE X
Termination
Section 10.01. Termination . . . . . . . . . . . . . . . . . . . . . . . 100
Section 10.02. Termination by Certificate Insurer . . . . . . . . . . . 102
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events . . . . . . . . . . . . . . . . 103
Section 11.02. Additional Rights Upon an Insolvency Event . . . . . . . 105
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 12.02. Recordation of Agreement . . . . . . . . . . . . . . . . 108
Section 12.03. Limitation on Rights of Certificateholders . . . . . . . 108
Section 12.04. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . 109
Section 12.05. The Certificate Insurer. . . . . . . . . . . . . . . . . 109
Section 12.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.08. Severability of Provisions . . . . . . . . . . . . . . . 110
Section 12.09. Assignment . . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.10. Certificates Nonassessable and Fully Paid . . . . . . . . 111
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.12. Effect of Headings and Table of Contents . . . . . . . . 111
Section 12.13. Third Party Beneficiary . . . . . . . . . . . . . . . . . 111
Section 12.14. Merger and Integration . . . . . . . . . . . . . . . . . 112
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
EXHIBIT A - Form of Face of Investor Certificate . . . . . . . A-1
EXHIBIT B - Form of Face of Transferor Certificate . . . . . . S-1
EXHIBIT C - Form of Reverse of Investor Certificate . . . . . . C-1
EXHIBIT D - Form of Reverse of Transferor Certificate . . . . . D-1
EXHIBIT E - Form of Notice for Certificate
Insurance Policy . . . . . . . . . . . . . . . . E-1
EXHIBIT F - Mortgage Loan Schedule . . . . . . . . . . . . . . F-1
EXHIBIT G - Form of Release of Document . . . . . . . . . . . . G-1
THIS POOLING AND SERVICING AGREEMENT, dated as of October 1, 1997,
between MERRILL LYNCH CREDIT CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, MLCC MORTGAGE INVESTORS,
INC., a corporation organized and existing under the laws of the State of
Delaware, and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee,
W I T N E S S E T H T H A T:
----------------------------
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions.
-----------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
Accelerated Principal Distribution Amount: As to any Distribution
-----------------------------------------
Date, the amount, if any, required to reduce the Certificate Principal
Balance (after giving effect to the distribution of all other amounts
actually distributed on the Investor Certificates on such Distribution Date)
until the Invested Amount (immediately following such Distribution Date)
exceeds the Certificate Principal Balance (as so reduced) by the amount, if
any, equal to (x) the Required Amount minus (y) the Transferor Subordinated
Amount.
Accrual Period: As to any Distribution Date other than the first
--------------
Distribution Date, the actual number of days included in the period beginning
on the preceding Distribution Date and ending on the day preceding such
Distribution Date, and, in the case of the first Distribution Date, the
period beginning on October 30, 1997 and ending on the day preceding the
first Distribution Date.
Additional Balance: As to any Mortgage Loan and day, the unpaid
------------------
balance of any principal advanced to the related Mortgagor after the date on
which the related Cut-off Date Trust Balance was calculated.
Aggregate Investor Loss Amount: With respect to any Distribution
------------------------------
Date, the total of the Investor Loss Amounts for prior Distribution Dates
(other than Investor Loss Amounts that were reallocated on prior Distribution
Dates to the Transferor pursuant to Section 5.01(c)(ii)).
Agreement: This Pooling and Servicing Agreement and all amendments
---------
hereof and supplements hereto.
Alternate Certificate Rate: As to any Accrual Period, the weighted
--------------------------
average of the Net Loan Rates applicable to the Mortgage Loans included in
the Trust Fund during the Collection Period preceding the related
Distribution Date, weighted on the basis of the monthly average Trust
Balances of such Mortgage Loans during such Collection Period as determined
by the Servicer in accordance with its normal servicing procedures, less the
Premium Percentage for the related Distribution Date.
Alternative Principal Payment: As to any Distribution Date, the
-----------------------------
amount (but not less than zero) equal to the aggregate amount of Trust
Principal Collections received during the related Collection Period minus the
total Additional Balances created during such Collection Period.
Appraised Value: As to any Mortgaged Property and time referred to
---------------
herein, the appraised value of the Mortgaged Property based upon the
appraisal made by or on behalf of the Servicer at such time.
Assignment of Retained Rights: As defined in Section 2.01(f).
-----------------------------
Available Distribution Amount: As to any Distribution Date, the
-----------------------------
aggregate of the amounts on deposit in the Certificate Account on such
Distribution Date described in clauses (i) - (vi), inclusive, of Section
4.01.
BIF: The Bank Insurance Fund, as from time to time constituted,
---
created under the Financial Institutions Reform, Recovery and Enhancement Act
of 1989, or if at any time after the execution of this instrument the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Book-Entry Certificate: Any Investor Certificate registered in the
----------------------
name of the Depository or its nominee ownership of which is reflected on the
books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance
with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
------------
a day on which national banks in the States of New York, Florida or
California are required or authorized by law to be closed.
Certificate: Any Investor Certificate or a Transferor Certificate.
-----------
Certificate Account: The trust account or accounts created and
-------------------
maintained with the Trustee pursuant to Section 4.02 and which shall be an
Eligible Account and shall be entitled "Bankers Trust Company of California,
N.A., in trust for the benefit of the registered holders of the ML Revolving
Home Equity Loan Asset Backed Certificates, Series 1997-1".
Certificateholder or Holder: The Person in whose name a Certificate
---------------------------
is registered in the Certificate Register, except that, solely for the
purpose of giving any consent pursuant to this Agreement, any Investor
Certificate registered in the name of the Transferor or the Servicer or any
affiliate of either shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect any
such consent has been obtained.
Certificate Formula Interest: As to any Distribution Date, interest
----------------------------
at the Certificate Rate for the related Accrual Period on the Certificate
Principal Balance on the first day of such Accrual Period (after giving
effect to any distribution of principal made on the first day of such Accrual
Period).
Certificate Insurance Policy: The certificate insurance policy
----------------------------
number AB0129BE dated as of the Closing Date, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Investor
Certificates.
Certificate Insurer: Ambac Assurance Corporation, or its successor in
-------------------
interest.
Certificate Interest Collections: As to any Distribution Date, an
--------------------------------
amount equal to the Floating Allocation Percentage of the aggregate amount of
Trust Interest Collections for the related Collection Period.
Certificate Owner: With respect to an Investor Certificate, the
-----------------
person who is the beneficial owner of a Book-Entry Certificate.
Certificate Principal Balance: As of any Distribution Date, (i) the
-----------------------------
Original Certificate Principal Balance minus (ii) the aggregate amount
actually distributed as principal on the Investor Certificates on previous
Distribution Dates.
Certificate Register and Certificate Registrar: The register
----------------------------------------------
maintained and the registrar appointed pursuant to Section 6.02.
Certificate Rate: As to the initial Distribution Date, One-Month
----------------
LIBOR determined as of October 28, 1997 plus 0.18%. As to any subsequent
Distribution Date, One-Month LIBOR plus 0.18%; provided, however, that in the
event the Alternate Certificate Rate is less than One-Month LIBOR for such
Distribution Date plus the applicable percentage specified above, the
Certificate Rate for such Distribution Date shall be the Alternate
Certificate Rate.
Closing Date: October 30, 1997.
------------
Code: The Internal Revenue Code of 1986, as the same may be amended
----
from time to time (or any successor statute thereto).
Collection Period: As to any Distribution Date and collections other
-----------------
than scheduled payments of Interest Collections and scheduled and unscheduled
payments of Principal Collections by Mortgagors, the calendar month preceding
the month in which such Distribution Date occurs. As to such Interest
Collections and Principal Collections and any Distribution Date, the period
from and including the 17th day of the month preceding the month in which
such Distribution Date occurs to and including the 16th day of the month in
which such Distribution Date occurs.
Combined Loan-to-Value Ratio: As of any date and Mortgage Loan, the
----------------------------
fraction, expressed as a percentage, the numerator of which is the sum of (i)
the Credit Limit and (ii) the unpaid principal balance of any related senior
mortgage loan or loans as of such date and the denominator of which is
generally the lesser of the Appraised Value or the sales price of the
Mortgaged Property, as applicable, as of the date of the appraisal and/or
purchase contract for the Mortgaged Property, as applicable, used by or on
behalf of MLCC to underwrite such Mortgage Loan.
Common Mortgage Loan Interests: The Common Mortgage Loans and, to
------------------------------
the extent provided in subsection 2.01(a), the related Loan Agreements,
Mortgages and other Mortgage File documents.
Common Mortgage Loans: Such of the Mortgage Loans, certain of the
---------------------
balances of which were sold and assigned to Trust 1992, Trust 1993, Trust
1994-1, Trust 1994-2, Trust 1995-1 or Trust 1995-2 pursuant to the Trust 1992
Pooling and Servicing Agreement, the Trust 1993 Pooling and Servicing
Agreement, the Trust 1994-1 Pooling and Servicing Agreement, the Trust 1994-2
Pooling and Servicing Agreement, the Trust 1995-1 Pooling and Servicing
Agreement, and the Trust 1995-2 Pooling and Servicing Agreement,
respectively, until such balances are reduced to zero.
Corporate Trust Office: The principal office of the Trustee in
----------------------
California, at which at any particular time its trust shall administer this
Agreement, which office at the date of the execution of this Agreement is
located at 3 Park Plaza, 16th Floor, Irvine, California 92614, Attention: ML
Revolving Home Equity Loan Asset Backed Certificates, Series 1997-1;
Facsimile: (714) 253-7577.
Credit Limit: As to any Mortgage Loan, the maximum Loan Balance
------------
permitted under the terms of the related Loan Agreement.
Cut-off Date: With respect to each Initial Mortgage Loan, October 1,
------------
1997 and, with respect to any Eligible Substitute Mortgage Loan, the day on
which each such Mortgage Loan is transferred to the Trust.
Cut-off Date Pool Balance: The aggregate of the Cut-off Date Trust
-------------------------
Balances of the Initial Mortgage Loans.
Cut-off Date Trust Balance: As to any Mortgage Loan, the unpaid
--------------------------
principal balance thereof (which may be $0) transferred and assigned to the
Trust as of the applicable Cut-off Date (excluding, in the case of any Common
Mortgage Loan, the portion thereof owned by one or more Prior Trusts).
Defective Mortgage Loan: Any Mortgage Loan which is required to be
-----------------------
repurchased or replaced by the Servicer pursuant to Sections 2.02, 2.04 or
3.01.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is Cede & Co., as the registered Holder of one
or more Certificates evidencing the Certificate Principal Balance. The
Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(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 17th day (or, if such 17th day is not a
------------------
Business Day, the Business Day immediately preceding such 17th day) of the
month in which the related Distribution Date occurs.
Dime Mortgage Loans: The Mortgage Loans originated by The Dime
-------------------
Savings Bank of New York, FSB and certain affiliates thereof and purchased by
MLCC on June 29, 1992, and sold to the Seller by MLCC.
Dissolution Distribution Date: The date on which the proceeds from
-----------------------------
the sale, disposition or liquidation of the Trust Balance of the Mortgage
Loans are received and distributed to Certificateholders pursuant to Article
XI hereof.
Distribution Date: The 25th day of each month beginning in the month
-----------------
following the month of the initial issuance of the Certificates (or, if such
25th day is not a Business Day, the Business Day immediately following).
Eligible Account: One or more accounts:
----------------
(i) that are maintained with a depository institution or trust company
whose long-term and short-term unsecured debt obligations (or, in
the case of a depository institution or trust company that is the
principal subsidiary of a bank holding company, the debt
obligations of such holding company) at the time of deposit therein
have been rated by each Rating Agency in its highest rating catego-
ries;
(ii) that are maintained with a depository institution or trust company
the long-term unsecured debt obligations of which have been rated
Baa3 or higher by Moody's, and the deposits in which are fully
insured by the Federal Deposit Insurance Corporation acting through
either the BIF or the SAIF;
(iii) that are segregated trust accounts maintained with the corporate
trust department of a depository institution or trust company,
acting in its fiduciary capacity, which has a short-term deposit
rating of P-1 by Moody's and A-1+ by Standard & Poor's; or
(iv) such other accounts that are acceptable to each Rating Agency and
the Certificate Insurer, as evidenced by a letter from each Rating
Agency and the Certificate Insurer to the Trustee, without
reduction or withdrawal of the rating of the Investor Certificates.
The depository institution or trust company with which the Eligible Account
is maintained shall be organized under the laws of the United States or any
state thereof, have a net worth in excess of $100,000,000 and deposits
insured to the full extent permitted by law by the Federal Deposit Insurance
Corporation and be subject to supervision and examination by federal or state
banking authorities. An Eligible Account may bear interest, and may include,
if otherwise qualified by this definition, an account maintained with the
Trustee.
Eligible Substitute Mortgage Loan: A Mortgage Loan to be substituted
---------------------------------
by the Servicer for a Defective Mortgage Loan pursuant to Section 2.02, 2.04
or 3.01, which on the date of such substitution shall:
(i) have a Trust Balance not substantially greater than and not less
than the Trust Balance of the Defective Mortgage Loan;
(ii) have a Loan Rate of not less than the Loan Rate of the Defective
Mortgage Loan and not more than 500 basis points in excess thereof;
(iii) have a Loan Rate based on the same index as that of the Defective
Mortgage Loan;
(iv) have a Margin that is not less than the Margin for the Defective
Mortgage Loan, or more than 100 basis points higher than the Margin
for the Defective Mortgage Loan;
(v) have a maximum Loan Rate and a minimum Loan Rate, if any, that are
not lower than the maximum Loan Rate and minimum Loan Rate,
respectively, of the Defective Mortgage Loan;
(vi) have a remaining term to maturity not more than six months earlier
and not more than six months later than the remaining term to
maturity of the Defective Mortgage Loan, and in no case later than
September 1, 2027;
(vii) comply with the representations and warranties set forth in Section
2.04 (which representations and warranties shall be deemed to be
made as of the date of substitution);
(viii) have a Combined Loan-to-Value Ratio that is not greater than the
Combined Loan-to-Value Ratio of the Defective Mortgage Loan as of
the date of origination of the Defective Mortgage Loan;
(ix) have a Mortgage in a lien position at least equal to the lien
position of the Mortgage securing the Defective Mortgage Loan; and
(x) be secured by a Mortgaged Property that is subject to the same use
(owner-occupied, second home or rental property) and that has the
same structural characteristics (attached or detached) as the
Mortgaged Property securing the Defective Mortgage Loan,
provided, however, that in the case of clause (x), an owner-occupied,
detached Mortgaged Property will satisfy the requirements of clause (x) in
all cases. The Servicer shall give the Trustee a notice of any proposed
substitutions of Defective Mortgage Loans which contains a list of the
substituting Mortgage Loans.
Event of Default: As defined in Section 8.01.
----------------
Final Termination Price: an amount equal to the sum of (A) the
-----------------------
Certificate Principal Balance, (B) accrued and unpaid Certificate Formula
Interest through the day preceding the final Distribution Date, (C) any
Unpaid Certificate Interest Shortfall, and (D) any accrued and unpaid
Investor Loss Reduction Amounts through the day preceding the final
Distribution Date.
Fixed Allocation Percentage: With respect to any date, the greater
---------------------------
of (i) 98% and (ii) the percentage equivalent (but not in excess of 100%) of
a fraction, the numerator of which is the Invested Amount and the denominator
of which is the Pool Balance as of the end of such day.
Floating Allocation Percentage: As to any Distribution Date, the
------------------------------
percentage equivalent of a fraction, the numerator of which is the Invested
Amount at the close of business on the preceding Distribution Date (or at the
Closing Date in the case of the first Distribution Date) and the denominator
of which is the Pool Balance, calculated as of the first day of the month
preceding the month in which such Distribution Date occurs.
Indirect Parent: Merrill Lynch & Co., Inc., a Delaware corporation,
---------------
or its successor in interest.
Initial Mortgage Loans: The mortgage loans (including the rights to
----------------------
receive payments thereunder) transferred and assigned to the Trustee on the
Closing Date pursuant to Section 2.01, together with the related Loan
Agreements and other Mortgage File documents and the rights thereunder
conveyed to the Trustee on the Closing Date pursuant to Section 2.01.
Insurance Agreement: The Insurance and Indemnity Agreement dated as
-------------------
of the Closing Date, among the Servicer, the Transferor, the Trustee and the
Certificate Insurer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
------------------
insurance policy covering a Mortgage Loan or the related Mortgaged Property
net of any component thereof covering any expenses incurred by or on behalf
of the Transferor or the Servicer in connection with obtaining such Insurance
Proceeds.
Insured Amount: As defined in the Certificate Insurance Policy.
--------------
Insured Payment: With respect to any Distribution Date, the Insured
---------------
Amount for such Distribution Date paid to the Trustee by the Certificate
Insurer.
Interest Collections: As to any payment on a Mortgage Loan made by
--------------------
or on behalf of the related Mortgagor for the related Collection Period, the
portion thereof allocable to accrued interest for the related Interest Period
in accordance with the terms of the related Loan Agreement (net of interest
at the Servicing Fee Rate on the Loan Balance for each day during such
Interest Period), including Net Liquidation Proceeds allocable to interest on
such Mortgage Loan.
Interest Period: As to any payment of interest on a Mortgage Loan,
---------------
the period during which the interest covered by such payment accrued and
which, for any Distribution Date, is the month preceding the month in which
such Distribution Date occurs.
Invested Amount: With respect to any date, an amount equal to the
---------------
Original Invested Amount minus the sum of (i) the total of Trust Principal
Collections previously distributed to Investor Certificateholders pursuant to
Section 5.01(b) and (ii) the Aggregate Investor Loss Amount.
Investor Certificate: Any one of the Certificates signed and
--------------------
countersigned by the Trustee substantially in the form set forth in Exhibits
A and C hereto.
Investor Certificate Distribution Amount: As to any Distribution
----------------------------------------
Date, the sum of all amounts to be distributed to the Investor
Certificateholders pursuant to Article V and Article XI hereof.
Investor Certificateholder: The Holder of an Investor Certificate.
--------------------------
Investor Loss Amount: With respect to any Distribution Date, the
--------------------
amount equal to the product of (i) the Floating Allocation Percentage and
(ii) the aggregate of the Trust Liquidation Loss Amounts for such
Distribution Date.
Investor Loss Reduction Amount: With respect to any Distribution
------------------------------
Date, the portion, if any, of the Investor Loss Amount for such Distribution
Date and all prior Distribution Dates that has not been (i) paid to Investor
Certificateholders from Certificate Interest Collections pursuant to Section
5.01(a), (ii) paid to Investor Certificateholders from Trust Interest
Collections and Trust Principal Collections allocable to the Transferor
pursuant to Section 5.01(c)(i), (iii) reallocated to the Transferor pursuant
to Section 5.01(c)(ii), or (iv) paid to Investor Certificateholders from
Insured Payments pursuant to Section 5.01(d).
Late Payment Rate: For any Distribution Date, the lesser of (a) the
-----------------
greater of (i) the rate of interest, as it is publicly announced by Citibank,
N.A. at its principal office in New York, New York as its prime rate (any
change in such prime rate of interest to be effective on the date such change
is announced by Citibank, N.A.) plus 2% and (ii) the then applicable
Certificate Rate and (b) the maximum rate permissible under applicable usuary
or similar laws limiting interest rates. The Late Payment Rate shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
------------------
(ii) a day on which banking institutions in the States of New York or
California or in the City of London, England are required or authorized by
law to be closed.
Liquidated Mortgage Loan: As to any Distribution Date, any
------------------------
Mortgage Loan that was not previously a Liquidated Mortgage Loan, was in
default during the related Collection Period and with respect to which the
Servicer has determined that all Liquidation Proceeds that the Servicer
expects to recover from or on account of such Mortgage Loan have been
recovered.
Liquidation Expenses: Expenses which are incurred by the Servicer in
--------------------
connection with the liquidation of any defaulted Mortgage Loan and not
recovered under any insurance policy or from the related Mortgagor,
including, without limitation, legal fees and expenses, real estate brokerage
commissions, any unreimbursed amount expended by the Servicer pursuant to
Section 3.06 with respect to such Mortgage Loan (including, without
limitation, amounts advanced to correct defaults on any mortgage loan which
is prior to such defaulted Mortgage Loan) and any related and previously
unreimbursed Property Protection Expenses.
Liquidation Proceeds: Cash or funds (including Insurance Proceeds)
--------------------
received in connection with the liquidation of any defaulted Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise.
Loan Agreement: As to any Mortgage Loan, any credit agreement, note
--------------
or other instrument pursuant to which the Mortgage Loan Seller or any other
applicable party agreed to make a Mortgage Loan to a Mortgagor or a Mortgagor
agrees to repay such Mortgage Loan on the terms and conditions provided in
such instrument.
Loan Balance: As to any Mortgage Loan and day, the principal balance
------------
of such Mortgage Loan upon which interest accrued for such day was
calculated.
Loan Rate: As to any Mortgage Loan and day, the rate of interest
---------
applicable to the calculation of interest for such day on the Loan Balance.
Managed Amortization Period: The period from the first Distribution
---------------------------
Date to and including the earlier of (i) the Distribution Date in October
2002 and (ii) the day as of which a Rapid Amortization Event occurs.
Margin: As to any Mortgage Loan, the spread over the applicable
------
index, as specified in the related Loan Agreement.
Maximum Principal Payment: As to any Distribution Date, an amount
-------------------------
equal to the Fixed Allocation Percentage of the aggregate amount of Trust
Principal Collections received during the related Collection Period.
Minimum Monthly Payment: As to any Mortgage Loan and any month, the
-----------------------
minimum amount required to be paid by the related Mortgagor pursuant to the
related Loan Agreement.
Minimum Transferor Interest: As to any date, an amount equal to the
---------------------------
lesser of (i) 5% of the Pool Balance on such date and (ii) the Original
Transferor Certificate Principal Balance.
MLCC Mortgage Loans: The Mortgage Loans either originated or, in
-------------------
certain cases, acquired by MLCC, excluding the Dime Mortgage Loans, and sold
to the Transferor by MLCC.
Monthly Advance: As to any Distribution Date, the aggregate of the
---------------
advances made by the Servicer on such Distribution Date pursuant to Section
4.02, the amount of any such Monthly Advance being equal to the excess of:
(i) the total amount of accrued interest (adjusted to interest at the
related Net Loan Rate) and principal due (including principal due
by reason of default or acceleration) on the Trust Balances of the
Mortgage Loans for the related Interest Period, over
(ii) the total amount of interest (adjusted to interest at the related
Net Loan Rate) and principal collected on the Trust Balances of the
Mortgage Loans for the related Collection Period as of the
Determination Date,
minus any amounts with respect to installments of interest and principal on
the Trust Balances of the Mortgage Loans which (x) were delinquent as of the
end of the related Collection Period, (y) were not the subject of a previous
Monthly Advance and (z) are determined by the Servicer to be Nonrecoverable
Advances.
Monthly Advance Reimbursement Amount: As to any Distribution Date,
------------------------------------
the aggregate of the Monthly Advances which have not been reimbursed (or
deemed to have been reimbursed) to the Servicer through either (i)
withdrawals from the Certificate Account on or before such Distribution Date
pursuant to the second paragraph of Section 4.02 or (ii) debits to the
Mortgage Loan Payment Record pursuant to clause (ii) of Section 3.03.
Moody's: Moody's Investors Service, Inc. or its successor in
-------
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
--------
first, second or more junior lien on an estate in fee simple interest in real
property securing a Mortgage Loan or creating a first, second or more junior
lien on a leasehold interest insofar as such leasehold interest exceeds the
term of the related mortgage by five years.
Mortgage File: The mortgage documents listed in Section 2.01
-------------
pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Payment Record: With respect to the Trust, the record
----------------------------
maintained by the Servicer pursuant to Section 3.02(b).
Mortgage Loan Schedule: As of any date, the schedule of Mortgage
----------------------
Loans included in the Trust Fund on such date. The initial schedule of
Mortgage Loans as of the Cut-off Date is attached hereto as Exhibit F and
sets forth as to each Initial Mortgage Loan (i) the Cut-off Date Trust
Balance, (ii) the Credit Limit, (iii) the stated maturity upon which any out-
standing Loan Balance is due and payable, (iv) the identification number, (v)
the state and zip code of the related Mortgaged Property, and (vi) whether
such loan is a Common Mortgage Loan. The Mortgage Loan Schedule will be
amended from time to time to reflect the removal of any Mortgage Loans from
the Trust and/or the conveyance of any Eligible Substitute Mortgage Loans to
the Trust, and when so amended shall include the information set forth above
with respect to each Eligible Substitute Mortgage Loan as of its related Cut-
off Date.
Mortgage Loan Seller: Merrill Lynch Credit Corporation, a Delaware
--------------------
corporation, or its successor in interest, as assignor of the Trust Balances
of the Mortgage Loans to the Transferor.
Mortgage Loan With Title Insurance: Each of the following MLCC
----------------------------------
Mortgage Loans:
(i) Mortgage Loans originated before February 1, 1994;
(ii) Mortgage Loans originated after February 1, 1994 in which (a) the
Credit Limit was over $1,000,000, or (b) the Mortgage Loan was
being used for a purchase money first mortgage transaction; and
(iii) Any other Mortgage Loan for which the originator required title
insurance to be obtained.
Mortgage Loans: Such of the mortgage loans for which balances are
--------------
transferred and assigned to the Trustee pursuant to Section 2.01 as from time
to time are held as a part of the Trust Fund, the Mortgage Loans so held
being identified in the Mortgage Loan Schedule. Any reference in this
Agreement (including, without limitation, any reference in subsection
2.01(a)) to a Mortgage Loan sold and assigned to, or repurchased or purchased
from, the Trust Fund or as constituting part of the Trust Fund shall mean
such Mortgage Loan to the extent of the related balance owned by the Trust
Fund. Any defaulted Mortgage Loan in respect of which the Servicer has not
yet received all Liquidation Proceeds that it expects to receive shall
continue to be a part of the Trust Fund. All proceeds of any such defaulted
Mortgage Loan shall be credited to the Mortgage Loan Payment Record to the
same extent as proceeds of Mortgage Loans which are not defaulted.
Mortgaged Property: The underlying property securing a Mortgage
------------------
Loan.
Mortgagor: The obligor under a Loan Agreement.
---------
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
------------------------
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: As to any Mortgage Loan and day, the Loan Rate less
-------------
the Servicing Fee Rate.
Net Trust Liquidation Proceeds: As to any Liquidated Mortgage Loan,
------------------------------
(i) the lesser of (x) Net Liquidation Proceeds and (y) the Trust Balance of
such Mortgage Loan at the time of liquidation, together with accrued and
unpaid interest thereon at the Net Loan Rate from the last day on which
interest was paid in full on such Mortgage Loan to the end of the Collection
Period in which such Mortgage Loan became a Liquidated Mortgage Loan, minus
(ii) any amount which may be retained by the Servicer on account of any
unreimbursed Monthly Advances under clause (iii) of Section 3.03.
Nonpayment: With respect to any Distribution Date, any Insured
----------
Amount owing in respect of such Distribution Date.
Nonrecoverable Advance: Any portion of a Monthly Advance previously
----------------------
made or proposed to be made in respect of a Mortgage Loan which has not been
previously reimbursed to the Servicer and which, in the good faith judgment
of the Servicer, will not or, in the case of a proposed Monthly Advance,
would not be ultimately recoverable from Net Trust Liquidation Proceeds or
other recoveries in respect of the related Mortgage Loan. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any pro-
posed advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by a certificate of a Servicing Officer delivered to the Trustee
and detailing the reasons for such determination.
Officer's Certificate: A certificate signed by the Chairman of the
---------------------
Board, the President, a Senior Vice President, a Vice President or an
Assistant Vice President of the Transferor or the Servicer, as the case may
be, and delivered to the Trustee.
One-Month 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 (as of October 28, 1997 in the
case of the initial Distribution Date). If no such posted rate appears,
One-Month 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, Bank of Tokyo Trust Co., 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 One-Month
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, One-Month 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, One-Month LIBOR will be the One-Month LIBOR applicable
to the immediately preceding Distribution Date.
Opinion of Counsel: A written opinion of counsel acceptable to the
------------------
Trustee and the Certificate Insurer, who may be internal counsel for the
Transferor or the Servicer.
Original Certificate Principal Balance: $363,791,000.
--------------------------------------
Original Invested Amount: $363,791,000.
------------------------
Original Transferor Certificate Principal Balance: $7,424,940.
-------------------------------------------------
Overcollateralization Amount: As of any date of determination, the
----------------------------
amount, if any, by which the Invested Amount exceeds the Certificate
Principal Balance.
Ownership Interest: With respect to any Certificate, any ownership
------------------
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
Percentage Interest: As to any Investor Certificate, the percentage
-------------------
interest evidenced thereby in distributions required to be made thereon, such
percentage interest being equal to the percentage obtained by dividing the
initial principal denomination of such Investor Certificate by the Original
Certificate Principal Balance.
Permitted Investments: One or more of the following:
---------------------
(i) obligations of, or guaranteed as to timely principal and interest
by, the United States or any agency or instrumentality thereof when
such obligations are backed by the full faith and credit of the
United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition
thereof, provided that the short-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated
by each Rating Agency in one of its two highest short-term rating
categories and the short-term debt obligations of the party agree-
ing to repurchase shall be rated Prime-1 or better by Moody's and
A-1+ by Standard & Poor's;
(iii) certificates of deposit, demand and time deposits and bankers'
acceptances (which, if Moody's is a Rating Agency, shall each have
an original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity
of more than 365 days) of any U.S. depository institution or trust
company incorporated under the laws of the United States or any
state; provided that the short-term debt obligations of such
depository institution or trust company (or, if the only Rating
Agency is Standard & Poor's, in the case of the principal
depository institution in a depository institution holding company,
debt obligations of the depository institution holding company) at
the date of acquisition thereof have been rated by each Rating
Agency in its highest short-term rating category; provided that if
Moody's is a Rating Agency, the short-term obligations of such
depository institution or trust company shall be rated Prime-1 or
better;
(iv) commercial paper (having original maturities of not more than 270
days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has
been rated by each Rating Agency in its highest short-term rating
category;
(v) investments in money market mutual funds registered under the
Investment Company Act of 1940 that are rated by each Rating Agency
in its highest rating category; provided that if Standard & Poor's
is a Rating Agency, the rating of such money market funds shall be
AAAm or AAAm-G; and
(vi) other obligations or securities that are acceptable to each Rating
Agency as a Permitted Investment hereunder and will not result in a
reduction in the then current rating or ratings of the Investor
Certificates without taking into account the Certificate Insurance
Policy, as evidenced by a letter to such effect from such Rating
Agency.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: As to any date, the aggregate of the Trust Balances of
------------
all Mortgage Loans as of such date.
Pool Factor: As to any Distribution Date, the percentage, carried to
-----------
six places, obtained by dividing the Certificate Principal Balance for such
Distribution Date (before taking into account any distributions of principal
to be made on such Distribution Date) by the Original Certificate Principal
Balance.
Preference Amount: As defined in the Certificate Insurance Policy.
-----------------
Premium Amount: As to any Distribution Date other than the first
--------------
Distribution Date, the product of (x) the Premium Percentage and (y) the
Certificate Principal Balance for such Distribution Date (before taking into
account any distributions of principal to be made on such Distribution Date).
As to the first Distribution Date, the amount determined in accordance with
the preceding sentence minus $10,000.
Premium Percentage: As defined in the Certificate Insurance Policy.
------------------
Principal Collections: As to any Mortgage Loan and Collection
---------------------
Period, all amounts (other than Insurance Proceeds and Liquidation Proceeds)
received from or on behalf of the related Mortgagor during such Collection
Period which, at the time of receipt, were applied in reduction of the Loan
Balance in accordance with the terms of the related Loan Agreement.
Prior Trust: Any of Trust 1992, Trust 1993, Trust 1994-1, Trust
-----------
1994-2, Trust 1995-1 and Trust 1995-2.
Prior Trust Pooling and Servicing Agreement: Any of the Trust 1992
-------------------------------------------
Pooling and Servicing Agreement, the Trust 1993 Pooling and Servicing
Agreement, the Trust 1994-1 Pooling and Servicing Agreement, the Trust 1994-2
Pooling and Servicing Agreement, the Trust 1995-1 Pooling and Servicing
Agreement or the Trust 1995-2 Pooling and Servicing Agreement.
Prior Trust Trustee: Any of the Trust 1992 Trustee, the Trust 1993
-------------------
Trustee, the Trust 1994-1 Trustee, the Trust 1994-2 Trustee, the Trust 1995-1
Trustee and the Trust 1995-2 Trustee.
Property Protection Expenses: Expenses paid or incurred by or for
----------------------------
the account of the Servicer in connection with the preservation or protection
of a Mortgaged Property or the security of a Mortgaged Property including (i)
hazard insurance policy premiums, (ii) real estate taxes and property repair,
replacement, protection and preservation expenses, (iii) amounts expended to
cure or prevent any default with respect to any mortgage loan senior to a
Mortgage Loan, and (iv) similar expenses reasonably paid or incurred to
preserve or protect the value of such security.
Rapid Amortization Commencement Date: The earlier of (i) the
------------------------------------
Distribution Date in November 2002 and (ii) the Distribution Date next
following the Collection Period in which a Rapid Amortization Event is deemed
to occur pursuant to Section 11.01.
Rapid Amortization Event: As defined in Section 11.01.
------------------------
Rapid Amortization Period: The period following the Managed
-------------------------
Amortization Period until the termination of the Trust pursuant to Section
10.01.
Rating Agency: Any statistical credit rating agency, or its
-------------
successor, that rated the Investor Certificates at the request of the
Transferor at the time of the initial issuance of the Investor Certificates.
If such agency or a successor is no longer in existence, "Rating Agency"
shall be such statistical credit rating agency, or other comparable Person,
designated by the Servicer, notice of which designation shall be given to the
Trustee. References herein to the highest rating categories of a Rating
Agency shall mean AAA (long-term), AAAm or AAAm-G (money market funds) and A-
1+ (short-term) in the case of Standard & Poor's and Aaa (long-term) and P-1
(short-term) in the case of Moody's and in the case of any other Rating
Agency shall mean such equivalent ratings.
Record Date: As to any Distribution Date, the last day of the month
-----------
(or if such last day is not a Business Day, the Business Day immediately
preceding such last day) preceding the month of such Distribution Date.
Reimbursement Amount: As to any Distribution Date, the sum of (x)(i)
- -------------------------
all Insured Payments paid by the Certificate Insurer, but for which the
Certificate Insurer has not been reimbursed prior to such Distribution Date
pursuant to Section 5.01(a) plus (ii) interest accrued thereon, calculated at
the Late Payment Rate from the date the Trustee received the related Insured
Payments and (y)(i) any amounts then due and owing to the Certificate Insurer
under the Insurance Agreement or the Certificate Insurance Policy plus (ii)
interest on such amounts at the Late Payment Rate. The Certificate Insurer
shall notify the Trustee and the Servicer of the amount of any Reimbursement
Amount.
Required Amount: For each Distribution Date occurring on or prior to
---------------
the 30th Distribution Date, 2% of the Cut-off Date Pool Balance. For each
Distribution Date thereafter, the lesser of (i) 2% of the Cut-off Date Pool
Balance and (ii) 4% of the Pool Balance as of such Distribution Date;
provided that in no event will the Required Amount be less than a floor
amount equal to the greater of (x) 1% of the Cut-off Date Pool Balance and
(y) 50% of the aggregate Trust Balances of all Mortgage Loans delinquent 91
days or more (including for this purpose any Mortgage Loans in foreclosure
and any Mortgage Loans with respect to which the related Mortgaged Properties
have been acquired by the Trust Fund) as of the end of the related Collection
Period. Notwithstanding the foregoing, for each Distribution Date, if the
cumulative principal losses on the Trust Balances of the Mortgage Loans
specified in item (xxxvi) of the Servicing Certificate prepared pursuant to
Section 4.01 exceed 1.25% of the Cut-off Date Pool Balance, then the Required
Amount shall be 3.75% of the Cut-off Date Pool Balance.
Responsible Officer: When used with respect to the Trustee, the
-------------------
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any Vice President, any Assistant Vice President, the Secretary,
any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier,
any Assistant Cashier, any Trust Officer or Assistant Trust Officer, the
Controller and any Assistant Controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also, with respect to a particular matter, to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Retained Rights: As defined in Section 2.01(e).
---------------
Retransfer Date: As defined in Section 2.06.
---------------
Retransfer Notice Date: As defined in Section 2.06.
----------------------
SAIF: The Savings Association Insurance Fund, as from time to time
----
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
Scheduled Principal Collections Payment: With respect to any
---------------------------------------
Distribution Date during the Managed Amortization Period, an amount equal to
the lesser of (i) the Maximum Principal Payment and (ii) the Alternative
Principal Payment. With respect to any Distribution Date on or after the
Rapid Amortization Commencement Date, an amount equal to the Maximum
Principal Payment.
Seriously Delinquent Mortgage Loan: As to any Distribution Date, any
----------------------------------
Mortgage Loan which (i) had not reached its stated maturity and was
delinquent in payment of interest for more than 90 days at the end of the
related Collection Period, (ii) had reached its stated maturity and was more
than 60 days delinquent at the end of the related Collection Period, or (iii)
was in default under the terms and provisions of the Loan Agreement (other
than a default related to a delinquency) as of the end of the related
Collection Period and as to which the Servicer had notified the Mortgagor of
such default, terminated the Loan Agreement and demanded the immediate
repayment of the outstanding Loan Balance.
Servicer or MLCC: Merrill Lynch Credit Corporation, a Delaware
----------------
corporation, or its successor in interest or any successor servicer appointed
as herein provided.
Servicing Certificate: A certificate completed by and executed on
---------------------
behalf of the Servicer in accordance with Section 4.01.
Servicing Fee Rate: 0.50% per annum.
------------------
Servicing Officer: Any officer of the Servicer involved in, or
-----------------
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished
to the Trustee by the Servicer, as such list may from time to time be
amended.
Standard & Poor's: Standard & Poor's Corporation or its successor in
-----------------
interest.
Stated Maturity Date: The Distribution Date in September 2027.
--------------------
Support Agreement: The letter agreement between the Servicer and its
-----------------
Indirect Parent dated as of October 1, 1997, pursuant to which the Indirect
Parent ensures performance by the Servicer of the obligations to repurchase
certain Mortgage Loans pursuant to Section 2.02 and to deposit certain
amounts in the Certificate Account pursuant to Section 4.02.
Transfer: Any direct or indirect transfer, sale, pledge,
--------
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer Date: With respect to the Initial Mortgage Loans, the
-------------
Closing Date and with respect to any Eligible Substitute Mortgage Loan, the
date on which such Eligible Substitute Mortgage Loan is conveyed to the Trust
under the terms hereof.
Transfer Deposit Amount: As defined in Section 2.02(b).
-----------------------
Transferee: Any Person who is acquiring by Transfer any Ownership
----------
Interest in a Certificate.
Transferor: MLCC Mortgage Investors, Inc., a Delaware corporation,
----------
or its successor in interest.
Transferor Certificate: The Certificates signed and countersigned by
----------------------
the Trustee substantially in the form set forth in Exhibits B and D hereto.
Transferor Certificate Principal Balance: As of any date of
----------------------------------------
determination, the amount equal to (i) the Pool Balance as of the end of the
day next preceding such date of determination minus (ii) the Invested Amount
as of the end of such day.
Transferor Certificateholders: The Holders of the Transferor
-----------------------------
Certificates.
Transferor Interest Collections: As to any Distribution Date, Trust
-------------------------------
Interest Collections for the related Collection Period that are not
Certificate Interest Collections.
Transferor Principal Collections: As to any Distribution Date,
--------------------------------
Trust Principal Collections for the related Collection Period minus the
amount of such Trust Principal Collections required to be distributed to
Investor Certificateholders pursuant to Section 5.01(b).
Transferor Subordinated Amount: As to any Distribution Date, the
------------------------------
least of
(i) 2% of the Cut-off Date Pool Balance minus the sum of (a) the
aggregate amount of Trust Principal Collections allocable to the
Transferor that have previously been distributed to Investor
Certificateholders pursuant to Section 5.01(c)(i) and (b) the
aggregate amount of Investor Loss Amounts that have previously been
reallocated to the Transferor pursuant to Section 5.01(c)(ii); or
(ii) the Transferor Subordinated Amount on the prior Distribution Date;
or
(iii) the Required Amount.
Trust: The trust created by this Agreement and designated "ML
-----
Revolving Home Equity Loan Trust 1997-1".
Trust 1992: The trust created by the Trust 1992 Pooling and
----------
Servicing Agreement and designated "ML Home Equity Loan Trust 1992-1".
Trust 1992 Pooling and Servicing Agreement: The Pooling and
------------------------------------------
Servicing Agreement dated as of September 1, 1992 among Merrill Lynch Credit
Corporation, as Servicer, MLCC Acquisition Corp., as Seller, and Bankers
Trust Company of California, N.A., as Trustee, and all amendments thereof and
supplements thereto.
Trust 1992 Trustee: The institution which executed the Trust 1992
------------------
Pooling and Servicing Agreement as Trustee, or its successors in interest, or
any successor trustee that has been appointed in accordance with the terms of
the Trust 1992 Pooling and Servicing Agreement.
Trust 1993: The trust created by the Trust 1993 Pooling and
----------
Servicing Agreement and designated "ML Home Equity Loan Trust 1993-1".
Trust 1993 Pooling and Servicing Agreement: The Pooling and
------------------------------------------
Servicing Agreement dated as of February 1, 1993 among Merrill Lynch Credit
Corporation, as Servicer, Merrill Lynch Home Equity Acceptance, Inc., as
Seller, and Bankers Trust Company of California, N.A., as Trustee, and all
amendments thereof and supplements thereto.
Trust 1993 Trustee: The institution which executed the Trust 1993
------------------
Pooling and Servicing Agreement as Trustee, or its successors in interest, or
any successor trustee that has been appointed in accordance with the terms of
the Trust 1993 Pooling and Servicing Agreement.
Trust 1994-1: The trust created by the Trust 1994-1 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1994-1".
Trust 1994-1 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of April 1, 1994 among Merrill Lynch Credit
Corporation, as Servicer, Merrill Lynch Home Equity Acceptance, Inc., as
Seller, and Bankers Trust Company of California, N.A., as Trustee, and all
amendments thereof and supplements thereto.
Trust 1994-1 Trustee: The institution which executed the Trust 1994
--------------------
1 Pooling and Servicing Agreement as Trustee, or its successors in interest,
or any successor trustee that has been appointed in accordance with the terms
of the Trust 1994-1 Pooling and Servicing Agreement.
Trust 1994-2: The trust created by the Trust 1994-2 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1994-2".
Trust 1994-2 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of September 1, 1994 among Merrill Lynch Credit
Corporation, as Servicer, MLCC Mortgage Investors, Inc., as Seller, and
Bankers Trust Company of California, N.A., as Trustee, and all amendments
thereof and supplements thereto.
Trust 1994-2 Trustee: The institution which executed the Trust 1994
--------------------
2 Pooling and Servicing Agreement as Trustee, or its successors in interest,
or any successor trustee that has been appointed in accordance with the terms
of the Trust 1994-2 Pooling and Servicing Agreement.
Trust 1995-1: The trust created by the Trust 1995-1 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1995-1".
Trust 1995-1 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of March 1, 1995 among Merrill Lynch Credit
Corporation, as Servicer, MLCC Mortgage Investors, Inc., as Seller, and
Bankers Trust Company of California, N.A., as Trustee, and all amendments
thereof and supplements thereto.
Trust 1995-1 Trustee: The institution which executed the Trust 1995
--------------------
1 Pooling and Servicing Agreement as Trustee, or its successors in interest,
or any successor trustee that has been appointed in accordance with the terms
of the Trust 1995-1 Pooling and Servicing Agreement.
Trust 1995-2: The trust created by the Trust 1995-2 Pooling and
------------
Servicing Agreement and designated "ML Home Equity Loan Trust 1995-2".
Trust 1995-2 Pooling and Servicing Agreement: The Pooling and
--------------------------------------------
Servicing Agreement dated as of October 1, 1995 among Merrill Lynch Credit
Corporation, as Servicer, MLCC Mortgage Investors, Inc., as Seller, and
Bankers Trust Company of California, N.A., as Trustee, and all amendments
thereof and supplements thereto.
Trust 1995-2 Trustee: The institution which executed the Trust 1995
--------------------
2 Pooling and Servicing Agreement as Trustee, or its successors in interest,
or any successor trustee that has been appointed in accordance with the terms
of the Trust 1995-2 Pooling and Servicing Agreement.
Trust Balance: As to any Mortgage Loan, other than a Liquidated
-------------
Mortgage Loan, and day, the related Cut-off Date Trust Balance, plus any
Additional Balances in respect of such Mortgage Loan arising during the
Managed Amortization Period, minus the sum of (i) all Principal Collections
credited against the Loan Balance (excluding, in the case of any Common
Mortgage Loan, any such Principal Collections applied in reduction of the
principal balance of such Common Mortgage Loan sold and assigned to one or
more of the Prior Trusts) in accordance with the related Loan Agreement prior
to such day, and (ii) any Trust Insurance Proceeds received prior to such day
in respect of such Mortgage Loan. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Trust Balance equal to the
Trust Balance of the related Mortgage Loan immediately prior to the final
recovery of related Liquidation Proceeds and a Trust Balance of zero
thereafter.
Trust Fund: The corpus of the ML Revolving Home Equity Loan Trust
----------
1997-1, consisting of, to the extent described herein, the following:
(i) the Trust Balance of each Mortgage Loan (including any Additional
Balance arising during the Managed Amortization Period under such
Mortgage Loan subsequent to the related Cut-off Date), all payments
of interest and of principal thereon, from whatever source derived,
received on or with respect to such Mortgage Loan on and after the
applicable Cut-off Date and allocable to such Trust Balance (but
not including all accrued interest and principal due on or with
respect to such Mortgage Loan for Interest Periods prior to the
related Cut-off Date);
(ii) such assets as shall from time to time be identified as deposited
in the Certificate Account in accordance with this Agreement;
(iii) the interest of the Certificateholders to the extent of the Trust
Balances of the Mortgage Loans and interest accrued thereon in (x)
property which secured a Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure, (y) any insurance
policies related to the Mortgage Loans, including hazard insurance
policies, and (z) the related Mortgage, Loan Agreement and other
Mortgage File documents for each Mortgage Loan;
(iv) the benefit of the Support Agreement and the Certificate Insurance
Policy; and
(v) the proceeds of each of the foregoing.
Trust Insurance Proceeds: As to any Mortgage Loan and Collection
------------------------
Period, an amount equal to the lesser of (i) Insurance Proceeds paid to the
Servicer during such Collection Period (reduced by any related expenses of
the Servicer in collecting such proceeds), which (x) are not Liquidation
Proceeds, (y) are not applied to the restoration or repair of the related
Mortgaged Property or released to the related Mortgagor in accordance with
the normal servicing procedures of the Servicer and (z) will be applied by
the Servicer in reduction of the Loan Balance of such Mortgage Loan and (ii)
the Trust Balance of such Mortgage Loan at the end of such Collection Period,
together with accrued and unpaid interest thereon at the Net Loan Rate from
the last day on which interest was paid in full on such Mortgage Loan to the
end of such Collection Period.
Trust Interest Collections: As to any payment on a Mortgage Loan
--------------------------
made by or on behalf of the related Mortgagor for the related Collection
Period, the lesser of (i) the portion of the amount collected on such
Mortgage Loan during the related Collection Period and allocated to interest
for the related Interest Period in accordance with the terms of the related
Loan Agreement (net of interest at the Servicing Fee Rate on the Loan Balance
for each day during such Interest Period) and (ii) accrued interest at the
Net Loan Rate on the Trust Balance for each day during such Interest Period.
Trust Liquidation Loss Amount: With respect to any Distribution
-----------------------------
Date and any Mortgage Loan that becomes a Liquidated Mortgage Loan during the
related Collection Period, the unrecovered Trust Balance thereof at the end
of such Collection Period, after giving effect to the Net Trust Liquidation
Proceeds applied in reduction of such Trust Balance in accordance with the
related Loan Agreement and this Agreement.
Trust Principal Collections: As to any Mortgage Loan and Collection
---------------------------
Period, the sum of (i) all amounts (other than Insurance Proceeds and
Liquidation Proceeds) received from or on behalf of the related Mortgagor
during such Collection Period which, at the time of receipt, were applied in
reduction of the Loan Balance in accordance with the terms of the related
Loan Agreement (other than, in the case of any Common Mortgage Loan, any such
principal collections applied in reduction of the principal balance of such
Common Mortgage Loan sold and assigned to any Prior Trust), (ii) the
principal portion of any Net Trust Liquidation Proceeds and Trust Insurance
Proceeds and (iii) the principal portion of any Transfer Deposit Amount.
Trustee: The institution executing this Agreement as Trustee, or its
-------
successor in interest, or any successor trustee that has been appointed in
accordance with the terms of this Agreement.
Unpaid Certificate Interest Shortfall: As to any Distribution Date,
-------------------------------------
the aggregate amount, if any, of Certificate Formula Interest that was
accrued in respect of one or more prior Distribution Dates and has not
previously been distributed to Investor Certificateholders.
Section 1.02. Interest Calculations.
---------------------
All calculations of interest hereunder that are made in respect of the
Loan Balance, Trust Balance or Additional Balance of a Mortgage Loan,
including calculations of interest at the Servicing Fee Rate, shall be made
on a daily basis using a 365 day year. All calculations of interest on the
Investor Certificates shall be made on the basis of the actual number of days
in an Accrual Period and a year assumed to consist of 360 days.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans.
----------------------------
(a) In consideration of the Trustee's delivery to or upon the order of
the Transferor of the Certificates in an aggregate amount equal to the
Cut-off Date Pool Balance, the Transferor does hereby transfer, assign, set
over and otherwise convey to the Trustee without recourse (except as provided
herein) all the right, title and interest of the Transferor in and to (i)(A)
the Cut-off Date Trust Balance of each Mortgage Loan, including any
Additional Balance arising during the Managed Amortization Period under each
Mortgage Loan subsequent to the related Cut-off Date and assigned and
transferred to the Trustee hereunder, all payments of interest and principal
thereon, from whatever source derived, which are received on or with respect
to each Mortgage Loan on or after the Cut-off Date and are allocable to the
Trust Balance (but not including all accrued interest and principal due on or
with respect to the Mortgage Loans for Interest Periods prior to the Cut-off
Date), (B) the Certificate Account, and (C) the Certificate Insurance Policy,
(ii) to the extent of the Trust Balances of the Mortgage Loans and interest
accrued thereon, as provided in this Agreement, (A) any Mortgaged Properties
converted to ownership through foreclosure or deed in lieu or otherwise, (B)
any insurance policies related to the Mortgage Loans, and (C) the related
Mortgages, Loan Agreements and other Mortgage File documents for the Mortgage
Loans; and (iii) the proceeds of each of the foregoing.
The Transferor and the Trustee acknowledge that the Prior Trusts have
rights, interests, power and authority with respect to the Common Mortgage
Loans and the related Loan Agreements, Mortgages and other Mortgage File
documents to the extent provided in the Prior Trust Pooling and Servicing
Agreements. The Servicer acknowledges that, pursuant to the terms of the
Loan Agreements, amounts received from or on behalf of the Mortgagor of a
Common Mortgage Loan which, at the time of receipt, are treated as principal
collections pursuant to the related Loan Agreement, will be applied in
reduction of the principal balance of such Common Mortgage Loan sold to one
or more of the Prior Trusts as provided in the Prior Trust Pooling and
Servicing Agreements before such collections may be applied as Principal
Collections under this Agreement.
Notwithstanding the characterization of the Investor Certificates as
debt for federal, state and local income and franchise tax purposes, the
parties hereto intend to treat the transfer of the Mortgage Loans as provided
herein as a sale for non-tax purposes from the Mortgage Loan Seller to the
Transferor and from the Transferor to the Trust of all of their right, title
and interest in and to the Mortgage Loans and other property described above.
In the event the transaction set forth herein is deemed not to be a sale for
the purposes described in the preceding sentence, the Mortgage Loan Seller
and the Transferor hereby grant to the Trustee a first priority security
interest in all of the Mortgage Loan Seller's and the Transferor's right,
title and interest in and to the (i) Mortgage Loans identified on the
Mortgage Loan Schedule on the Cut-off Date, (ii) Mortgage Loans added to the
Mortgage Loan Schedule from time to time, (iii) all property included in the
Trust Fund, (iv) and all proceeds of any of the foregoing; and this Agreement
shall constitute a security agreement under applicable law.
In connection with such assignment, transfer and conveyance of the Trust
Fund, as promptly as practicable but in no event later than 10 days following
the Closing Date, (i) the Mortgage Loan Seller will file in the appropriate
office in the State in which the principal place of business of the Mortgage
Loan Seller is located a UCC-1 financing statement executed by the Mortgage
Loan Seller as debtor, naming the Transferor as secured party and listing as
collateral the Mortgage Loans identified on the Mortgage Loan Schedule and
all property constituting the Trust Fund, and (ii) the Transferor will file
in the appropriate office in the State in which the principal place of
business of the Transferor is located a UCC-1 financing statement executed by
the Transferor as debtor, naming the Trustee as secured party and listing as
collateral the Mortgage Loans identified on the Mortgage Loan Schedule and
all property constituting the Trust Fund. In connection with such filings,
the Mortgage Loan Seller and the Transferor agree that they shall each cause
to be filed all necessary continuation statements thereof and to take or
cause to be taken such actions and execute such documents as are necessary to
perfect and protect the Certificateholders' interests in the Mortgage Loans
and the proceeds thereof allocable thereto.
(b) In connection with the foregoing assignment, transfer and
conveyance by the Transferor, the Servicer acknowledges that it is holding as
custodian for the Trustee or the applicable Prior Trustee the following
documents or instruments with respect to each Mortgage Loan so assigned and
transferred (other than Mortgage Loans which have been prepaid in full on or
after the Cut-off Date and prior to the date of the execution of this
Agreement):
(i) The original Loan Agreement;
(ii) The related Mortgage with evidence of recording indicated
thereon; and
(iii) As to each Mortgage Loan With Title Insurance, evidence of
such insurance (to the extent such evidence is included in the
related Mortgage File).
Except as hereinafter provided, the Servicer shall be entitled to
maintain possession of all of the foregoing documents and instruments and
shall not be required to deliver any of them to the Trustee. In the event,
however, that possession of any of such documents or instruments is required
by any person (including the Trustee) acting as successor servicer pursuant
to Section 7.04 in order to carry out the duties of Servicer hereunder, then
such successor shall be entitled to request delivery of such documents or
instruments by the Servicer and to retain such documents or instruments for
as long as necessary for servicing purposes. Any such documents or
instruments shall be returned to the Servicer (unless returned to the related
Mortgagor in connection with the payment in full of the related Mortgage
Loan) when possession thereof is no longer required.
(c) The Servicer further confirms to the Trustee that it has caused the
portions of its records relating to the Mortgage Loans to be clearly and
unambiguously marked to indicate that the Trust Balances of such Mortgage
Loans (to the extent provided herein) have been assigned and transferred to
the Trustee and constitute part of the Trust Fund in accordance with the
terms of the trust created hereunder.
(d) The Servicer's right to maintain possession of the documents
enumerated above shall continue so long as the long term unsecured debt of
the Indirect Parent is assigned ratings of at least A- by Standard and Poor's
and A3 by Moody's. At such time as the long term unsecured debt of the
Indirect Parent does not satisfy the above referenced criteria, as promptly
as practicable but in no event more than 90 days following the happening of
such event (or 120 days following the receipt by the Trustee from the
Servicer of a letter from each Rating Agency that such longer period (without
taking into account the Certificate Insurance Policy) will not result in a
reduction in or withdrawal of any rating of the Investor Certificates), the
Servicer shall at the expense of the Servicer (i) prepare assignments in
recordable form to the Trustee of each Mortgage Loan (which may be a blanket
assignment) and (ii) deliver the related Mortgage Files to the Trustee to be
held by the Trustee in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders and the Trustee
shall retain possession thereof except to the extent the Servicer requires
any Mortgage Files for normal servicing as contemplated by Section 3.07;
provided, however, that such preparation of assignments and delivery of
related Mortgage Files shall not be required in the case of any Common
Mortgage Loan for which the Servicer has so prepared an assignment and
delivered the related Mortgage File to the related Prior Trustee. In the
event the Servicer fails to deliver the Mortgage Files to the Trustee within
such 90 day period or, if applicable, 120 day period, to the extent the
Trustee has received written notice or has actual knowledge of such downgrade
of the Indirect Parent, the Trustee shall give written notice pursuant to the
Support Agreement to the Indirect Parent of the Servicer's failure to deliver
the Mortgage Files.
Within 60 days following delivery of the Mortgage Files to the Trustee,
it will review or cause to be reviewed each Mortgage File to ascertain that
all required documents set forth in this Section 2.01 have been executed and
received, and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule and in so doing the Trustee may rely on the
purported due execution and genuineness of any signature thereon. If within
such 60 day period the Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule, the Trustee shall
promptly notify the Servicer, which shall have a period of 30 days after such
notice within which to correct or cure any such defect. Upon the completion
of the review by the Trustee of each Mortgage File within such 60 day period
and, if necessary, the correction or cure of any defect by the Servicer
within such 30 day period, the Servicer will submit such assignments of the
Mortgage Loans for recording in the appropriate public offices for real
property records within seven (7) days of the completion of such review and
necessary correction and instruct the recording offices to return the
original recorded assignments to the Trustee. Within 30 days following
receipt by the Trustee of the recorded assignment the Trustee shall review or
cause to be reviewed such assignment to confirm the information specified
above with respect to the other documents. The Trustee shall notify the
Servicer of any defect in such assignment based on such review. The Servicer
shall have a period of 30 days following such notice to correct or cure such
defect.
If the Servicer fails to record an assignment of a Mortgage Loan as
herein provided, the Trustee shall prepare and file or cause to be prepared
and filed, at the expense of the Servicer, such assignments in the
appropriate real property or other records and the Servicer hereby appoints
the Trustee as its attorney-in-fact with full power and authority acting in
its stead for the purpose of such preparation and filing.
(e) On the Closing Date the Transferor shall deliver the Certificate
Insurance Policy to the Trustee.
(f) Bankers Trust Company of California, N.A., as the Prior Trust
Trustee or successor trustee for each of the Prior Trusts, hereby
acknowledges that the Mortgage Loan Seller has previously reserved and
retained certain rights, interests, power and authority (the "Retained
Rights") with respect to the Common Mortgage Loan Interests to the extent of
the Mortgage Loan Seller's interest in the Common Mortgage Loan Interests not
sold to the Prior Trusts, all as set forth more fully in the Prior Trust
Pooling and Servicing Agreements. Without limiting the generality of the
foregoing, the Retained Rights include the right of the Mortgage Loan Seller
to certain balances arising under the related Common Mortgage Loans, together
with payments of principal and interest, from whatever source derived,
allocable to such balances, as provided in the Prior Trust Pooling and
Servicing Agreements. The Mortgage Loan Seller hereby notifies the Prior
Trust Trustees that certain of the Retained Rights are being assigned to the
Trustee pursuant to, and to the extent provided in, this Agreement (the
"Assignment of Retained Rights").
Bankers Trust Company of California, N.A., as the Prior Trust Trustee or
successor trustee for each of the Prior Trusts, hereby acknowledges receipt
of (i) a copy of this Agreement, (ii) notice of the Assignment of Retained
Rights as set forth in this Section 2.01(f), (iii) notice of the transfer and
assignment to the Trustee of the Common Mortgage Loan Interests and related
rights (including, without limitation, payments on the Common Mortgage Loans)
as evidenced by this Section 2.01(f), and (iv) notice of the Trustee's first
priority perfected security interest in the Common Mortgage Loan Interests
and related rights (including, without limitation, payments on the Common
Mortgage Loans) as evidenced by, and to the extent provided in, this
Agreement.
Not later than the end of the 90 day period or, if applicable, 120 day
period specified in Section 2.01(d), the Servicer shall deliver the Mortgage
File for each Common Mortgage Loan to the Prior Trust Trustee with the most
senior rights thereto. Each of the Prior Trust Trustees hereby agrees to act
for the Trust Fund as a bailee that has received notification of the Trust
Fund's interest in the Common Mortgage Loans to the extent of the Trust
Balances at such time as the Prior Trust Trustees take possession of the Loan
Agreements or any of the other Mortgage File documents with respect to the
Common Mortgage Loans. Further, each of the Prior Trust Trustees agrees that
if the Loan Agreement or any of the other Mortgage File documents with
respect to any Common Mortgage Loan that may be held by it in its capacity as
trustee are no longer required to be held by it in such capacity (by reason
of payment of the balance of such Common Mortgage Loan owned by such Prior
Trust or for any other reason that under the related Prior Trust Pooling and
Servicing Agreement permits or requires release of the related Mortgage File
to the Transferor), and the Trust Balance of such Common Mortgage Loan is
then owned by the Trust Fund, the Prior Trust Trustee shall promptly transfer
possession of all such Mortgage File documents to the Prior Trust Trustee, if
any, with the then most senior rights to the related Mortgage File for such
Common Mortgage Loan and if there is no such trustee, then to the Trustee or
to any successor Trustee. Each of the Prior Trust Trustees hereby
acknowledges and confirms that its right, title and interest in any mortgage
loan and any property related to such mortgage loan conveyed to it pursuant
to Section 2.01(a) of the applicable Prior Trust Pooling and Servicing
Agreement, is limited to the "trust balance" (as defined in the applicable
Prior Trust Pooling and Servicing Agreement), if any, of any such mortgage
loan plus accrued interest, if any, thereon.
Nothing in this Section 2.01(f) shall be deemed to affect the right or
obligation of a Prior Trust Trustee to release the Mortgage File of any
Common Mortgage Loan to the servicer of the related Prior Trust or to the
Servicer to the extent permitted or required by the applicable Prior Trust
Pooling and Servicing Agreement.
Section 2.02. Acceptance by Trustee; Retransfer
---------------------------------
of Mortgage Loans; Substitution of
----------------------------------
Eligible Substitute Mortgage Loans.
----------------------------------
(a) The Trustee acknowledges the assignment and transfer of the Loan
Agreements and the Mortgages pursuant to Section 2.01, and declares that it
will hold the Trust Fund in trust, upon the terms herein set forth, for the
use and benefit of all present and future Certificateholders and the
Certificate Insurer.
(b) If the time to correct or cure any defect of which the Trustee has
notified the Servicer following any review by the Trustee of the Mortgage
Files pursuant to Section 2.01 has expired without any correction or cure or
if any loss that materially and adversely affects the interests of the
Certificateholders is incurred in respect of any Mortgage Loan as a result of
(i) a defect in any document constituting a part of a Mortgage File or (ii)
the Servicer's retention of such Mortgage File, then on the Business Day next
preceding the Distribution Date in the month following the Collection Period
in which the time to correct or cure such defect expired or such loss
occurred, the Servicer shall deposit in the Certificate Account the Transfer
Deposit Amount, if any, and upon satisfaction of the applicable conditions
described herein, all right, title and interest of the Trust in and to such
Mortgage Loan shall be deemed to be retransferred, reassigned and otherwise
reconveyed, without recourse, representation or warranty, to the Transferor
on such Business Day and the Trust Balance of such Mortgage Loan shall be
deducted from the Pool Balance; provided, however, that interest accrued on
the Trust Balance of such Mortgage Loan to the end of the related Interest
Period shall be the property of the Trust. The Servicer shall determine if
the removal of such Trust Balance from the Pool Balance in accordance with
the preceding sentence would cause the Transferor Certificate Principal
Balance to be less than the Minimum Transferor Interest ("Transfer
Deficiency"), in which event the Servicer shall deliver written notice of
such deficiency to the Trustee and the Transferor, and within five Business
Days after the Business Day of such retransfer the Servicer shall either (i)
substitute an Eligible Substitute Mortgage Loan or (ii) deposit into the
Certificate Account an amount (the "Transfer Deposit Amount") in immediately
available funds equal to the Transfer Deficiency or a combination of both (i)
and (ii) above. Such reduction or substitution and the actual payment of any
Transfer Deposit Amount, if any, shall be deemed to be payment in full for
such Mortgage Loan.
Upon receipt of any Eligible Substitute Mortgage Loan or of written
notification signed by a Servicing Officer to the effect that the Transfer
Deposit Amount in respect of a Defective Mortgage Loan has been deposited
into the Certificate Account or, if the Transferor Certificate Principal
Balance is not reduced below the Minimum Transferor Interest as a result of
the deemed retransfer of a Defective Mortgage Loan, then as promptly as
practicable following such deemed transfer, the Trustee shall execute and
deliver such instrument of transfer or assignment presented to it by the
Servicer, in each case without recourse, as shall be necessary to vest in the
Servicer or the Transferor, as the case may be, legal and beneficial
ownership of such repurchased or removed Mortgage Loan (including any
property acquired in respect thereof and any insurance policy or Insurance
Proceeds with respect thereto). Notwithstanding the preceding sentence, the
Trustee shall not be required to execute and deliver such instrument of
transfer and assignment if the Mortgage Loan is required to be retained for
the use and benefit of a Prior Trust pursuant to a Prior Trust Pooling and
Servicing Agreement. It is understood and agreed that the obligation of the
Transferor and the Servicer to accept a transfer of a Defective Mortgage Loan
and to either convey an Eligible Substitute Mortgage Loan or to make a
deposit of any related Transfer Deposit Amount into the Certificate Account
shall constitute the sole remedy respecting such defect available to Certifi-
cateholders, the Trustee or the Certificate Insurer, and such obligation on
the part of the Servicer shall survive any resignation or termination of the
Servicer pursuant to Section 7.04 or 8.01.
Notwithstanding the foregoing, if any Eligible Substitute Mortgage Loans
conveyed to the Trust are Common Mortgage Loans, the Servicer shall be
required to deliver to, and deposit with, the Trustee with respect to such
Common Mortgage Loans an Officer's Certificate identifying the Eligible
Substitute Mortgage Loans with respect to which such documents or instruments
previously were delivered and deposited pursuant to a Prior Trust Pooling and
Servicing Agreement. The documents or instruments identified in such
Officer's Certificate shall be considered to be part of the Mortgage Files
for all purposes of this Agreement and shall be subject to the provisions of
Section 2.01(d).
Notwithstanding any other provision of this Section 2.02(b), a re-
transfer of a Defective Mortgage Loan to the Servicer pursuant to this
Section that would cause the Transferor Certificate Principal Balance to be
less than the Minimum Transferor Interest shall not occur if either the
Transferor fails to convey an Eligible Substitute Mortgage Loan or to deposit
into the Certificate Account any related Transfer Deposit Amount required by
this Section 2.02(b) with respect to the transfer of such Defective Mortgage
Loan.
(c) For any Collection Period during which the Servicer substitutes
one or more Eligible Substitute Mortgage Loans, the Servicer shall determine
the Transfer Deposit Amount which shall be deposited into the Certificate
Account on the Business Day next preceding the Distribution Date occurring in
the month following such Collection Period. All amounts received in respect
of the Eligible Substitute Mortgage Loan or Loans during the Collection
Period in which the circumstances giving rise to the relevant substitution
occur shall not be a part of the Trust Fund and shall not be deposited by the
Servicer into the Certificate Account. All amounts received by the Servicer
in respect of any Mortgage Loan so removed from the Trust Fund during the
Collection Period in which the circumstances giving rise to such substitution
occur shall be deposited by the Servicer into the Certificate Account. Upon
the substitution of an Eligible Substitute Mortgage Loan or Loans, such
Mortgage Loans shall be subject to the terms of this Agreement in all
respects, and the Servicer shall be deemed to (i) have entered into or made
with respect to such Eligible Substitute Mortgage Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth
in Section 2.04 and (ii) have represented that such Eligible Substitute
Mortgage Loan satisfies the criteria set forth in the definition of Eligible
Substitute Mortgage Loan herein. The procedures applied by the Servicer in
selecting each Eligible Substitute Mortgage Loan shall not be adverse to the
interests of the Trustee, the Certificate Insurer and the Investor
Certificateholders and shall be comparable to the selection procedures
applicable to the Mortgage Loans conveyed hereunder as of the date of this
Agreement.
The provisions of this Section 2.02(c) shall apply to (i) any removal or
retransfer of Defective Mortgage Loan or Loans, (ii) the substitution of
Eligible Substitute Mortgage Loan or Loans by the Servicer pursuant to
Section 2.04 and 3.01(e) or (iii) the repurchase of any Mortgage Loan or
Loans by the Servicer pursuant to Section 3.06.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section.
Section 2.03. Representations and Warranties
------------------------------
Regarding the Servicer.
----------------------
The Servicer represents and warrants to the Trustee, the Certificate
Insurer and the Investor Certificateholders that:
(i) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has
the corporate power to own its assets and to transact the business
in which it is currently engaged. The Servicer is duly qualified
to do business as a foreign corporation and is in good standing in
each jurisdiction in which the character of the business transacted
by it or properties owned or leased by it requires such quali-
fication and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Servicer;
(ii) The Servicer has the power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated
under the Agreement, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority,
bureau or agency which consent the Servicer has not already
obtained in connection with the execution, delivery, performance,
validity or enforceability of this Agreement;
(iv) The execution, delivery and performance of this Agreement by the
Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of
Incorporation or Bylaws of the Servicer, or constitute a material
breach of any mortgage, indenture, contract or other agreement to
which the Servicer is a party or by which the Servicer may be
bound;
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any
of its properties or with respect to this Agreement or the
Certificates which, if adversely determined, would in the opinion
of the Servicer have a material adverse effect on the transactions
contemplated by this Agreement;
(vi) On the Closing Date, the Servicer will assign and transfer all of
its right, title and interest in the Trust Balance of each Mortgage
Loan to the Transferor;
(vii) The Servicer will take all necessary actions to enforce payment of
the Mortgage Loans by the Mortgagors thereon, including commencing
or joining as a party to proceedings; and
(viii) (a) Immediately prior to the assignment and transfer referenced in
(vi) above, the Servicer had good title to the Mortgage Loans, is
authorized to assign and transfer the Trust Balance of each
Mortgage Loan to the Transferor and (b) the Servicer and its
assignees, including the Transferor and the Trustee, have the right
to enforce payment of the Mortgage Loans against the Mortgagors on
such Mortgage Loans.
Upon discovery by the Transferor, the Servicer or the Trustee of a breach of
any of the foregoing representations and warranties in this Section 2.03
which materially and adversely affects the interests of the Investor
Certificateholders, the party discovering such breach shall give prompt
written notice to the other parties. Within sixty (60) days of its discovery
or receipt of notice of any such breach, the Servicer shall use all
reasonable efforts to cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Servicer
----------------------------------------------
Regarding the Mortgage Loans; Repurchase and
--------------------------------------------
Substitution Obligations.
------------------------
As indicated in Section 2.03(vi), on the Closing Date the Trust Balances
of the Mortgage Loans are being assigned and transferred by the Servicer to
the Transferor. In connection with such assignment and transfer the Servicer
is making the representations and warranties in this Section 2.04 to the
Transferor. As a condition of the purchase by the Transferor, the Transferor
has required that the Servicer make such representations and warranties
directly to the Trustee, the Certificate Insurer and the Investor
Certificateholders so that the Trustee may recover directly against the
Servicer on such representations and warranties rather than indirectly
through claims by the Transferor against the Servicer. Consequently, the
Servicer represents and warrants to the Trustee, the Certificate Insurer and
the Investor Certificateholders as of the Closing Date (unless otherwise
specified) and as to each Mortgage Loan that:
(i) The information set forth in the Mortgage Loan Schedule was true
and correct in all material respects at the date or dates
respecting which such information is furnished;
(ii) As of the Closing Date, each Mortgage is a valid lien on the
property securing the amount owed by the Mortgagor under the Loan
Agreement subject only to (a) the lien of current real property
taxes and assessments, (b) any related first, second or third
mortgage loan, which first, second or third mortgage loan does not
contain an obligatory future advance provision (except for certain
Mortgage Loans that are subordinate to mortgage loans held by MLCC,
in which case the senior lien amount is defined as the total credit
limit of the senior liens), (c) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally in the area in which the Mortgaged Property
is located or specifically reflected in the appraisal obtained in
connection with the origination of the related Mortgage Loan
obtained by the Transferor and (d) other matters to which like
properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by such
Mortgage;
(iii) Immediately prior to the transfer and assignment by the Servicer to
the Transferor referred to in Section 2.03(vi) hereof and the
transfer and assignment by the Transferor to the Trust Fund
referred to in Section 2.01, the Servicer and the Transferor each
had good title to each Mortgage Loan and was authorized to transfer
the Trust Balance of each Mortgage Loan to the Transferor and to
the Trust Fund, respectively;
(iv) As of the Cut-off Date, no payment of interest on or in respect of
any Mortgage Loan is more than one month past due;
(v) As of the Closing Date, to the best knowledge of the Servicer,
there is no mechanics' lien or claim for work, labor or material
affecting the premises subject to any Mortgage which is or may be a
lien prior to, or equal or coordinate with, the lien of such
Mortgage except those which are insured against by the title
insurance policy referred to in (x) below;
(vi) As of the Closing Date, to the best knowledge of the Servicer,
there is no delinquent tax or assessment lien against any Mortgaged
Property;
(vii) As of the Closing Date, to the best knowledge of the Servicer,
there is no valid offset, defense or counterclaim to any Loan
Agreement or Mortgage;
(viii) As of the Closing Date, to the best knowledge of the Servicer,
without independent investigation, the Mortgaged Property is free
of material damage, including damage by water, flood or similar
casualty, and is in good repair (excluding any damage to the
Mortgaged Property from the presence of hazardous wastes or
hazardous substances, as to which no representation or warranty is
made);
(ix) As of the origination of each Mortgage Loan and as of the Closing
Date, all requirements of federal, state or local laws, including,
without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity
and disclosure laws and the regulations promulgated thereunder
which are applicable to the origination and servicing of the
Mortgage Loans, have been complied with in all material respects
and the consummation of the transactions herein contemplated,
including, without limitation, the receipt of interest by Certifi-
cateholders, will not violate of such laws in any material respect;
(x) As to each Mortgage Loan With Title Insurance, a lender's title
insurance policy or binder, or other assurance of title customary
in the relevant jurisdiction therefor, was issued on or as of the
date of the recording of each such Mortgage, and each such policy
or binder is valid and remains in full force and effect;
(xi) As to each Dime Mortgage Loan, to the best of the Servicer's
knowledge, the Mortgaged Property had undergone satisfactory title
review in accordance with the originator's mortgage origination
policies and procedures and, where required by such policies and
procedures, the originator obtained a lender's title insurance
policy, acceptable to the originator, insuring the originator, its
successors and assigns, as to the lien priority of such Mortgage
Loan in the amount of the Credit Limit, and the Servicer has not,
by act or omission, done anything which would impair the coverage
of such title insurance policy;
(xii) As of the Closing Date, the Servicer has not received a notice of
default of any first mortgage loan related to a Mortgaged Property
which has not been cured by a party other than the Servicer;
(xiii) As to most of the MLCC Mortgage Loans, the definition of "Prime
Rate" for each day set forth in the Loan Agreements is the prime
rate published for that day in The Wall Street Journal; if a prime
rate range is published, the Loan Agreements provide either that
the highest rate of that range is to be used or that the midpoint
of any prime rate range published in The Wall Street Journal is to
be used; and for the other MLCC Mortgage Loans, the Loan Agreements
provide that the "Prime Rate" for any day is the highest prime rate
(or equivalent rate) quoted for that day by three specified banks;
(xiv) As of the Closing Date, no more than 14.16% of the MLCC Mortgage
Loans by principal balance have as Mortgagors employees or
independent contractors entitled to reduced Loan Rates;
(xv) At the date of the execution of the related Loan Agreement, the
Combined Loan-to-Value Ratio for each of the MLCC Mortgage Loan and
a sample pool of the Dime Mortgage Loans was not in excess of 85%,
except with respect to approximately 3.43% of the Mortgage Loans by
principal balance;
(xvi) Except with respect to approximately 11.00% of the MLCC Mortgage
Loans by principal balance, no Mortgage Loan was originated in a
program conducted by the Servicer in which the amount of
documentation in the underwriting process was limited in comparison
to the Servicer's normal documentation requirements;
(xvii) Approximately 89.32% of the MLCC Mortgage Loans by principal
balance were, as of their origination, the primary residences of
the related Mortgagors;
(xviii) Not more than 0.84% of the MLCC Mortgage Loans by principal balance
are secured by Mortgaged Properties located in the same zip code
area;
(xix) Not more than 5.02% of the MLCC Mortgage Loans by principal balance
will be secured by condominiums;
(xx) Not more than 0.05% of the MLCC Mortgage Loans by principal balance
will be secured by manufactured homes within the meaning of 42
United States Code, Section 5402(6);
(xxi) With respect to each Mortgage Loan originated by the Servicer, the
Servicer performed a full appraisal of the related Mortgaged
Property at the origination of such Mortgage Loan;
(xxii) No selection procedure believed by the Servicer to be adverse to
the interests of the Certificateholders was used in selecting the
Mortgage Loans for inclusion in the Trust Fund; and
(xxiii) Each Mortgagor is required to maintain for the corresponding
Mortgaged Property, pursuant to the corresponding Mortgage, a
hazard insurance policy.
(xxiv) At time of origination of each MLCC Mortgage Loan, MLCC verified
that: (a) the Mortgagor had procured a hazard insurance policy
which insures against loss by fire and by hazards included within
the term "extended coverage" for the Mortgaged Property in an
amount acceptable to MLCC; (b) such policy contained a standard
mortgagee's clause with an appropriate endorsement in favor of
MLCC; and (c) the coverage would extend for at least thirty (30)
days following the origination of the Mortgage Loan. In general,
such hazard insurance policy for each Mortgage Loan was in an
amount approximately equal to the lesser of: (y) the full insurable
value of the improvements located on the Mortgaged Property; or (z)
Credit Limit of such Mortgage Loan plus the outstanding balance of
any mortgage loan senior to such Mortgage Loan, but in no event was
such amount less than was necessary to prevent the Mortgagor from
becoming a coinsurer thereunder.
(xxv) With respect to each MLCC Mortgage Loan, if, at the time of
origination, the applicable Mortgaged Property was located in an
area designated by the Federal Emergency Management Agency as
having special flood hazards, MLCC required that the Mortgagor
obtain a flood insurance policy that met the then current
guidelines of the Federal Insurance Administration from an
insurance carrier that was acceptable to MLCC in an amount
representing coverage not less than the least of: (a) the Credit
Limit of such Mortgage Loan plus the outstanding balance of any
mortgage loan senior to such Mortgage Loan; (b) the full insurable
value of improvements located on the Mortgaged Property; or (c) the
maximum amount of insurance which is available under the federal
flood insurance laws.
The representations and warranties set forth in this Section 2.04 shall
survive the transfer and assignment of the Mortgage Loans to the Trustee.
Upon discovery by the Transferor, the Servicer or the Trustee of a breach of
any of the foregoing representations and warranties, without regard to any
limitation set forth in such representation or warranty concerning the
knowledge of the Servicer as to the facts stated therein, which materially
and adversely affects the interests of the Investor Certificateholders or the
Certificate Insurer in the related Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties. Any breach of a
representation and warranty contained in clauses (ii)(b) and (v) - (viii),
inclusive, shall not be deemed to materially and adversely affect the inter-
ests of Investor Certificateholders or the Certificate Insurer in the related
Mortgage Loan to the extent that such Mortgage Loan is not a delinquent or
defaulted Mortgage Loan. Within 60 days of its discovery or receipt of
notice of any such breach, the Servicer shall use all reasonable efforts to
cure such breach in all material respects. Unless at the expiration of such
60-day period, such breach has been cured in all material respects or
otherwise does not exist or continue to exist, the Servicer shall, not later
than the Business Day next preceding the Distribution Date in the month
following the related Collection Period in which any such cure period ex-
pired, either (i) repurchase such Defective Mortgage Loan (including any
property acquired in respect thereof and any insurance policy or Insurance
Proceeds with respect thereto) or (ii) remove such Mortgage Loan from the
Trust Fund and substitute in its place an Eligible Substitute Mortgage Loan
or Loans, in either case in the same manner and subject to the same
conditions as set forth in Section 2.02. Upon making any such repurchase or
removal, the Servicer shall be entitled to receive an instrument of assign-
ment of the repurchased or removed Mortgage Loan from the Trustee to the
extent set forth in Section 2.02. The obligation of the Servicer to
repurchase or remove any such Defective Mortgage Loan (or property acquired
in respect thereof) shall constitute the sole remedy against the Servicer
with respect to such breach of the foregoing representations or warranties
available to Investor Certificateholders, the Trustee on behalf of Certifi-
cateholders, or the Certificate Insurer, and such obligation on the part of
the Servicer shall survive any resignation or termination of the Servicer
pursuant to Section 7.04 or 8.01.
Section 2.05. Execution and Authentication
----------------------------
of Certificates.
---------------
The Trustee has caused to be executed, countersigned and delivered to or
upon the order of the Transferor (except that the Transferor Certificates
shall be in the name of the Transferor), concurrently with the transfer and
assignment to the Trustee of the Initial Mortgage Loans, Investor
Certificates in authorized denominations and the Transferor Certificates,
together evidencing the entire ownership of the Trust Fund.
Section 2.06. Retransfers of Mortgage Loans
-----------------------------
at Election of the Transferor.
-----------------------------
Subject to the conditions set forth below, the Transferor may, but shall
not be obligated to, require the retransfer of Mortgage Loans from the Trust
to the Transferor as of the end of a Collection Period (the "Retransfer
Date") during the Managed Amortization Period. On the fifth (5th) Business
Day (the "Retransfer Notice Date") prior to the Retransfer Date designated in
such notice, the Transferor shall give the Trustee a notice of the proposed
retransfer that contains a list of the Mortgage Loans to be retransferred.
Such retransfers of Mortgage Loans shall be permitted upon satisfaction of
the following conditions:
(i) No Rapid Amortization Event has occurred;
(ii) On the Retransfer Notice Date the Transferor Certificate Principal
Balance (after giving effect to the removal from the Trust of the
Mortgage Loans) is at least equal to the Minimum Transferor
Interest;
(iii) The retransfer of any Mortgage Loans on any Retransfer Date during
the Managed Amortization Period shall not, in the reasonable belief
of the Servicer, cause a Rapid Amortization Event to occur or an
event which with notice or lapse of time or both would constitute a
Rapid Amortization Event:
(iv) On or before the Retransfer Date, the Servicer shall have delivered
to the Trustee a revised Mortgage Loan Schedule, reflecting the
proposed retransfer and on the Retransfer Date the Servicer shall
have caused the portions of its records relating to the Mortgage
Loans to be clearly and unambiguously marked to show that the
Mortgage Loans retransferred to the Transferor are no longer owned
by the Trust;
(v) The Transferor shall represent and warrant that no selection
procedures reasonably believed by the Transferor to be adverse to
the interests of the Investor Certificateholders or the
Certificate Insurer were utilized in selecting the Mortgage Loans
to be removed from the Trust;
(vi) In connection with the first retransfer of Mortgage Loans pursuant
to this Section 2.06, each Rating Agency shall have received on or
prior to the Retransfer Notice Date notice of such proposed
retransfer of Mortgage Loans and, prior to the first Retransfer
Date, shall have notified the Transferor in writing that such
retransfer of Mortgage Loans would not result in a reduction or
withdrawal of its then current rating of the Investor Certificates
without taking into account the Certificate Insurance Policy;
(vii) The percentage of the Trust Balances of the Mortgage Loans
remaining in the Trust Fund (after giving effect to the proposed
retransfer) that are delinquent more than 30 days shall not exceed
by more than 0.50% the percentage (based on the average for the
three immediately preceding months) of the Trust Balances of the
Mortgage Loans in the Trust Fund (prior to giving effect to the
proposed retransfer) that are delinquent more than 30 days; and
(viii) The Transferor shall have delivered to the Trustee and the
Certificate Insurer an Officer's Certificate certifying that the
items set forth in subparagraphs (i) through (vii), inclusive, have
been performed or are true and correct, as the case may be. The
Trustee may conclusively rely on such Officer's Certificate, shall
have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying.
Upon receiving the requisite information from the Transferor or the Servicer,
the Servicer shall perform in a timely manner those acts required of it as
specified above. Upon satisfaction of the above conditions, on the
Retransfer Date the Trustee shall execute and deliver to the Servicer such
instruments of assignment and other documents prepared by the Servicer as
shall be reasonably necessary to retransfer such Mortgage Loan or Loans to
the Transferor. Any such retransfer of the Trust's right, title and interest
in and to Mortgage Loans shall be without recourse, representation or
warranty by the Trust to the Transferor.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section
2.06.
Section 2.07. Tax Treatment.
-------------
It is the intention of the Transferor, the Servicer and the Investor
Certificateholders (and Certificate Owners) that the Investor Certificates
will be indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income.
The Transferor, the Servicer, the Trustee and each Investor Certificateholder
(and Certificate Owner) by acceptance of its Investor Certificate (or, in the
case of a Certificate Owner, by virtue of such Certificate Owner's
acquisition of a beneficial interest therein) agree to treat the Investor
Certificates (or beneficial interest therein), for purposes of federal, state
and local income and franchise tax, as indebtedness secured by the Mortgage
Loans and to report the transactions contemplated by this Agreement on all
applicable tax returns in a manner consistent with such treatment. Each
Certificateholder agrees that it will cause any Certificate Owner acquiring
an interest in a Investor Certificate through it to comply with this
Agreement as to treatment as indebtedness for federal, state and local income
and franchise tax purposes and for purposes of any other tax imposed on or
measured by income. Furthermore, the Trustee shall treat the Trust as a
security device only, and shall not file tax returns or obtain an employer
identification number on behalf of the Trust.
Section 2.08. Covenants of the Transferor.
---------------------------
The Transferor shall not, without the prior written consent of the
Certificate Insurer and the Trustee (which consent of the Trustee shall be
given only upon the delivery to the Trustee by the Transferor of a letter
from each Rating Agency to the effect that any of the following will not
result in a downgrading or withdrawal of its rating of the Investor
Certificates), do any of the following:
(a) dissolve or liquidate, in whole or in part, or file a petition to
take advantage of any applicable insolvency, bankruptcy or reorganization
statute;
(b) merge or consolidate with any other corporation other than a
corporation wholly-owned, directly or indirectly, by the Indirect Parent,
having a certificate of incorporation containing provisions identical to the
covenants of this Section 2.08 and executing an agreement of assumption to
perform every obligation of the Transferor hereunder; or
(c) incur any indebtedness except in connection with, or relating to,
the issuance of obligations that are rated in the highest rating category of
each Rating Agency.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. MLCC to Act as Servicer.
-----------------------
(a) The Servicer shall service and administer the Mortgage Loans in
accordance with its customary servicing procedures which are generally
consistent with general industry practice. The Servicer shall have full power
and authority, acting alone, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered by the Trustee, to execute
and deliver, on behalf of itself, the Certificateholders and the Trustee or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged
Properties. The Trustee shall execute, at the Servicer's direction, any
special or limited powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
For purposes of this Article III, to the extent that the Servicer
determines that there are any conflicts or inconsistencies between its
servicing responsibilities set forth in this Agreement and its servicing
responsibilities as servicer of one or more Common Mortgage Loans set forth
in any of the Prior Trust Pooling and Servicing Agreements, the Servicer
shall use its best efforts to service the Mortgage Loans for purposes of this
Agreement in accordance with the most prudent and conservative procedures set
forth in either the Prior Trust Pooling and Servicing Agreements or in this
Agreement.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
(b) In connection with its servicing and administration of the Mortgage
Loans, the Servicer may consent to the placing or refinancing of a lien
senior to that of the Mortgage on the related Mortgaged Property. Any such
consent shall be consistent with the Servicer's then current practice
respecting comparable mortgage loans held in its own portfolio and may be
given only in the following situations:
(i) the Combined Loan-to-Value Ratio of the related Mortgage Loan
following such placing or refinancing of a senior lien does not
exceed the Combined Loan-to-Value Ratio at origination of such
Mortgage Loan; or
(ii) such placement or refinancing of an existing senior lien is in
connection with a new senior lien for which the principal balance
is limited to the sum of the unpaid principal balance of the
existing senior lien, closing costs (including all prepaid items),
points and other funds for the Mortgagor's use (which other funds
do not exceed 1% of the principal balance of the new senior lien).
(c) In connection with its servicing and administration of the Mortgage
Loans and during a Rapid Amortization Period that did not commence upon the
occurrence of a Rapid Amortization Event, the Servicer may increase the
Credit Limit specified in the related Loan Agreement by modifying the Loan
Agreement to provide for an additional amount. The Combined Loan-to-Value
Ratio of such Mortgage Loan immediately following such modification shall not
exceed 85%.
(d) In connection with its servicing and administration of the Mortgage
Loans and at the request of a Mortgagor or at its own initiative, the
Servicer may agree to modify the Loan Agreement relating to the Mortgage Loan
of such Mortgagor or waive compliance by the Mortgagor with any provision of
such Loan Agreement. Any such modification or waiver shall be consistent with
the Servicer's then current practice respecting comparable mortgage loans
held in its own portfolio and shall not:
(i) extend the scheduled maturity date of, modify the interest rate
payable under (except as required by law or as contemplated by the
Loan Agreement), or constitute a cancellation or discharge of the
outstanding Loan Balance under, such Mortgage Loan; or
(ii) materially and adversely affect the security afforded by the Mort-
gaged Property.
Any modification, waiver or change of the nature described in Section 3.02(a)
shall be deemed not to violate either Section 3.01(d)(i) or (ii).
(e) In the event that:
(i) the Servicer consents to (A) the placing or refinancing of a senior
lien that does not satisfy the requirements of Section 3.01(b), (B)
the modification of a Loan Agreement to provide for an increased
Credit Limit resulting in a Combined Loan-to-Value Ratio exceeding
the limitation specified in Section 3.01(c), or (C) the
modification or waiver of a Loan Agreement that does not satisfy
the requirements of Section 3.01(d), or
(ii) any loss is suffered by the Trust Fund in respect of any Mortgage
Loan as a result of a failure to file on or within 90 days
subsequent to the Closing Date of the UCC-1 financing statements
referred to in Section 2.01,
then the Servicer shall, not later than the Business Day preceding the
Distribution Date in the month following the Collection Period during which
such modification, change, loss or consent occurred, either repurchase the
applicable Mortgage Loan or Loans or substitute one or more Eligible
Substitute Mortgage Loans for the applicable Mortgage Loan or Loans.
Each repurchase or substitution shall be accomplished in the same manner
and subject to the same conditions as set forth in Section 2.02. Upon
completing any such repurchase or substitution, the Servicer shall be
entitled to receive an instrument of assignment or transfer from the Trustee
to the same extent as set forth in Section 2.02.
The Mortgage Loan Schedule shall be amended to reflect all deletions,
substitutions or additions of Mortgage Loans provided for in this Section
3.01.
(f) Notwithstanding anything to the contrary in Section 3.01(e), if the
short-term credit rating of the Indirect Parent is downgraded below A-1/P-1,
any repurchase or substitution of a Mortgage Loan pursuant to Section
3.01(e) shall occur on the second Business Day following the date on which
the applicable modification, waiver or changes agreed to by the Servicer are
made by it.
Section 3.02. Collection of Certain Mortgage Loan
-----------------------------------
Payments; Mortgage Loan Payment Record.
--------------------------------------
(a) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures as it follows with respect to mortgage
loans in its servicing portfolio comparable to the Mortgage Loans.
Consistent with, and without limiting the generality of, the foregoing, the
Servicer may, in its discretion, do the following:
(i) waive any late payment charge or any assumption fees or other fees
which may be collected in the ordinary course of servicing such
Mortgage Loan,
(ii) if the Mortgagor is in default or about to be in default because of
the Mortgagor's financial condition, arrange with a Mortgagor a
schedule for the payment of interest due and unpaid for a period of
not more than 180 days after the date of the initial uncured
delinquency thereon, and
(iii) waive compliance with or modify the terms of such Mortgage Loan as
appropriate to permit the Mortgagor to bring such Mortgage Loan
current and/or remedy any deviations from compliance with the
documentation for such Mortgage Loan.
provided, however, that as to clause (ii) above, the Servicer may in its
discretion arrange with a Mortgagor a schedule for the payment of interest
due and unpaid for a period that exceeds 180 days if such arrangement is
determined by the Servicer to be reasonable and consistent with its then
current practice respecting comparable mortgage loans held in its own port-
folio, including but not limited to its practices regarding mortgage loans
secured by mortgage properties located in federally designated disaster
areas.
Any waiver or modification of the sort described in this Section 3.02(a)
shall not (x) be considered in any determination pursuant to clause (i) of
the definition of Seriously Delinquent Mortgage Loan or (y) affect the amount
or timing of the Servicer's obligation to make Monthly Advances with respect
to any Mortgage Loan which Monthly Advances shall be made without regard to
any such waiver or modification.
(b) The Servicer shall establish and maintain for the Trust Fund a
Mortgage Loan Payment Record in which the following payments on and
collections in respect of the Mortgage Loans shall as promptly as practicable
be credited by the Servicer for the account of the Holders of the
Certificates:
(i) All Interest Collections and Principal Collections;
(ii) The Transfer Deposit Amount in respect of any Mortgage Loans
transferred, substituted or repurchased pursuant to Sections 2.02, 2.04,
3.01 and 3.06;
(iii) All Net Trust Liquidation Proceeds; and
(iv) All Trust Insurance Proceeds (including, for this purpose,
any amounts required to be credited by the Servicer pursuant to the last
sentence of Section 3.04(c)).
The foregoing requirements respecting credits to the Mortgage Loan Payment
Record are exclusive. Without limiting the generality of the preceding
sentence, the Servicer need not enter in the Mortgage Loan Payment Record
amounts representing fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the account of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments and similar items. If any such amounts are credited to the
Mortgage Loan Payment Record, they shall be thereafter debited to the
Mortgage Loan Payment Record by the Servicer in accordance with its normal
servicing procedures.
(c) Until the Business Day prior to each Distribution Date on which
amounts are required to be deposited in the Certificate Account pursuant to
Section 4.02, the Servicer may, so long as the Indirect Parent has a
short-term credit rating of A-1/P-1 or higher and a long-term unsecured debt
rating of at least A3 by Moody's, retain and commingle such amounts with its
own funds and shall be entitled to retain for its own account any investment
income thereon, and any such investment income shall not be subject to any
claim of the Trustee or Certificateholders. In the event that the Servicer
is not permitted to retain and commingle such amounts with its own funds, it
shall, all provisions in this Agreement to the contrary notwithstanding,
deposit such amounts in the Certificate Account created and maintained
pursuant to Section 4.02 not later than the second Business Day following
receipt, subject to withdrawal to the same extent as debits to the Mortgage
Loan Payment Record are permitted pursuant to Section 3.03.
(d) The Mortgage Loan Payment Record shall be made available for
inspection during normal business hours of the Servicer upon request of the
Trustee or the firm of independent accountants acting pursuant to Section
3.10.
Section 3.03. Permitted Debits to the Mortgage Loan
-------------------------------------
Payment Record.
--------------
The Servicer may, from time to time, make debits to the Mortgage Loan
Payment Record for the following purposes:
(i) to make deposits into the Certificate Account pursuant to Section
4.02;
(ii) to reimburse or indemnify the Servicer to the extent required or
permitted by Section 7.03;
(iii) to reimburse the Servicer for unreimbursed Monthly Advances
theretofore made in respect of any Mortgage Loan to the extent of
receipts by the Servicer of late payments of Trust Interest
Collections and Net Trust Liquidation Proceeds in respect of such
Mortgage Loan;
(iv) to reimburse the Servicer for any Nonrecoverable Advance;
(v) to pay the Servicer amounts received in respect of Defective
Mortgage Loans during the Collection Period in which such Defective
Mortgage Loans were replaced, substituted for or repurchased or
which were otherwise reflected in the calculation of the related
Transfer Deposit Amount;
(vi) to pay the Servicer out of related collections the servicing fee
pursuant to Section 3.08; and
(vii) to pay the Servicer the servicing fee pursuant to Section 3.08 with
respect to any Liquidated Mortgage Loan to the extent that Net
Liquidation Proceeds for such Mortgage Loan exceed the related Loan
Balance together with interest accrued thereon at the Net Loan Rate
from the last date to which such interest was distributed to
Certificateholders to the end of the related Collection Period pre-
ceding the Distribution Date for which the related Net Trust
Liquidation Proceeds are distributed to Certificateholders.
In addition, if the Servicer credits to the Mortgage Loan Payment Record
any amount not required to be credited thereto or any amount in respect of
payments by Mortgagors made by checks subsequently returned for insufficient
funds or other reason for non-payment it may at any time debit such amount in
the Mortgage Loan Payment Record, any provision herein to the contrary not-
withstanding. All amounts credited by the Servicer to the Mortgage Loan
Payment Record shall be held by the Servicer in trust for the
Certificateholders until such amounts are disbursed in accordance with
Section 4.02 or debited in accordance with this Section 3.03.
Section 3.04. Flood Insurance Policy, Property Protection
-------------------------------------------
Expenses.
--------
If a Mortgaged Property is in an area identified at the time of
origination in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and such flood insurance has been
made available), the Servicer will cause to be maintained flood insurance
coverage with a generally acceptable insurance carrier, in an amount
representing coverage not less than the least of (i) the Credit Limit of such
Mortgage Loan plus the outstanding balance of any mortgage loan senior to
such Mortgage Loan, (ii) the full insurable value of any improvements located
on the Mortgaged Property or (iii) the maximum amount required under the
federal flood insurance laws.
The Servicer shall incur, or refrain from incurring, Liquidation
Expenses and Property Protection Expenses with respect to Mortgage Loans in a
manner consistent with this Agreement and the Servicer's then current
practice respecting comparable mortgage loans in its own portfolio. Anything
contained herein to the contrary notwithstanding, the Servicer shall have the
right to assign, transfer, abandon or surrender any Mortgaged Property, if,
in the good faith judgment of the Servicer, continued retention of such
interest in such Mortgaged Property could result in Liquidation Expenses and
Property Protection Expenses with respect to such Mortgage Loan which may
exceed Liquidation Proceeds. Notwithstanding the immediately preceding
sentence, the Servicer shall be reimbursed for amounts expended for Property
Protection Expenses and Liquidation Expenses with respect to Mortgage Loans
in accordance with the terms of this Agreement.
Section 3.05. Mortgagor Transfers of
----------------------
Mortgaged Properties.
--------------------
In any case in which the Servicer becomes aware that a Mortgaged
Property has been conveyed by a Mortgagor (except to, or for the benefit of,
the Mortgagor, a co-Mortgagor or relative of the Mortgagor), the Servicer
will take reasonable steps to freeze such Mortgagor's Credit Limit at the
level of the current outstanding Loan Balance. Notwithstanding the
Servicer's efforts to freeze a Mortgagor's Credit Limit at the current
outstanding Loan Balance under such circumstances, the Loan Balance of such a
Mortgage Loan may include any charges which may accrue subsequent to the date
of such freeze.
The Servicer shall exercise or refrain from exercising its right to
undertake to collect the full amount due under the related Loan Agreement
consistent with the then current practice of the Servicer and without regard
to the inclusion of such Mortgage Loan in the Trust Fund and not in the
Servicer's portfolio. If it elects not to enforce its right to accelerate
and collect the full amount of such Mortgage Loan or if it is prevented from
doing so by applicable law, the Servicer is authorized to take or enter into
an assumption and modification agreement from or with the Person to whom such
Mortgaged Property has been or is about to be conveyed, pursuant to which
such Person becomes liable under the Loan Agreement. If deemed appropriate
by the Servicer after the Person to whom such Mortgaged Property has been or
is about to be conveyed enters into an assumption and modification agreement,
the original Mortgagor may be released from liability. The Servicer shall
notify the Trustee that any assumption and modification agreement has been
completed by delivering to the Trustee an Officer's Certificate certifying
that such agreement is in compliance with this Section 3.05 and by retaining
the original copy of such assumption and modification agreement. Any such
assumption and modification agreement shall, for all purposes, be considered
a part of the related Mortgage File to the same extent as all other documents
and instruments constituting a part thereof. No change in the terms of the
related Loan Agreement may be made by the Servicer in connection with any
such assumption to the extent that such change would not be permitted to be
made in respect of the original Loan Agreement pursuant to Section 3.01(d).
Any fee collected by the Servicer for entering into any such assumption will
be retained by the Servicer as additional servicing compensation.
Notwithstanding any provision of this Agreement to the contrary, the
Servicer shall not be deemed to be in default, breach or otherwise in
violation of its obligations hereunder by reason of any transfer of a
Mortgaged Property which occurs by operation of law or which the Servicer is
restricted by law from preventing.
Section 3.06. Realization Upon Defaulted
--------------------------
Mortgage Loans.
--------------
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come
into and continue in delinquency or default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.02. In connection with such foreclosure or other conversion, the
Servicer shall follow such practices (including, in the case of any
delinquency or default on a related prior mortgage loan, the advancing of
funds to correct such delinquency or default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in the general first
and second mortgage loan servicing activities of the Servicer. The Servicer
shall be reimbursed for Property Protection Expenses incurred by it out of
the related Liquidation Proceeds. Notwithstanding the foregoing, the
Servicer shall not be required (i) to expend its own funds in connection with
any foreclosure or towards the correction of any delinquency or default on a
related prior mortgage loan or restoration of any property unless, in the
reasonable judgment of the Servicer, such foreclosure, correction or resto-
ration will increase Net Trust Liquidation Proceeds, or (ii) to foreclose
upon or otherwise convert to ownership any Mortgaged Property which the
Servicer has determined may be materially contaminated with hazardous wastes
or hazardous substances.
In lieu of foreclosing on any delinquent or defaulted Mortgage Loan, the
Servicer, may, in its sole discretion, repurchase from the Trust Fund any
Mortgage Loan which is a Seriously Delinquent Mortgage Loan. Each repurchase
shall be subject to the same conditions as set forth in Section 2.02. The
repurchase price for any Seriously Delinquent Mortgage Loan shall be equal to
the sum of (i) the Trust Balance thereof as of the end of the Collection
Period next preceding the Distribution Date upon which the proceeds of such
repurchase are to be distributed and (ii) accrued and unpaid interest to the
end of such Collection Period computed on a daily basis at the Net Loan Rate
on the Trust Balance thereof. The repurchase price shall be included along
with the Transfer Deposit Amount deposited into the Certificate Account on
the Business Day next preceding the Distribution Date upon which the proceeds
of such repurchase are to be distributed. Upon making any such purchase the
Servicer shall be entitled to receive an instrument of assignment or transfer
from the Trustee to the same extent as set forth in Section 2.02.
In the event that title to any Mortgaged Property securing a Mortgage
Loan other than a Common Mortgage Loan is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to
the Servicer on behalf of the Trust Fund, to the Trustee on behalf of
Certificateholders or to the Trustee's nominee on behalf of
Certificateholders. The Servicer or an affiliate of the Servicer shall
maintain a blanket hazard insurance policy covering hazard losses on such
Mortgaged Property for the benefit of the Trust.
Section 3.07. Trustee to Cooperate.
--------------------
Upon the payment in full of the Trust Balance of any Mortgage Loan
during the Rapid Amortization Period or the distribution of all Net Trust
Liquidation Proceeds with respect to any Mortgage Loan, the Servicer will
notify the Trustee by a certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payment which are required to be credited to the Mortgage Loan Payment Record
pursuant to Section 3.02 have been so credited) of a Servicing Officer. Such
notification shall be made each month at the time that the Servicer delivers
the Servicing Certificate to the Trustee pursuant to Section 4.01. Upon any
such payment or distribution, the Servicer is authorized to execute, pursuant
to the authorization contained in Section 3.01, if the Loan Balance of such
Mortgage Loan equals zero, an instrument of satisfaction regarding the
related Mortgage, which instrument of satisfaction shall be recorded by the
Servicer if required by applicable law and be delivered to the Person
entitled thereto. No expenses incurred in connection with such instrument of
satisfaction shall be reimbursed from amounts at the time credited to the
Mortgage Loan Payment Record.
If the Trustee is holding the Mortgage Files, from time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the
Trustee shall, upon request of the Servicer and delivery to the Trustee of a
receipt, in the form of Exhibit G, signed by a Servicing Officer, release the
related Mortgage File to the Servicer and shall execute at the Servicer's
direction such documents as shall be necessary to the prosecution of any such
proceedings. Such trust receipt shall obligate the Servicer to return the
Mortgage File to the Trustee when the need therefor by the Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the receipt shall be released by the Trustee to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
delinquent or defaulted Mortgage Loan following any recordation of the
assignments of Mortgage in accordance with the provisions of this Agreement,
the Trustee shall, if so requested, assign such delinquent or defaulted
Mortgage Loan for the purpose of collection to the Servicer or to another
assignee for collection designated by the Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only), and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Mortgage Loan and the Servicer will deposit or credit any Net Trust
Liquidation Proceeds received with respect thereto in the Certificate Account
or the Mortgage Loan Payment Record, as the case may be. In the event that
all delinquent payments due under any such Mortgage Loan are paid by the
Mortgagor and any other defaults are cured then the Servicer shall cause the
assignee for collection to promptly reassign such Mortgage Loan to the
Trustee and return it to the place where the related Mortgage File was being
maintained.
Section 3.08. Servicing Compensation; Payment
-------------------------------
of Certain Expenses by Servicer.
-------------------------------
(a) The Servicer shall be entitled to withhold and pay to itself as
servicing compensation out of each payment received by it on account of
interest on a Mortgage Loan an amount equal to daily interest at the
Servicing Fee Rate on the Loan Balance from time to time outstanding during
the related Interest Period. Additional servicing compensation in the form
of assumption fees, annual fees, late payment charges or otherwise shall be
retained by the Servicer.
(b) The Servicer shall be required to pay all expenses incurred by it
in connection with its activities hereunder (including payment of Trustee
fees, and all other fees and expenses not expressly stated hereunder to be
for the account of the Certificateholders) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance.
---------------------------------
The Servicer will deliver to the Trustee on or before March 31 of each
year, beginning with the first March 31 that occurs at least six months after
the Cut-off Date, an Officers' Certificate stating, as to each signer
thereof, that (a) a review of the activities of the Servicer during the
preceding calendar year and of performance under this Agreement has been made
under such officer's supervision and (b) to the best of such officer's
knowledge, based on such review the Servicer has fulfilled all of its
obligations under this Agreement in all material respects throughout such
year, or, if there has been a default in the fulfillment of any such
obligation in any material respect, specifying each such default known to
such officer and the nature and status thereof. Copies of such statement
shall be provided to each Rating Agency and the Certificate Insurer. Copies
of such statement shall also be provided by the Servicer to any
Certificateholder upon request. If the Servicer shall fail to provide such
copies and the Trustee is aware that the Servicer has not so provided copies,
the Trustee shall provide such copies at the Servicer's expense if the
Trustee has received such statement.
Section 3.10. Annual Independent Public
-------------------------
Accountants' Servicing Report.
-----------------------------
On or before March 31 of each year, beginning with the first March 31
that occurs at least six months after the Cut-off Date, the Servicer at its
expense shall cause a nationally recognized firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a report to the Trustee to the effect that all
Mortgage Loans serviced by the Servicer under this Agreement were included in
the total population that was subject to selection for testing in such firm's
examination of certain documents and records and that such examination, which
has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (or such other audit or review
program applicable to the Servicer), has disclosed no items of material
noncompliance with the provisions of the Uniform Single Attestation Program
for Mortgage Bankers (or such other program), except for such items of
noncompliance as shall be set forth in such report. Copies of such report
shall be provided to the Rating Agencies, the Certificate Insurer, and, upon
request, to the Certificateholders, by the Servicer, or by the Trustee at the
Servicer's expense if the Trustee has received such report and the Servicer
shall fail to provide such copies and the Trustee is aware that the Servicer
has not so provided copies.
Section 3.11. Access to Certain Documentation
-------------------------------
and Information Regarding the
-----------------------------
Mortgage Loans.
--------------
(a) The Servicer shall provide to the Trustee, the Certificate Insurer,
Investor Certificateholders which are federally insured savings and loan
associations, the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation and the supervisory agents and examiners of such office and such
corporation, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the Office of Thrift Supervision, such
access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer. Nothing in this
Section 3.11 shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in
this Section 3.11 as a result of such obligation shall not constitute a
breach of this Section 3.11.
(b) The Servicer shall supply information, in such form as the Trustee
shall reasonably request, to the Trustee on or before the start of the third
Business Day preceding each Distribution Date, as is required in the
Trustee's reasonable judgment to enable the Trustee to make required
distributions and to furnish the required reports to Certificateholders and
to make any draws under the Certificate Insurance Policy.
Section 3.12. Maintenance of Certain Servicing Policies.
-----------------------------------------
The Servicer shall during the term of its service as servicer maintain
in force (i) a policy or policies of insurance covering errors and omissions
in the performance of its obligations as servicer hereunder and (ii) a
fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and bond shall, together, comply with the requirements
from time to time of the Federal National Mortgage Association for persons
performing servicing for mortgage loans purchased by such association;
provided, however, that if the cost of the premiums for such policy or
policies and bond in any year is greater than an amount equal to the sum of
(i) the premiums paid by the Servicer for such policy or policies and bond in
the year during which this Agreement was executed and (ii) the product of (x)
the number of full years from the date of this Agreement to such future date,
(y) 0.15 and (z) the premium amount described in clause (i) above, the policy
or policies and bond maintained by the Servicer may provide for coverage
which does not satisfy the requirements of the Federal National Mortgage
Association so long as the premiums paid by the Servicer therefor approximate
such sum.
Section 3.13. Reports to the Securities and Exchange Commission.
-------------------------------------- ----------
The Servicer shall, on behalf of the Trust, cause to be filed with the
Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Securities and Exchange Commission
thereunder.
Section 3.14. Information Required by the Internal Revenue Service
----------------------------------------------------
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
- ----------------------------------------------------------------------------
In addition to the requirements set forth in Section 3.01, the Servicer
shall prepare and deliver, or cause to be prepared and delivered, to the
Trustee for the Trustee's signature, and shall file or cause to be filed, all
federal and state information reports when and as required by all applicable
state and federal income tax laws, including, without limitation, reports
required by Section 6050J of the Code.
Section 3.15. Tax Returns.
-----------
In accordance with Section 2.07 hereof, the Trustee shall not file any
federal, state or local income tax return for the Trust or apply for a
taxpayer identification number on behalf of the Trust. The Transferor shall
treat the Mortgage Loans as its property for all federal, state and local
income and franchise tax purposes and shall report all income earned thereon
(including amounts payable as fees to the Servicer) as its income for federal
income tax purposes. In the event the Trust shall be required pursuant to an
audit or administrative proceeding or change in applicable regulations to
file federal, state, local income or franchise tax returns, the Servicer
shall prepare, or cause to be prepared, any tax returns required to filed by
the Trust; the Servicer, as agent on behalf of the Trust, shall promptly sign
such returns and such returns shall be filed by the Servicer. The Servicer
shall also prepare or shall cause to be prepared all tax information required
by and to be distributed to Certificateholders. In no event shall the
Trustee or the Servicer be liable for any liabilities, costs or expenses of
the Trust, the Certificateholders or the Certificate Owners arising under any
tax law, including without limitation federal, state or local income,
franchise or excise taxes or any other tax imposed on or measured by income
(or any interest or penalty with respect thereto or arising from a failure to
comply therewith).
Section 3.16. Further Assurances.
------------------
The Servicer shall provide any certifications and other information
reasonably requested by the Trustee.
ARTICLE IV
Servicing Certificate; Certificate Account Deposit
Section 4.01. Servicing Certificate.
---------------------
With respect to each Distribution Date, not later than the second
Business Day prior to each Distribution Date, the Servicer shall deliver to
the Trustee, the Certificate Insurer and to the Rating Agencies a Servicing
Certificate stating the related Collection Period, Distribution Date, the
series number of the Certificates, the date of this Agreement, and including,
but not limited to, the following information:
(i) the aggregate amount of Trust Interest Collections for such
Collection Period (net of any amount included therein which has
been retained by the Servicer prior to such Distribution Date in
reimbursement for any portion of a Monthly Advance made in respect
of the related Mortgage Loan as permitted by clause (iii) of
Section 3.03);
(ii) the aggregate amount of Trust Principal Collections for such
Collection Period;
(iii) the aggregate of any Trust Insurance Proceeds received during the
related Collection Period (including, for this purpose, any amounts
required to be credited by the Servicer pursuant to the last
sentence of Section 3.04(b));
(iv) the aggregate of any Net Trust Liquidation Proceeds received during
the related Collection Period;
(v) the amount of any Transfer Deposit Amount paid by the Transferor or
Servicer pursuant to Section 2.02, 2.04, 3.01 or 3.06;
(vi) the Monthly Advance for such Distribution Date;
(vii) the Available Distribution Amount for such Distribution Date;
(viii) any Monthly Advance Reimbursement Amount for such Distribution
Date;
(ix) the Floating Allocation Percentage and the Fixed Allocation
Percentage for such Distribution Date;
(x) the Certificate Interest Collections for such Distribution
Date;
(xi) the Certificate Formula Interest for the related Accrual
Period, together with a specification as to the Certificate
Rate applicable to such Distribution Date and whether it is
derived from One-Month LIBOR or the Alternate Certificate
Rate;
(xii) the Unpaid Certificate Interest Shortfall, if any;
(xiii) the portion of the Unpaid Certificate Interest Shortfall, if
any, to be distributed on such Distribution Date;
(xiv) the amount of Unpaid Certificate Interest Shortfall, if any,
to remain after the distribution on such Distribution Date;
(xv) the Transferor Interest Collections and Transferor Principal
Collections for such Distribution Date;
(xvi) the Accelerated Principal Distribution Amount for such
Distribution Date;
(xvii) the Scheduled Principal Collections Payment, separately
stating the components thereof;
(xviii) the aggregate of the Trust Liquidation Loss Amounts and the
Investor Loss Amount for such Distribution Date;
(xix) the aggregate amount, if any, of Investor Loss Reduction
Amounts for previous Distribution Dates that have not been
previously reimbursed to Investor Certificateholders pursuant
to Section 5.01(a)(iv);
(xx) the Pool Balance of the Mortgage Loans, as of the end of the
preceding Collection Period;
(xxi) the Invested Amount as of the end of the preceding Collection
Period;
(xxii) the Required Amount for such Distribution Date;
(xxiii) the Transferor Subordinated Amount for such Distribution Date;
(xxiv) the Overcollateralization Amount, if any, after giving effect
to the distribution to be made on such Distribution Date;
(xxv) the Certificate Principal Balance and Pool Factor after giving
effect to the distribution on such Distribution Date;
(xxvi) the Transferor Certificate Principal Balance after giving
effect to the distribution on such Distribution Date;
(xxvii) the aggregate amount of Additional Balances created during the
previous Collection Period;
(xxviii) whether a Rapid Amortization Event has occurred since the
prior Distribution Date, specifying each such Rapid
Amortization Event if one has occurred;
(xxix) the Insured Amount, the Preference Amount and the amounts
described in clauses (a) and (b), or (y), as the case may be,
of the definition of the Insured Amount, if any, for such
Distribution Date;
(xxx) the Reimbursement Amount, if any, for such Distribution Date;
(xxxi) the amount to be distributed to the Transferor pursuant to Section
5.01(a)(vii);
(xxxii) the number and aggregate Trust Balances of Mortgage Loans
delinquent (a) 31 to 60 days, (b) 61 to 90 days and (c) 91 days or
more, respectively, as of the end of the related Collection Period;
(xxxiii) the number and aggregate Trust Balances of all Mortgage Loans
in foreclosure as of the end of the related Collection Period;
(xxxiv) the book value (within the meaning of 12 C.F.R. Section571.13
or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xxxv) the aggregate of the Trust Balances as of the end of the
related Collection Period of the Mortgage Loans which became
Liquidated Mortgage Loans during such Collection Period;
(xxxvi) the cumulative amount of Trust Liquidation Loss Amounts for
such Distribution Date and all prior Distribution Dates; and
(xxxvii) the number and aggregate Trust Balances of Mortgage Loans to
be retransferred from the Trust Fund on the related Retransfer
Date and the cumulative number and aggregate Trust Balance of
all Mortgage Loans that have been retransferred on all prior
Retransfer Dates.
Section 4.02. Certificate Account.
-------------------
The Servicer shall establish and maintain with the Trustee the
Certificate Account as a single, separate account for the benefit of the
Holders of Certificates. The Servicer shall remit to the Trustee by wire
transfer of immediately available funds for deposit into the Certificate
Account, not later than 1:00 p.m. New York City time on the Business Day
prior to each Distribution Date, an amount equal to the aggregate of the
amounts specified in clauses (i) - (v), inclusive, of the Servicing
Certificate furnished to the Trustee pursuant to Section 4.01. The Servicer
shall include with such deposit any Monthly Advance for such Distribution
Date as specified in the Servicing Certificate.
On each Distribution Date upon which there is a Monthly Advance
Reimbursement Amount, upon the written request of the Servicer, the Trustee
shall withdraw from the Certificate Account for the account of the Servicer
an amount equal to the Monthly Advance Reimbursement Amount, but not in
excess of (i) the Available Distribution Amount (without taking into account
any portion thereof representing payments of Trust Interest Collections and
Trust Principal Collections allocable to the Transferor and payments of any
Insured Amounts) minus (ii) the sum of the Investor Certificate Distribution
Amount, the Premium Amount and the Reimbursement Amount.
At the direction of the Servicer, the Trustee shall invest any funds in
the Certificate Account in Permitted Investments specified in such direction
(including (but not limited to) obligations of the Trustee or any of its
affiliates, if such obligations otherwise qualify as Permitted Investments).
Such direction shall be in writing, signed by a Servicing Officer, and shall
designate specific investments and shall certify that the specified
investments constitute Permitted Investments. Each investment shall mature
not later than the Business Day next preceding the Distribution Date
following the date of such investment (unless the obligor in respect of such
investment is the Trustee, in which case such investment may mature on such
Distribution Date) and shall not be sold or disposed of prior to its
maturity. All income and gain realized from any such investment shall be for
the benefit of the Servicer. The Trustee shall remit all such income and
gain to the Servicer on each Distribution Date. The amount of any losses
incurred in respect of any such investments shall be deposited in the
Certificate Account by the Servicer out of its own funds immediately as
realized. The Trustee shall not be liable for any loss incurred in connection
with any such investment.
Section 4.03. Payments Under Support Agreement.
--------------------------------
In the event that the Servicer does not, on or before 1:00 P.M. New York
City time on the Business Day preceding a Distribution Date, remit to the
Trustee for deposit in the Certificate Account the respective amounts
required to be remitted by it pursuant to Section 4.02, the Trustee, no later
than 2:00 P.M. on such day, shall make a written demand pursuant to the
Support Agreement upon the Indirect Parent for any and all amounts required
to be deposited in the Certificate Account by it pursuant thereto.
To the extent of any payment by the Indirect Parent under the Support
Agreement, the Indirect Parent shall have all rights of the Servicer under
this Agreement to be reimbursed for such payment made by the Indirect Parent,
including, without limitation, rights in and to any Mortgage Loan or payment
with respect to any Mortgage Loan or the proceeds thereof. In addition, the
Indirect Parent shall be subrogated to the rights of Investor
Certificateholders to the extent of payments under the Support Agreement.
Each of the Transferor, the Servicer and the Trustee agrees to such
subrogation and, further, agrees to execute such instruments and to take such
actions as, in the sole judgment of the Indirect Parent, as evidenced in
writing to the Transferor, the Servicer and the Trustee, are necessary to
evidence such subrogation.
Section 4.04. The Certificate Insurance Policy.
--------------------------------
(a) If the statement delivered to the Trustee pursuant to Section 4.01
indicates that there will be the payment of an Insured Amount for the related
Distribution Date, the Trustee shall complete the Notice for Payment (as
defined and included in the form specified by the Certificate Insurance
Policy). The Trustee shall submit such notice to the Certificate Insurer no
later than 12:00 noon New York City time on the Business Day preceding such
Distribution Date as a claim for an Insured Payment.
(b) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Investor Certificateholders, the Trustee shall deposit such Insured
Payments in the Certificate Account and shall distribute such Insured
Payments, or the proceeds thereof, in accordance with Section 5.01(a);
provided that Insured Payments shall be applied and distributed solely to
Holders of the Investor Certificates and any Preference Amount shall be
distributed solely to the Holders of the Investor Certificates.
(c) The Trustee shall (i) receive as attorney-in-fact of each Holder of
Investor Certificates receiving any Insured Payment from the Certificate
Insurer and (ii) disburse the same to the Holders of such Certificates as set
forth in Section 5.01(d). Insured Payments disbursed by the Trustee from
proceeds of a Certificate Insurance Policy shall not be considered payment by
the Trust Fund with respect to such Certificates, and the Certificate Insurer
shall be entitled to receive the related Reimbursement Amount pursuant to
Section 5.01(a)(v). The Trustee hereby agrees on behalf of each Investor
Certificateholder and the Trust Fund for the benefit of the Certificate
Insurer that it recognizes that to the extent the Certificate Insurer makes
Insured Payments, either directly or indirectly (as by paying through the
Trustee), to the Holders of such Certificates, the Certificate Insurer will
be entitled to receive the related Reimbursement Amount pursuant to Section
5.01(a)(v).
(d) Subject only to the priority of payment provisions of this
Agreement, each of the Transferor, the Servicer and the Trustee acknowledges
that, to the extent of any payment made by the Certificate Insurer pursuant
to the Certificate Insurance Policy, the Certificate Insurer is to be fully
subrogated to the extent of such payment and any additional interest due on
any late payment, to the rights of the Holders of the Investor Certificates
to any moneys paid or payable in respect of the Investor Certificates under
this Agreement or otherwise. Each of the Transferor, the Servicer and the
Trustee agrees to such subrogation and, further, agrees to execute such
instruments and to take such actions as, in the sole judgment of the
Certificate Insurer, as evidenced in writing to the Transferor, the Servicer
and the Trustee, are necessary to evidence such subrogation and, subject to
the priority of payment provisions of this Agreement, to perfect the rights
of the Certificate Insurer to receive any moneys paid or payable in respect
of the Investor Certificates under this Agreement or otherwise.
ARTICLE V
Payments and Statements to
Certificateholders
Section 5.01. Distributions.
-------------
(a) Distribution of Certificate Interest Collections. On each
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Distribution Date, the Trustee shall, based upon information set forth in the
Servicing Certificate, distribute out of the Certificate Account, to the
extent deposited, to the extent of Certificate Interest Collections collected
during the related Collection Period and any Monthly Advance for such
Distribution Date (including any amount paid by the Indirect Parent under the
Support Agreement pursuant to Section 4.03), in the following amounts and
order of priority to the following Persons:
(i) to the Certificate Insurer, the Premium Amount;
(ii) to the Investor Certificateholders as interest, the
Certificate Formula Interest and then any Unpaid Certificate
Interest Shortfall;
(iii) to the Investor Certificateholders as principal in reduction
of the Certificate Principal Balance, any Investor Loss Amount
for such Distribution Date;
(iv) to the Investor Certificateholders as principal in reduction
of the Certificate Principal Balance, the aggregate amount of
any Investor Loss Reduction Amounts for previous Distribution
Dates that have not been previously reimbursed to Investor
Certificateholders pursuant to this clause (iv);
(v) to the Certificate Insurer, any Reimbursement Amount;
(vi) to the Investor Certificateholders as principal in reduction
of the Certificate Principal Balance, any Accelerated
Principal Distribution Amount; and
(vii) to the Transferor, any remaining amount.
provided, however, that, notwithstanding the above prioritization of the
distribution of the Certificate Interest Collections on deposit in the
Certificate Account, on each Distribution Date any Insured Payment received
by the Trustee and deposited in the Certificate Account shall be applied by
the Trustee solely for the benefit of the Investor Certificateholders.
(b) Distribution of Trust Principal Collections. Subject to Section
-------------------------------------------
11.02(b) and except on the Stated Maturity Date, on each Distribution Date,
the Trustee shall distribute out of the Certificate Account to Investor
Certificateholders the Trust Principal Collections up to the Scheduled
Principal Collections Payment (but not in excess of the Certificate Principal
Balance). On the Stated Maturity Date, the Trustee shall distribute Trust
Principal Collections to the Investor Certificateholders up to the
Certificate Principal Balance.
(c) Application of Transferor Subordinated Amount. (i) If, after
---------------------------------------------
applying Certificate Interest Collections as provided in Section 5.01(a)
above, any amounts payable pursuant to clauses (i) through (iv), inclusive,
of Section 5.01(a) remain unpaid, the Trustee shall, based on information set
forth in the Servicing Certificate, apply Transferor Interest Collections and
Transferor Principal Collections (but only up to the Transferor Subordinated
Amount prior to such application) to make such payments and the Transferor
Subordinated Amount shall be reduced in accordance with clause (i)(a) of the
definition thereof to the extent of such application of funds.
(ii) If Transferor Interest Collections and Transferor Principal
Collections as so applied in the preceding paragraph are insufficient to
cover the amounts payable pursuant to clauses (iii) and (iv) of Section
5.01(a) on such Distribution Date, then the remaining Investor Loss Amount
(but only to the extent of the remaining Transferor Subordinated Amount on
such Distribution Date) shall be reallocated to the Transferor (i.e., in
accordance with the definition of Aggregate Investor Loss Amount) and the
Transferor Subordinated Amount shall be reduced in accordance with clause
(i)(b) of the definition thereof to the extent of such reallocation to the
Transferor.
(d) Distribution of the Insured Payment. With respect to any
-----------------------------------
Distribution Date, to the extent that:
(i) the amount on deposit in the Certificate Account on such
Distribution Date and available to be distributed pursuant to
Section 5.01(a), together with the amount of Transferor Interest
Collections and Transferor Principal Collections to be applied
pursuant to Section 5.01(c), are less than the amount payable
pursuant to Section 5.01(a)(ii) on such Distribution Date, plus
(ii) after the Transferor Subordinated Amount has been reduced to zero,
the amount, if any, by which the Certificate Principal Balance as
of such Distribution Date (after giving effect to all other amounts
distributable and allocable to principal on the Investor
Certificates on such Distribution Date) exceeds the Invested Amount
as of such Distribution Date (after giving effect to all other
amounts distributable and allocable to principal on the Investor
Certificates on such Distribution Date), plus
(iii) any portion of the Certificate Principal Balance remains
outstanding on the Stated Maturity Date (after giving effect to all
other amounts distributable and allocable to principal on the
Investor Certificates on such Distribution Date),
the Trustee will make such payments (the "Deficiency Amount") to Investor
Certificateholders from the Insured Payment pursuant to Section 4.04.
Notwithstanding the foregoing, the Certificate Insurance Policy (i)
shall not cover any such Deficiency Amount on any Dissolution Distribution
Date and (ii) shall not be available to cover any insufficiency in the
distributions required to be made to Investor Certificateholders pursuant to
Section 11.02(b).
The aggregate amount of principal distributed to Investor
Certificateholders under Article V of this Agreement shall not exceed the
Original Certificate Principal Balance.
(e) Method of Distribution. On each Distribution Date, the Trustee
----------------------
shall distribute to each Investor Certificateholder of record on the related
Record Date (other than as provided in Section 10.01 respecting the final
distribution) by check mailed to such Certificateholder at the address
appearing in the Certificate Register, or upon written request of a Holder of
a Investor Certificate received by the Trustee at least five Business Days
prior to the related Record Date, by wire transfer (but only if such Certifi-
cateholder is the Depository or such Certificateholder owns of record one or
more Investor Certificates which have principal denominations aggregating at
least $5,000,000), or by such other means of payment as such Certifi-
cateholder and the Trustee shall agree. Distributions among Investor
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Investor Certificates held by such Investor
Certificateholders.
(f) Final Distribution. Except as otherwise provided in Section
------------------
10.01 and Section 11.02, when the Trustee receives written notice from the
Servicer that the final distribution with respect to the Investor
Certificates shall be made on the next Distribution Date, the Trustee shall,
no later than three (3) days after the related Determination Date, to the
extent such written notice was received, mail to each Holder on such date of
the Investor Certificates a notice to the effect that: (i) the Trustee
expects that the final distribution with respect to the Investor Certificates
will be made on such Distribution Date but only upon presentation and
surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on the Investor
Certificates from and after the end of the related Interest Accrual Period.
In the event that Certificateholders do not surrender their Certificates for
final cancellation, the Trustee shall follow procedures comparable to the
arrangements set forth in Section 10.01(e).
(g) Distributions on Book-Entry Certificates. Each distribution
----------------------------------------
with respect to a Book-Entry Certificate shall be paid to the Depository,
which shall credit the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution
to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible
for disbursing funds to the Certificate Owners that it represents. All such
credits and disbursements with respect to a Book-Entry Certificate are to be
made by the Depository and the Depository Participants in accordance with the
provisions of the Investor Certificates. None of the Trustee, the Transferor
nor the Servicer shall have any responsibility therefore except as otherwise
provided by applicable law.
(h) Distributions to Holders of Transferor Certificates. On each
---------------------------------------------------
Distribution Date, the Trustee shall, based upon the information set forth in
the Servicing Certificate for such Distribution Date, distribute to the
Transferor the Transferor Interest Collections and Transferor Principal
Collections that are not required to be distributed to the Investor
Certificateholders pursuant to Section 5.01(c) on such Distribution Date;
provided that collections allocable to the Transferor Certificates will be
distributed to the Transferor only to the extent that such distribution will
not reduce the amount of the Transferor Certificate Principal Balance as of
such Distribution Date below the Minimum Transferor Interest. Amounts not
distributed to the Transferor because of such limitations will be retained in
the Certificate Account until the Transferor Certificate Principal Balance
exceeds the Minimum Transferor Interest, at which time such excess shall be
released to the Transferor. If any such amounts are still retained in the
Certificate Account upon the commencement of the Rapid Amortization Period,
such amounts will be paid to the Investor Certificateholders as a reduction
of the Investor Certificate Principal Balance.
Section 5.02. Certain Calculations by the Trustee.
-----------------------------------
On the LIBOR Business Day next preceding each Distribution Date the
Trustee shall determine One-Month LIBOR for the next Accrual Period. The
Trustee shall promptly advise the Servicer of such determination by tested
telex or telefax to the address provided herein.
The determination of One-Month LIBOR by the Trustee for each Accrual
Period (excluding the first Accrual Period) shall (in the absence of manifest
error) be final, conclusive and binding upon the Certificateholders, the
Servicer and any of their respective partners, beneficiaries, agents, offi-
cers, directors, employees or successors or assigns.
Section 5.03. Statements to Certificateholders.
--------------------------------
Not later than the second Business Day prior to each Distribution Date,
the Servicer shall deliver to the Trustee for mailing to each Holder of a
Investor Certificate and the Certificate Insurer a statement with respect to
such Distribution Date setting forth:
(i) the Investor Certificate Distribution Amount;
(ii) the amount of interest included in such distribution and the
related Certificate Rate;
(iii) the amount, if any, of any Unpaid Certificate Interest
Shortfall in such distribution;
(iv) the amount, if any, of the remaining Unpaid Certificate
Interest Shortfall after giving effect to such distribution;
(v) the amount, if any, of principal in such distribution,
separately stating the components thereof;
(vi) the amount, if any, of the reimbursement of previous
Investor Loss Reduction Amounts in such distribution;
(vii) the amount, if any, of the aggregate of unreimbursed
Investor Loss Reduction Amounts after giving effect to such
distribution;
(viii) the Investor Floating Allocation Percentage for such
Distribution Date;
(ix) the Invested Amount, the Certificate Principal Balance and
the Pool Factor, each after giving effect to such distribution;
(x) the Required Amount for such Distribution Date,
(xi) the Transferor Subordinated Amount after giving effect to
such distribution,
(xii) the Pool Balance of the Mortgage Loans as of the end of the
preceding Collection Period;
(xiii) the Overcollateralization Amount, if any;
(xiv) the Servicing Fee for such Distribution Date;
(xv) the amount of any Monthly Advance by the Servicer;
(xvi) the number and aggregate Trust Balances of Mortgage Loans
delinquent (a) 31 to 60 days, (b) 61 to 90 days and (c) 91 days or more,
respectively, as of the end of the preceding Collection Period;
(xvii) the number and aggregate Trust Balances of the Mortgage
Loans in foreclosure as of the end of the preceding Collection Period;
(xviii) the book value (within the meaning of 12 C.F.R.
Section 571.13 or comparable provision) of any real estate acquired
through foreclosure or grant of a deed in lieu of foreclosure; and
(xix) the amount of any Insured Payments by the Certificate
Insurer;
(xx) the number and aggregate Trust Balance of Mortgage Loans to
be retransferred from the Trust Fund on the related Retransfer Date, and
the cumulative number and aggregate Trust Balance of all Mortgage Loans
that have been retransferred on all prior Retransfer Dates.
In the case of information furnished pursuant to clauses (ii)
through (vii) above, the amounts shall be expressed as a dollar amount per
Investor Certificate with a $1,000 denomination.
Within 90 days after the end of each calendar year, the Servicer shall
deliver to the Trustee for mailing to each Person who at any time during the
calendar year was the Holder of a Investor Certificate and to the Certificate
Insurer a statement containing the information set forth in clauses (ii) and
(v) above aggregated for such calendar year or, in the case of each Person
who was a Certificateholder for a portion of such calendar year, setting
forth such information for each month thereof. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.
The Trustee shall prepare or cause to be prepared (based on information
provided to it by the Servicer and in a manner consistent with the treatment
of the Investor Certificates as indebtedness) Internal Revenue Service Form
1099 (or any successor form) and any other tax forms required to be filed or
furnished to Certificateholders in respect of distributions by the Trustee on
the Investor Certificates and shall file and distribute such forms as
required by law.
Section 5.04. Rights of Certificateholders.
----------------------------
The Investor Certificates shall represent fractional undivided interests
in the Trust Fund, including the benefits of the Certificate Account and the
right to receive Certificate Interest Collections, Principal Collections and
other amounts at the times and in the amounts specified in this Agreement;
the Transferor Certificates shall represent the remaining interest in the
Trust Fund.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates shall be
----------------
substantially in the forms set forth in Exhibits A and C, and the Transferor
Certificates shall be substantially in the forms set forth in Exhibits B and
D, and shall, on original issue, be executed, countersigned and delivered by
the Trustee to or upon the order of the Transferor concurrently with the
transfer and assignment to the Trustee of the Trust Fund. The Investor
Certificates shall be initially evidenced by one or more certificates
representing the entire Original Certificate Principal Balance. Beneficial
ownership of the Investor Certificates that are Book-Entry Certificates may
be held in minimum dollar denominations of $25,000 and integral multiples of
$1,000 in excess thereof (except as provided in the following paragraph).
The sum of the denominations of all outstanding Investor Certificates shall
equal the Original Certificate Principal Balance. The Transferor
Certificates shall be issuable as one or more certificates representing the
entire interest in the assets of the trust other than that represented by the
Investor Certificates and shall initially be issued to the Transferor.
Beneficial ownership of the Investor Certificates that are Book-Entry
Certificates may be held in minimum dollar denominations of less than $25,000
and integral multiples of $1,000 in excess thereof in the case of Persons who
(i) are sophisticated, institutional investors having knowledge and
experience in financial and business matters, (ii) are purchasing on behalf
of, and serving as investment advisor or manager for, one or more Persons who
are sophisticated, institutional investors having knowledge and experience in
financial and business matters, (iii) are purchasing Certificates which have,
in the aggregate, an Original Certificate Principal Balance in excess of
$25,000, and (iv) have requested that Investor Certificates be issued in such
lower minimum denominations and registered in the name of Persons meeting the
criteria in clause (ii).
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificate.
No Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless such Certificate shall have been manually
countersigned by the Trustee substantially in the form provided for herein,
and such countersignature upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
countersignature. Subject to Section 6.02(c), the Investor Certificates shall
be Book-Entry Certificates. The Transferor Certificates shall not be
Book-Entry Certificates.
Section 6.02. Registration of Transfer and
----------------------------
Exchange of Certificates; Registrar.
-----------------------------------
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for
the registration of Certificates and of Transfers and exchanges of Certifi-
cates as herein provided. The Trustee shall initially serve as Certificate
Registrar for the purpose of registering Investor Certificates and transfers
and exchanges of Investor Certificates as herein provided.
Upon surrender for registration of Transfer of any Investor Certificate
at any office or agency of the Trustee maintained for such purpose pursuant
to the foregoing paragraph, the Trustee shall execute, countersign and de-
liver, in the name of the designated Transferee or Transferees, one or more
new Investor Certificates of the same aggregate Percentage Interest.
At the option of the Investor Certificateholders, Investor Certificates
may be exchanged for other Investor Certificates of authorized denominations
of the same aggregate Percentage Interest, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any
Investor Certificates are so surrendered for exchange the Trustee shall
execute, countersign and deliver the Investor Certificates which the Cer-
tificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for Transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any Transfer or exchange of Investor
Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any Transfer or exchange of Investor Certificates.
All Certificates surrendered for Transfer and exchange shall be
cancelled by the Trustee.
(b) Except as provided in Section 6.02(d), the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Investor Certificates may
not be transferred by the Trustee except to another Depository; (ii) the
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Investor
Certificates; (iii) ownership and transfers of registration of the Investor
Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its
usual and customary fees, charges and expenses from its Depository
Participants; (v) the Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as representatives of the
Certificate Owners of the Investor Certificates for purposes of exercising
the rights of Holders under this Agreement, and requests and directions for
and votes of such representatives shall not be deemed to be inconsistent if
they are made with respect to different Certificate Owners; and (vi) the
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depository with respect to its Depository Participants and
furnished by the Depository Participants with respect to indirect
participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
Whenever notice or other communication to the Investor
Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant
to Section 6.02(d), the Trustee shall give to the Depository all such notices
and communications specified herein to be given to Certificateholders.
(c) If (x)(i) the Servicer advises the Trustee and the Certificate
Insurer in writing that the Depository is no longer willing or able to
properly discharge its responsibilities as Depository, and (ii) the Servicer
is unable to locate a qualified successor, (y) the Servicer at its option may
advise the Trustee in writing that it elects to terminate the book-entry
system through the Depository or (z) after the occurrence of an Event of
Default, Certificate Owners representing Percentage Interests aggregating not
less than 50% of the aggregate Percentage Interests of the Investor
Certificates together advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Certificate Owners, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability
of definitive, fully registered Investor Certificates (the "Definitive
Certificates") to Certificate Owners requesting the same. Upon surrender to
the Trustee of the Investor Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall, at the expense of the Servicer, issue the Definitive Certificates.
The Definitive Certificates shall be issued in minimum denominations of
$25,000 and integral multiples of $1,000 in excess thereof, except that any
Investor Certificate that was represented by a Book-Entry Certificate in an
amount less than $25,000 immediately prior to the issuance of a Definitive
Certificate pursuant to the second paragraph of Section 6.01 shall be issued
in minimum denomination equal to the amount represented by such Book-Entry
Certificate and shall be subject to the same restrictions on transfer set
forth in the second paragraph of Section 6.01. Neither the Servicer nor the
Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive 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.
Section 6.03. Mutilated, Destroyed, Lost
--------------------------
or Stolen Certificates.
- ------------------------------------------
If (i) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee, the
Servicer and the Transferor such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, countersign and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor, Class and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses
of the Trustee) connected therewith. Any new Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership
in the Trust Fund, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners.
---------------------
The Servicer, the Transferor, the Certificate Insurer, the Trustee and
any agent of the Servicer, the Transferor or the Trustee may treat the Person
in whose name any Certificate is registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 5.01 and for
all other purposes whatsoever, and neither the Servicer, the Transferor, the
Certificate Insurer, the Trustee nor any agent of the Servicer, the
Transferor, the Certificate Insurer or the Trustee shall be affected by
notice to the contrary.
Section 6.05. Restrictions on Transfer
------------------------
of Transferor Certificates.
--------------------------
(a) The Transferor Certificates shall be assigned, transferred,
exchanged, pledged, financed, hypothecated or otherwise conveyed
(collectively, for purposes of this Section 6.05 and any other Section
referring to the Transferor Certificates, "transferred" or a "transfer") only
in accordance with this Section 6.05.
(b) No transfer of a Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Act"), and any applicable state securities laws or
is made in accordance with the Act and laws. The Trustee and the Servicer
shall require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Servicer that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the Act and laws or is being made pursuant to the Act
and laws, which Opinion of Counsel shall not be an expense of the Trustee or
the Servicer, and the Trustee and the Servicer shall require the transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to the Trustee and the Servicer certifying to the Trustee and
the Servicer the facts surrounding such transfer, which investment letter
shall not be an expense of the Trustee or the Servicer; provided that such
Opinion of Counsel shall not be required in the case of transfers by or to
Merrill Lynch, Pierce, Fenner & Smith Incorporated or an affiliate thereof.
The Holder of a Transferor Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Servicer and the
Certificate Insurer against any liability that may result if the transfer is
not so exempt or if not made in accordance with such federal and state laws.
(c) The Transferor Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent:
(i) the Person that acquires a Transferor Certificate shall (A) be organized
and existing under the laws of the United States of America or any state or
the district of Columbia thereof (B) expressly assume, by an agreement
supplemental hereto, executed and delivered to the Trustee, the performance
of every covenant and obligation of the Transferor hereunder with respect to
the assets evidenced by the Transferor Certificates, and (C) as part of its
acquisition of a Transferor Certificate, acquire all rights of the related
Transferor or any transferee under this Section 6.05(c) to amounts payable to
such Transferor or such transferee under Sections 5.01(a)(vii) and 5.01(g),
(ii) the Transferor shall deliver to the Trustee an Officer's Certificate
stating that such transfer and such supplemental agreement comply with this
Section 6.05(c) and that all conditions precedent provided by this Section
6.05(c) have been complied with and an Opinion of Counsel stating that all
conditions precedent provided by this Section 6.05(c) have been complied
with, and the Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying; (iii) the Transferor
shall deliver to the Trustee a letter from each Rating Agency confirming that
its rating of the Investor Certificates, after giving effect to such transfer
without taking into account the Certificate Insurance Policy, will not be
reduced or withdrawn; (iv) the Transferor shall deliver to the Trustee an
Opinion of Counsel to the effect that (a) such transfer will not adversely
affect the treatment of the Investor Certificates after such transfer as debt
for federal and applicable state income tax purposes, (b) such transfer will
not result in the Trust being subject to tax at the entity level for federal
or applicable state tax purposes, (c) such transfer will not have any
material adverse impact on the federal or applicable state income taxation of
an Investor Certificateholder or any Certificate Owner and (d) such transfer
will not result in the arrangement created by this agreement or any "portion"
of the assets being treated as a taxable mortgage pool as defined in Section
7701(i) of the Code; (v) all filings and other actions necessary to continue
the perfection of the interest of the Trust in the assets and the other
property conveyed hereunder shall have been taken or made and (vi) the
transferee shall have assumed the obligations of the Transferor pursuant to
Section 7.06 hereof. Notwithstanding the foregoing, the requirement set
forth in subclause (i)(A) of this Section 6.05(c) shall not apply in the
event the Trustee shall have received a letter from each Rating Agency
confirming that its rating of the Investor Certificates, after giving effect
to a proposed transfer to a Person that does not meet the requirement set
forth in subclause (i)(A) without taking into account the Certificate
Insurance Policy, shall not be reduced or withdrawn.
Section 6.06. Actions of Certificateholders.
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders
in person or by its agent duly appointed in writing; and except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where required,
to the Transferor, the Certificate Insurer or the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and conclusive in favor
of the Trustee, the Transferor, the Certificate Insurer and the Servicer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by a Certificateholder shall bind every Holder of
every Certificate issued upon the registration of Transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted
to be done, by the Trustee, the Transferor or the Servicer in reliance
thereon, whether or not notation of such action is made upon such
Certificate.
(d) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
(e) The ownership of Certificates shall be proved by the Certificate
Register.
ARTICLE VII
The Servicer and the Transferor
Section 7.01. Liability of the Servicer.
-------------------------
The Servicer shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Servicer
herein.
Section 7.02. Merger or Consolidation of,
---------------------------
or Assumption of the Obligations
--------------------------------
of, the Servicer or Transferor.
------------------------------
Any corporation into which the Servicer or Transferor may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer or Transferor shall be a party, or any
corporation succeeding to the business of the Servicer or Transferor, or any
corporation, more than 50% of the voting stock of which is, directly or
indirectly, owned by the Indirect Parent, which executes an agreement of
assumption to perform every obligation of the Servicer or Transferor
hereunder, shall be the successor of the Servicer or Transferor hereunder,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary
notwithstanding.
Notwithstanding anything to the contrary contained in this Section 7.02
or in Section 7.04, the Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that (i) the purchaser
or transferee accepting such assignment or delegation shall be a Person
reasonably satisfactory to the Trustee and which shall be qualified to
service mortgage loans for the Federal National Mortgage Association, and
shall execute and deliver to the Trustee an agreement, in form and substance
reasonably satisfactory to the Trustee, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant
and condition to be performed or observed by the Servicer under this
Agreement from and after the date of such agreement; and (ii) each Rating
Agency's rating of the Investor Certificates, without taking into account the
Certificate Insurance Policy, in effect immediately prior to such assignment,
sale or transfer will not be qualified, downgraded or withdrawn as a result
of such assignment, sale or transfer, as evidenced by a letter to such effect
from each Rating Agency. In the case of any such assignment and delegation,
the Servicer shall remain liable for all liabilities and obligations incurred
by it as Servicer hereunder prior to the satisfaction of the conditions to
such assignment and delegation set forth in clauses (i) and (ii) of the
preceding sentence.
Section 7.03. Limitation on Liability of
--------------------------
the Servicer and Others.
-----------------------
Neither the Servicer nor any of the directors or officers or employees
or agents of the Servicer shall be under any liability to the Trust Fund or
the Certificateholders for any action taken or for refraining from the taking
of any action by the Servicer pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Servicer or any such person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties of the Servicer or by reason of reckless disregard
of obligations and duties of the Servicer hereunder. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
----- -----
by any Person respecting any matters arising hereunder. The Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to duties to service the Mortgage Loans in accordance
with this Agreement, and which in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable in respect
of this Agreement, and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In the event of any such
loss, liability or expense, the legal expenses and costs of such action and
any liability resulting therefrom shall be expenses, costs and liabilities
for which the Servicer shall be entitled to reimbursement therefor only from
amounts otherwise distributable to the Holders of the Transferor Certificates
on any subsequent Distribution Date. The Servicer's right to reimbursement
pursuant to this Section 7.03 shall survive any resignation or termination of
the Servicer pursuant to Section 7.04 or 8.01 with respect to any such
losses, liabilities or expenses arising prior to such resignation or termi-
nation (or arising from events that occurred prior to such resignation or
termination). Any claims under this Section 7.03 by or on behalf of the
Certificateholders or the Trust Fund shall be made only against the Servicer,
who shall be liable hereunder with respect to its own acts and omissions as
well as the acts and omissions of its directors, officers, employees and
agents.
Section 7.04. Servicer Not to Resign.
----------------------
Subject to the provisions of Section 7.02, the Servicer shall not resign
from the obligations and duties hereby imposed on it (i) for so long as the
Trust owns Trust Balances of one or more Common Mortgage Loans, unless it has
resigned from its obligations and duties as servicer under all Prior Trust
Pooling and Servicing Agreements applicable to such Common Mortgage Loans or
(ii) except upon determination that the performance of its duties hereunder
is no longer permissible under applicable law or is in material conflict by
reason of applicable law with any other activities carried on by it or its
subsidiaries or other affiliates, the other activities of the Servicer so
causing such a conflict being of a type and nature carried on by the Servicer
or such subsidiaries or other affiliates at the date of this Agreement. For
so long as the Trust owns Trust Balances of one or more Common Mortgage
Loans, the determination set forth in clause (ii) shall provide the basis for
the Servicer's resignation only if the Servicer simultaneously resigns from
its obligations and duties as servicer under the Prior Trust Pooling and
Servicing Agreements applicable to such Common Mortgage Loans. For so long
as the Trust owns Trust Balances of one or more Common Mortgage Loans, the
Servicer shall resign from its obligations and duties hereunder promptly upon
any resignation from its obligations and duties as servicer under the Prior
Trust Pooling and Servicing Agreements applicable to such Common Mortgage
Loans.
Any resignation under this Section 7.04 shall not relieve the Servicer
of responsibility for any of the obligations specified in Sections 8.01 and
8.02 as obligations that survive the resignation or termination of the
Servicer; provided, however, that no resignation by the Servicer shall become
effective until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
8.02. The Servicer shall have no claim (whether by subrogation or otherwise)
or other action against any Certificateholder for any amounts paid by the
Servicer pursuant to any provision of this Agreement. Any determination
permitting the resignation of the Servicer shall be evidenced by an Opinion
of Counsel to such effect delivered to the Trustee and the Certificate
Insurer.
Section 7.05. Limitation on Liability of Certain Persons.
------------------------------------------
No recourse under or upon any obligation or covenant of this Agreement,
or of any Certificate, or for any claim based thereon or otherwise in respect
thereof, shall be had against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Transferor or of any
successor corporation, either directly or through the Transferor, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise. This Agreement and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by the
incorporators, shareholders, officers or directors as such, of the
Transferor, or any of them, because of the issuance of the Certificates, or
under or by reason of the obligations, covenants or agreements contained in
this Agreement or in any of the Certificates or implied therefrom; and that
any and all such personal liability, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, shareholder, officer or director, as such, because
of the issuance of the Certificates, or under or by reason of the
obligations, covenants or agreements contained in this Agreement or in any of
the Certificates or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Agreement and the issuance of the Certificates. The Transferor and any
director, officer, employee or agent of the Transferor may rely in
good faith on any document of any kind prima facie properly executed and
----- -----
submitted by any Person respecting any matters arising hereunder.
Section 7.06. Liability of Transferor.
-----------------------
Notwithstanding Section 7.05 or any other provisions of this Agreement,
the Transferor by entering into this Agreement, by its acceptance thereof,
agrees to be liable, directly to the injured party, for the entire amount of
any losses, claims, damages or liabilities (other than those that would be
incurred by a Certificateholder if the Certificates were notes secured by the
Trust assets, for example, as a result of the performance of the Trust
assets, market fluctuations, a shortfall or failure to make payment under the
Certificate Insurance Policy or other similar market or investment risks
associated with ownership of the Certificates) arising out of or based on the
arrangement created by this Agreement or the actions of the Servicer taken
pursuant hereto (to the extent that, if the Trust assets at the time the
claim is made were used to pay in full all outstanding Certificates, the
Trust assets that would remain after the Certificateholders and Certificate
Insurer were paid in full would be insufficient to pay any such losses,
claims, damages or liabilities) as though this Agreement created a
partnership under the Delaware Revised Uniform Partnership Act in which the
Transferor was a general partner. The rights created by this Section 7.06
shall run directly to and be enforceable by the injured party subject to the
limitations hereof.
Section 7.07. Transferor May Own Certificates.
-------------------------------
The Transferor and any Person controlling, controlled by or under common
control with the Transferor may in its individual or any other capacity
become the owner or pledgee of Investor Certificates with the same rights as
it would have if it were not the Transferor or such an affiliate thereof,
except as otherwise provided in the definition of the term
"Certificateholder" specified in Section 1.01. Certificates so owned by or
pledged to the Transferor or such controlling or commonly controlled Person
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among all of the
Investor Certificates, except as otherwise provided in the definition of the
term "Certificateholder" specified in Section 1.01.
ARTICLE VIII
Default
Section 8.01. Events of Default.
-----------------
If any one of the following events ("Events of Default") shall occur and
be continuing:
(i) Any failure by the Servicer to remit to the Trustee any
payment required to be made under the terms of such Certificates and
this Agreement which continues unremedied for a period of five (5)
Business Days after the date upon which written notice of such failure
shall have been given to the Servicer by the Trustee or to the Servicer
and the Trustee by Holders of Investor Certificates evidencing not less
than 25% of the aggregate Percentage Interests of the Investor
Certificates or by the Certificate Insurer; or
(ii) Failure on the part of the Servicer duly to observe or perform
in any material respect any other covenants or agreements of the
Servicer set forth in the Certificates or in this Agreement, which
covenants and agreements (A) materially affect the rights of
Certificateholders and (B) continue unremedied for a period of sixty
(60) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer
by the Trustee, or to the Servicer and the Trustee by the Holders of
Investor Certificates evidencing not less than 25% of the aggregate
Percentage Interests of the Investor Certificates or by the Certificate
Insurer; or
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding up or Liquidation of its
affairs, and the continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days; or
(iv) The consent by the Servicer to the appointment of a con-
servator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to substantially all of its
property; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every such case, so long as an Event of Default shall
not have been remedied by the Servicer, either the Trustee (with the consent
of the Certificate Insurer, which consent shall not be unreasonably
withheld), or the Holders of Investor Certificates evidencing not less than
25% of the aggregate Percentage Interests of the Investor Certificates (with
the consent of the Certificate Insurer) or the Certificate Insurer, by notice
then given in writing to the Servicer (and to the Trustee if given by
Certificateholders or the Certificate Insurer) may terminate all of the
rights and obligations of the Servicer as servicer under this Agreement. In
addition, for so long as the Trust owns Trust Balances of one or more Common
Mortgage Loans, whether or not there is any Event of Default hereunder, if
the Servicer is terminated as servicer under the Prior Trust Pooling and
Servicing Agreements applicable to such Common Mortgage Loans, the Trustee
shall promptly deliver a notice of termination to the Servicer and shall
appoint as successor Servicer pursuant to Section 8.02 the same Person
appointed to succeed the Servicer as servicer under such Prior Trust Pooling
and Servicing Agreements.
Any written notice provided to the Servicer shall be simultaneously
provided to the Indirect Parent, the Certificate Insurer and the Rating
Agencies. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee pursuant to and under this Section 8.01; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice
of termination, whether to complete the transfer and endorsement of the
Mortgage Loans and related documents, or otherwise. The Servicer agrees to
cooperate with the Trustee in effecting the termination of the responsibili-
ties and rights of the Servicer hereunder, including, without limitation, the
transfer to the Trustee for the administration by it of all cash amounts that
shall at the time be held by the Servicer and credited by it to the Mortgage
Loan Payment Record, or that have been deposited by the Servicer in the
Certificate Account or thereafter received by the Servicer with respect to
the Mortgage Loans. In addition to any other amounts which are then, or,
notwithstanding the termination of its activities as servicer, may become,
payable to the Servicer under this Agreement, the Servicer shall be entitled
to receive out of any delinquent payment on account of interest on a Mortgage
Loan, due during the period prior to the notice pursuant to this Section 8.01
which terminates the obligation and rights of the Servicer hereunder and re-
ceived after such notice, that portion of such payment which it would have
been entitled to retain pursuant to Section 3.03(ii) if such notice had not
been given.
Section 8.02. Trustee to Act; Appointment of Successor.
----------------------------------------
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.01 or the Servicer's resignation in accordance with the
terms of Section 7.04, and, for so long as the Trust owns Trust Balances of
one or more Common Mortgage Loans (and if and for so long as the Trustee also
acts as servicer under a Prior Trust Pooling and Servicing Agreement
applicable to such Common Mortgage Loans), the Trustee shall be the successor
in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof; provided, however,
that the responsibilities and duties of the Servicer pursuant to Section 2.02
and Section 2.04, the obligations of the Servicer to make repurchases or
replacements of Mortgage Loans pursuant to Section 3.01 and Section 3.06 and
the obligations of the Servicer to make Monthly Advances pursuant to Section
4.02 shall not be the responsibilities, duties or obligations of the Trustee.
As compensation therefor, the Trustee shall, except as provided in Section
8.01, be entitled to such compensation as the Servicer would have been
entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as
successor Servicer, (ii) if the Trustee is legally unable so to act, (iii)
for so long as the Trust owns one or more Trust Balances of the Common
Mortgage Loans, if the Trustee is not acting as servicer under the Prior
Trust Pooling and Servicing Agreements applicable to such Common Mortgage
Loans, the Trustee may (in the situation described in clause (i)) or shall
(in the situation described in clause (ii) or (iii)) appoint, with the
consent of the Certificate Insurer, or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution
that is then servicing a home equity loan portfolio and having all licenses,
permits and approvals required by applicable law, and having a net worth of
not less than $10,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder; provided, however, that, for so long as the Trust
owns Trust Balances of one or more Common Mortgage Loans, any such successor
Servicer shall be the same Person that is then acting as, or has been
designated to act as, servicer under the Prior Trust Pooling and Servicing
Agreements applicable to such Common Mortgage Loans; and provided, further,
that the appointment of any such successor Servicer shall not result in the
reduction, suspension or withdrawal of the ratings assigned to the Investor
Certificates by any Rating Agency without taking into account the Certificate
Insurance Policy. Pending appointment of a successor to the Servicer here-
under, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Servicer hereunder. The Trustee and
such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer maintain in force (i) a
policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder, and (ii) a fidelity
bond in respect of its officers, employees and agents to the same extent as
the Servicer is so required pursuant to Section 3.12. No successor servicer
(other than the Trustee as successor to the Servicer) shall have the right
(i) to maintain possession of the Mortgage Files as set forth in Section
2.01(d) or (ii) to retain and commingle payments on, and collections in
respect of, the Mortgage Loans with its own funds pursuant to Section
3.02(c).
Section 8.03. Notification to Certificateholders.
----------------------------------
Upon any termination or appointment of a successor to the Servicer
pursuant to this Article VIII, the Trustee shall give prompt written notice
thereof (i) to Certificateholders at their respective addresses appearing in
the Certificate Register, (ii) to each Rating Agency at their respective
addresses set forth in Section 12.07, and (iii) to the Certificate Insurer at
its address set forth in Section 12.07.
Section 8.04. Waiver of Past Events of Default.
--------------------------------
The Holders of Investor Certificates evidencing not less than 51% of the
aggregate Percentage Interests of the Investor Certificates together, with
the consent of the Certificate Insurer, may, on behalf of all Holders of
Certificates, waive any Event of Default by the Servicer in the performance
of its obligations hereunder and its consequences, except a default in making
any required deposits to the Certificate Account in accordance with this
Agreement. Upon any such waiver of a past Event of Default, such Event of
Default shall cease to exist and shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.
-----------------
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in
this Agreement. If an Event of Default has occurred (which has not been
cured), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act
or its own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall
be proved that the Trustee was negligent in performing its duties
in accordance with the terms of this Agreement;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Investor
Certificates evidencing not less than 25% of the aggregate
Percentage Interests of the Investor Certificates with the consent
of the Certificate Insurer relating to the time, method and place
of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement; and
(iv) The Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer
referred to in clauses (i) and (ii) of Section 8.01 unless a
Responsible Officer of the Trustee at the Corporate Trust Office
obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Servicer, the Holders of
Certificates evidencing not less than 25% of the Trust Fund (based
on the outstanding principal balances of the Certificates) or the
Certificate Insurer.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee.
-------------------------------------
Except as otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate
of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond
or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto,
at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of an Event of Default (which has
not been cured), to exercise such of the rights and powers vested
in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default and after the curing
of all Events of Default which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or documents, unless requested in writing to do so by
Holders of Investor Certificates evidencing not less than 25% of
the aggregate Percentage Interests of the Investor Certificates or
the Certificate Insurer; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms
of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to such pro-
ceeding. The reasonable expense of every such examination shall be
paid by the Servicer or, if paid by the Trustee, shall be reim-
bursed by the Servicer upon demand. Nothing in this clause (v)
shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors; and
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or attorneys or a custodian.
Section 9.03. Trustee Not Liable for Certificates
-----------------------------------
or Mortgage Loans.
-----------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Servicer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) or of any Mortgage Loan or related document. The Trustee
shall not be accountable for the use or application by the Servicer of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Certificate Account by the
Servicer.
Section 9.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights as it would have if it were
not Trustee.
Section 9.05. Servicer to Pay Trustee's Fees and Expenses.
-------------------------------------------
The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust) for all services rendered by it in the
execution of the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee, and the Servicer will
pay or reimburse the Trustee upon its request for all reasonable expenses
(including any expenses arising under Section 4.04(d)), 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) except any such expense, disbursement or advance as may arise
from its negligence or bad faith or which is the responsibility of Certi-
ficateholders hereunder. In addition, the Servicer covenants and agrees to
indemnify the Trustee from, and hold it harmless against, any and all losses,
liabilities, damages, claims, legal actions, including any pending or
threatened claims or legal actions, or expenses other than those resulting
from the negligence or bad faith of the Trustee.
Section 9.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times (i) be a Person having its
principal office in the state of New York or in the same state as that in
which the initial Trustee under this Agreement has its principal office and
organized and doing business under the laws of such State or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority and (ii)
have at all times a long term unsecured debt rating (or the direct or
indirect corporate parent of the Trustee have a long term unsecured debt
rating if the Trustee does not have such a rating) that will not result in
the downgrading or withdrawal of the rating or ratings then assigned to the
Certificates by each Rating Agency. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 9.07.
Section 9.07. Resignation or Removal of Trustee.
---------------------------------
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Transferor. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee; provided, however, that, (i) such appointment does not
result in a reduction or withdrawal of the then current rating of the
Investor Certificates, and (ii) so long as such consent is not unreasonably
withheld, the Certificate Insurer consents to such appointment. The Servicer
shall make a good faith effort to appoint a successor within 30 days of its
receipt of such notice. If the Servicer does not appoint a successor Trustee
within such 30 day period and it is not making a good faith effort to appoint
a successor Trustee, then the Certificate Insurer may appoint a successor
Trustee. The Servicer shall indemnify the Trustee for any loss, liability,
or expense incurred as a result of the Servicer's failure to make a good
faith effort to appoint a successor Trustee. If no successor Trustee shall
have been so appointed and having accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Transferor, (ii) the Transferor has delivered to the
Trustee a letter from any Rating Agency to the effect that the rating of the
Investor Certificates has been or is about to be reduced or withdrawn on
account of a reduction in the long-term credit rating of the Trustee or the
parent of the Trustee (if (a) the Trustee proposes to the Transferor and the
Servicer to enter into an agreement with the Trustee and the Transferor and
the Servicer, each in its sole discretion, elect to enter into such agreement
and (b) such agreement is consented to by the Certificate Insurer and is
satisfactory to the Rating Agencies without resulting in a reduction in or
withdrawal of any rating of the Investor Certificates, then upon the
execution and delivery of such agreement the Transferor shall not request
such resignation pursuant to this clause (ii)) and the Trustee shall fail to
resign after written request therefor by the Transferor, or (iii) the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Transferor or, in the case of clause (ii) above, the
Servicer may remove the Trustee and appoint a successor trustee, subject to
the following paragraph and to the consent of the Certificate Insurer to such
appointment (which consent shall not be unreasonably withheld), by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee.
-----------------
Any successor Trustee appointed as provided in Section 9.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of
its predecessor hereunder, with like effect as if originally named as
Trustee. The Transferor, the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reason-
ably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
Trustee hereunder to all holders of Certificates at their addresses as shown
in the Certificate Register. If the Servicer fails to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
Section 9.09. Merger or Consolidation of Trustee.
----------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 9.06, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
Section 9.10. Appointment of Co-Trustee or
----------------------------
Separate Trustee.
----------------
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or any Mortgaged Property may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons ap-
proved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust Fund, or any
part thereof, and, subject to the other provisions of this Section 9.10, such
powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a
request so to do, or in the case an Event of Default shall have occurred and
be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 9.06
and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee
jointly (provided, however, that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be per-
formed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unquali-
fied to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to
the Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Servicer and the Trustee acting jointly may at any time accept
the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article IX. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Transferor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 9.11. Tax Returns.
-----------
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required and within the Trustee's reasonable
control or knowledge in connection with the Servicer's preparation of any tax
returns of the Trust Fund to the extent required, and the Servicer shall, as
agent on behalf of the Trust, execute and file such returns.
Section 9.12. Streit Act.
----------
Any provisions required to be contained in this Agreement by Section 126
of Article 4-A of the New York Real Property Law are hereby incorporated, and
such provisions shall be in addition to those conferred or imposed by this
Agreement; provided, however, that to the extent that such Section 126 shall
not apply to this Agreement, such Section 126 shall not have any effect, and
if such Section 126 should at any time be repealed or cease to apply to this
Agreement, or be construed by judicial decision to be inapplicable, such
Section 126 shall cease to have any further effect upon the provisions of
this Agreement. In case of a conflict between the provisions of this
Agreement and any mandatory provision of Article 4-A of the New York Real
Property Law, such mandatory provisions of such Article 4-A shall prevail,
provided, however, that if such Article 4-A shall not apply to this
Agreement, or be construed by judicial decision to be inapplicable, such
mandatory provisions of such Article 4-A shall cease to have any further
effect upon the provisions of this Agreement.
ARTICLE X
Termination
Section 10.01. Termination.
-----------
(a) The respective obligations and responsibilities of the Servicer,
the Transferor and the Trustee created hereby (other than the obligation of
the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Servicer to send certain notices
as hereinafter set forth) shall terminate upon the last action required to be
taken by the Trustee on the final Distribution Date pursuant to this Article
X following the later of (A) payment in full of all amounts owing to the
Certificate Insurer and (B) the earliest of:
(i) the retransfer, under the conditions specified in Section 10.01(b),
to the Servicer of the Investor Certificateholders' interest in
each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust Fund for the Final Termination
Price;
(ii) the day following the Distribution Date on which the distribution
made to Investor Certificateholders has reduced the Certificate
Principal Balance to zero;
(iii) the final payment or other liquidation (or any Monthly Advance with
respect thereto) of the Trust Balance of the last Mortgage Loan
remaining in the Trust Fund (including without limitation the
disposition of the Mortgage Loans pursuant to Section 10.02) or the
disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Mortgage Loan; and
(iv) the Distribution Date in September 2027.
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
(b) The Servicer shall have the right to exercise the option to
retransfer to itself each Mortgage Loan pursuant to Section 10.01(a)(i) on
any Distribution Date on or after the Distribution Date immediately prior to
which the Certificate Principal Balance is less than ten percent (10%) of the
Original Certificate Principal Balance and all amounts due and owing to the
Certificate Insurer for unpaid premiums and unreimbursed draws on the
Certificate Insurance Policy, together with interest thereon as provided
under the Insurance Agreement, have been paid. If such right is exercised
and the Trustee is holding the Mortgage Files, the Servicer shall provide to
the Trustee the certification required by Section 3.07 and the Trustee shall,
promptly following payment of the Final Termination Price, release to the
Servicer the Mortgage Files pertaining to the Mortgage Loans being
retransferred.
(c) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Investor Certificateholders may surrender their Investor Certificates to the
Trustee for payment of the final distribution and cancellation, shall be
given promptly by the Trustee (upon receipt of written directions from the
Servicer to the Trustee no later than the 20th day of the month preceding the
month of such final distribution, if the Servicer is exercising its right to
repurchase the assets of the Trust Fund) by letter to Investor Certificate-
holders and the Certificate Insurer mailed not earlier than the first day and
not later than the tenth day of the month of such final distribution
specifying (A) the Distribution Date upon which final distribution of the
Investor Certificates will be made upon presentation and surrender of
Investor Certificates at the office or agency of the Trustee therein desig-
nated, (B) the amount of any such final distribution and (C) that the Record
Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the Investor
Certificates at the office or agency of the Trustee therein specified. In
the event written directions are delivered by the Servicer to the Trustee as
described in the preceding sentence, the Servicer shall deposit in the
Certificate Account before the Distribution Date for such final distribution
in immediately available funds an amount equal to the Final Termination Price
for the assets of the Trust Fund. Such deposit shall be in lieu of the
deposit otherwise required to be made in respect of such Distribution Date.
(d) Upon presentation and surrender of the Investor Certificates, the
Trustee shall cause to be distributed to the holders of Investor Certificates
on the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Investor Certificates, an amount
equal to (i) if such final distribution is not being made pursuant to the
retransfer to the Servicer pursuant to Section 10.01(a)(i), the amount
required to be distributed to Investor Certificateholders pursuant to Section
5.01 for such Distribution Date and (ii) if such final distribution is being
made pursuant to such retransfer, the amount specified in
Section 10.01(a)(i). The distribution on such final Distribution Date
pursuant to a retransfer pursuant to Section 10.01(a)(i) shall be in lieu of
the distribution otherwise required to be made on such Distribution Date in
respect of the Certificates. On the final Distribution Date prior to having
made the distributions called for above, the Trustee will withdraw from the
Certificate Account and remit to the Certificate Insurer the lesser of (x)
the amount available for distribution on such final Distribution Date, net of
any portion thereof necessary to pay the amounts described in clauses (d)(i)
and (ii) above and (y) the unpaid amounts due and owing to the Certificate
Insurer for unpaid premiums and unreimbursed draws on the Certificate
Insurance Policy, together with interest thereon as provided under the
Insurance Agreement.
(e) In the event that all of the Investor Certificateholders shall not
surrender their Investor Certificates for final payment and cancellation on
or before such final Distribution Date, the Trustee shall on such date cause
all funds in the Certificate Account not distributed in final distribution to
the Certificate Insurer or Investor Certificateholders to be withdrawn
therefrom and credited to the remaining Investor Certificateholders by
depositing such funds in a separate escrow account for the benefit of such
Investor Certificateholders and the Servicer (if the Servicer has exercised
its right to retransfer the Mortgage Loans) and the Trustee shall give a
second written notice to the remaining Investor Certificateholders to
surrender their Investor Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the Investor Certificates shall not have been surrendered for
cancellation, any funds deposited in such escrow account and remaining
unclaimed shall be paid by the Trustee to the Servicer and thereafter
Investor Certificateholders shall look only to the Servicer with respect to
any claims in respect of such funds.
Section 10.02. Termination by Certificate Insurer.
----------------------------------
In the event the Servicer does not exercise its option to terminate the
Trust Fund pursuant to this Article X, the Certificate Insurer may do so on
the same terms.
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events
-------------------------
If any one of the following events shall occur during the Managed
Amortization Period:
(a) failure on the part of the Servicer (i) to make any payment or
deposit required by the terms of this Agreement, on or before the date
occurring five (5) Business Days after the date such payment or deposit is
required to be made herein, or (ii) duly to observe or perform in any
material respect the covenants set forth in Section 2.04 or (iii) duly to
observe or perform in any material respect any other covenants or agreements
of the Servicer set forth in this Agreement, which failure, in each case,
materially and adversely affects the interests of the Certificateholders or
the Certificate Insurer and which, in the case of clause (iii), continues
unremedied and continues to affect materially and adversely the interests of
the Certificateholders for a period of sixty (60) days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee, or to the Servicer and
the Trustee by the Certificate Insurer or the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51%;
(b) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect in any material respect when
made, as a result of which the interests of the Investor Certificateholders
or the Certificate Insurer are materially and adversely affected and which
continues to be incorrect in any material respect and continues to affect
materially and adversely the interests of the Investor Certificateholders or
the Certificate Insurer for a period of sixty (60) days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee, or to the Servicer and
the Trustee by either the Certificate Insurer or the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51%;
provided, however, that a Rapid Amortization Event pursuant to this
subparagraph (b) shall not be deemed to have occurred hereunder if the
Servicer has accepted retransfer of the related Mortgage Loan or Mortgage
Loans during such period (or such longer period (not to exceed an additional
60 days) as the Trustee, with the consent of the Certificate Insurer, may
specify) in accordance with the provisions hereof;
(c) the Transferor or the Servicer shall go into liquidation, consent
to the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Transferor or the
Servicer or of or relating to all or substantially all of its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Transferor or the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of thirty (30) days; or the
Transferor or the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
(d) the Trust shall become subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended;
(e) any Event of Default shall occur;
(f) the aggregate of Insured Payments under the Certificate Insurance
Policy exceeds 1% of the Pool Balance as of the Cut-off Date; or
(g) the Transferor or the Servicer becomes subject to a tax lien and
not released within sixty (60) days of its attachment;
then, in the case of any event described in subparagraph (a), (b) or (e)
after the applicable grace period, if any, set forth in such subparagraphs,
either the Certificate Insurer, the Trustee or the Holders of Investor
Certificates evidencing Percentage Interests aggregating more than 51%, with
the consent of the Certificate Insurer, by notice given in writing to the
Transferor and the Servicer (and to the Trustee if given by either the
Certificate Insurer or the Investor Certificateholders) may declare that an
early amortization event (a "Rapid Amortization Event") has occurred as of
the date of such notice, and in the case of any event described in
subparagraphs (c), (d), (f) or (g), a Rapid Amortization Event shall occur
without any notice or other action on the part of the Trustee, the
Certificate Insurer or the Investor Certificateholders, immediately upon the
occurrence of such event.
Section 11.02. Additional Rights Upon an Insolvency Event.
------------------------------------------
(a) If the Transferor goes into liquidation or consents to the
appointment of a conservator or receiver or liquidator or similar person in
any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Transferor or of or relating to
all or substantially all its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator or similar person in
any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Transferor and such decree shall have
remained in force undischarged or unstayed for a period of 30 days; or the
Transferor shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors or voluntarily suspend payment of its obligations (such
voluntary liquidation, appointment, entering of such decree, admission,
filing, making, suspension or violation or other event described above, an
"Insolvency Event"), (i) the Transferor shall on the day of such appointment,
voluntary liquidation, entering of such decree, admission, filing, making,
suspension or inability, as the case may be (the "Appointment Day"), promptly
give notice to the Trustee and the Certificate Insurer of such Insolvency
Event, and (ii) the arrangement among the Certificateholders and the
Transferor shall dissolve and the Trust shall be liquidated in accordance
with the following procedures. The Transferor shall on the Appointment Day
immediately cease to transfer Additional Balances to the Trust.
Notwithstanding any cessation of the transfer to the Trust of Additional
Balances, Additional Balances transferred to the Trust prior to the
occurrence of such Insolvency Event or violation, and Principal Collections
and Interest Collections, whenever created, accrued in respect of such
Mortgage Loans shall continue to be a part of the Trust, and shall continue
to be allocated and paid in accordance with Article IV. Within fifteen (15)
days of the Appointment Day, the Trustee shall (i) publish a notice in an
authorized newspaper that an Insolvency Event has occurred and that the
Trustee intends to sell, dispose of or otherwise liquidate the Trust assets
on commercially reasonable terms and in a commercially reasonable manner and
(ii) send written notice to the Certificateholders describing the provisions
of this Section 11.02 and requesting instructions from such Holders. Unless
within seventy-five (75) days from the day notice pursuant to clause
(i) above is first published the Trustee shall have received written
instructions from Holders of Investor Certificates evidencing more than 51%
of the aggregate Percentage Interests to the effect that such
Certificateholders disapprove of the liquidation of the Trust assets, the
Trustee shall sell, dispose of or otherwise liquidate the Trust assets in a
commercially reasonable manner and on commercially reasonable terms, which
shall include the solicitation of competitive bids. The Trustee may obtain a
prior determination from any such conservator, receiver or liquidator that
the terms and manner of any proposed sale, disposition or liquidation are
commercially reasonable. The provisions of Sections 11.01 and 11.02 shall
not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the Trust
assets pursuant to subsection (a) above shall be treated as collections on
the Mortgage Loans received during the Rapid Amortization Period; provided,
however, that such proceeds will, based on amounts specified in writing to
the Servicer to the Trustee, first be paid to the Certificate Insurer to
reimburse the Certificate Insurer for previously unreimbursed Insured
Payments and other amounts owing under the Insurance Agreement and second be
paid to the Trustee in reimbursement of expenses incurred in connection with
the sale, disposition or liquidation of the Trust assets pursuant to Section
11.02(a); and provided, further, that the Fixed Allocation Percentage of such
remaining proceeds shall be paid to Investor Certificateholders in the
following amounts and order of priority:
(i) all accrued and unpaid interest on the Certificate Principal
Balance through the Accrual Period immediately preceding the
Distribution Date on which such proceeds are distributed to the Investor
Certificateholders; and
(ii) an amount of principal up to the Certificate Principal
Balance.
The Certificate Insurance Policy will not cover any shortfall in the event
such proceeds are insufficient to make a full distribution to Investor
Certificateholders pursuant to Section 11.02(b). On the day following the
final Distribution Date on which such proceeds are distributed to the
Investor Certificateholders, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article XI with respect to competitive bids
or any other of its duties.
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment.
---------
This Agreement may be amended from time to time by the Servicer, the
Transferor and the Trustee, with the consent of the Certificate Insurer so
long as such consent is not unreasonably withheld and without the consent of
any of the Certificateholders, (i) to cure any ambiguity or mistake, (ii) to
correct or supplement any provisions herein or therein which may be
inconsistent with any other provisions herein or therein, as the case may be,
or (iii) to add or delete any other provisions not inconsistent herewith with
respect to matters or questions arising under this Agreement, including
provisions relating to the Trust's ownership of Trust Balances of Common
Mortgage Loans and the issuance of definitive Certificates to Certificate
Owners in the event that book-entry registration of Investor Certificates is
no longer permitted; provided, however, that in each case such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Servicer,
the Transferor and the Trustee, with the consent of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and the consent of the Certificate Insurer, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or the Certificate Insurance Policy, or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (a) reduce in any manner the amount of, or delay the
timing of, collections of payments on Mortgage Loans or distributions which
are required to be made on any Certificate without the consent of the Holder
of such Certificate or (b) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all
Investor Certificates then outstanding.
Notwithstanding the foregoing, the Agreement may not be amended unless,
in connection with such amendment, an Opinion of Counsel is furnished to the
Trustee that such amendment will not (i) adversely affect the status of the
Investor Certificates as debt; (ii) result in the Trust being taxed at the
entity level; or (iii) result in the Trust being taxed as a taxable mortgage
pool (as defined in Section 7701(i) of the Code).
Not later than the time of obtaining any such consent the Trustee shall
furnish written notification of the substance of such amendment to each
Rating Agency. Promptly after the execution of any such amendment or con-
sent, the Trustee shall furnish written notification of such amendment to
each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 12.01 to approve the particular form of any proposed amendment
or consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
In connection with any amendment pursuant to this Section 12.01, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment is authorized or permitted by this Agreement. In no event
shall any Opinion of Counsel provided pursuant to this Section 12.01 be an
expense of the Trustee.
Section 12.02. Recordation of Agreement.
------------------------
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer and at its expense
on direction by the Trustee, but only upon direction of the Trustee
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
Section 12.03. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a partition or
winding up of the Trust Fund, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or such party.
No Certificateholder shall have any right to vote (except as provided in
Section 12.01) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Investor Certificates evidencing
Percentage Interests aggregating not less than 25% shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. Each
Certificateholder expressly covenants with every other Certificateholder and
the Trustee that no one or more Holders of Certificates shall have any right
in any manner whatever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 12.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.04. (Reserved).
Section 12.05. The Certificate Insurer.
-----------------------
The Certificate Insurer is a third-party beneficiary of this Agreement.
Any right conferred to the Certificate Insurer shall be suspended during any
period in which the Certificate Insurer is in default in its payment
obligations under the Certificate Insurance Policy. During any period of
suspension the Certificate Insurer's rights hereunder shall vest in the
Holders of the Investor Certificates and shall be exercisable by the Holders
of at least a majority in Percentage Interest of the outstanding Investor
Certificates. At such time as the Investor Certificates are no longer
outstanding hereunder and the Certificate Insurer has been reimbursed for all
Insured Payments to which it is entitled hereunder and has been paid all
Premium Amounts due and owing under the Insurance Agreement, the Certificate
Insurer's rights hereunder shall terminate.
Section 12.06. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES AND THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION), AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 12.07. Notices.
-------
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered at or mailed by
certified mail, return receipt requested, to (a) in the case of the Servicer,
Merrill Lynch Credit Corporation, 4802 Deer Lake Drive East, Jacksonville,
Florida 32246, Attention: General Counsel, (b) in the case of the Transferor,
MLCC Mortgage Investors, Inc., 4802 Deer Lake Drive East, Jacksonville,
Florida 32246, Attention: President, (c) in the case of the Trustee, at the
Corporate Trust Office, (d) in the case of Moody's, ABS Monitoring
Department, 4th Floor, 99 Church Street, New York, New York 10007, (e) in the
case of the Certificate Insurer, Ambac Assurance Corporation, One State
Street Plaza, New York, New York 10004, Attention: Structured Finance-MBS,
(f) in the case of Standard and Poor's, Debt Rating Division, 25 Broadway,
20th Floor, New York, New York 10004, Attention: Asset-Backed Surveillance
Group, or, as to each party, at such other address as shall be designated by
such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed to a Certificateholder within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
Section 12.08. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders
thereof.
Section 12.09. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 7.02 and 7.04, this Agreement may not be assigned by the
Transferor or the Servicer without the prior written consent of Holders of
Investor Certificates evidencing Percentage Interests aggregating not less
than 66%.
Section 12.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
The parties agree that the Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the beneficial ownership
interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust Fund or for any reason whatsoever, and that
Certificates upon execution, countersignature and delivery thereof by the
Trustee pursuant to Section 6.01 are and shall be deemed fully paid.
Section 12.11. Counterparts.
------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 12.12. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 12.13. Third Party Beneficiary.
-----------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and, in addition, shall inure to the benefit of
Certificateholders and, to the extent provided herein, the Certificate
Insurer and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, no other Person shall have any right or
obligation hereunder.
Section 12.14. Merger and Integration.
----------------------
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, and all
contemporaneous oral understandings, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
* * *
IN WITNESS WHEREOF, the Servicer, the Transferor and the Trustee have
caused this Agreement to be duly executed by their respective officers all as
of the day and year first above written.
MERRILL LYNCH CREDIT CORPORATION
By /s/ Linzy S. Banks
---------------------
Name: Linzy S. Banks
Title: Vice President
MLCC MORTGAGE INVESTORS, INC.
By /s/ Laurel A. Davis
----------------------
Name: Laurel A. Davis
Title: Vice President
and Assistant Secretary
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee
By /s/ Melanie Anbarci
----------------------
Name: Melanie Anbarci
Title: Assistant Secretary
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee of ML Home Equity Loan Trust
1992-1, ML Home Equity Loan Trust 1993-1,
ML Home Equity Loan Trust 1994-1, ML Home
Equity Loan Trust 1994-2, ML Home Equity
Loan Trust 1995-1 and ML Home Equity Loan
Trust 1995-2
By /s/ Melanie Anbarci
----------------------
Name: Melanie Anbarci
Title: Assistant Secretary
State of Florida )
) ss.:
County of Duval )
On the 28th day of October, 1997 before me, a notary public in and
for the State of Florida, personally appeared Linzy S. Banks, known to me
who, being by me duly sworn, did depose and say that he is located at 4802
Deer Lake Drive East, Jacksonville, Florida 32246; that he is a Vice
President of Merrill Lynch Credit Corporation, a corporation formed under the
laws of the State of Delaware, one of the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ Kathy M. Molitoris
-------------------------
Notary Public
(Notarial Seal)
State of Florida )
) ss.:
County of Duval )
On the 28th day of October, 1997 before me, a notary public in and
for the State of Florida, personally appeared Laurel A. Davis, known to me
who, being by me duly sworn, did depose and say that she is located at 4802
Deer Lake Drive East, Jacksonville, Florida 32246; that she is a Vice
President and Assistant Secretary of MLCC Mortgage Investors, Inc., a
corporation formed under the laws of the State of Delaware, one of the
parties that executed the foregoing instrument; and that she signed her name
thereto by order of the Board of Directors of said corporation.
/s/ Kathy M. Molitoris
----------------------
Notary Public
(Notarial Seal)
State of )
) ss.:
County of )
On the 30th day of October, 1997 before me, a notary public in and
for the State of California, personally appeared Melanie Anbarci, known to me
who, being by me duly sworn, did depose and say that she is located at 3 Park
Plaza, 16th Floor, Irvine, California 92714; that she is an Assistant vice
President of Bankers Trust Company of California, N.A., one of the parties
that executed the foregoing instrument; and that she signed her name thereto
under authority granted by the Board of Directors of said Bank.
/s/ James M. Wulffleff
----------------------
Notary Public
(Notarial Seal)
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Initial Certificate Principal
Balance of this Investor
Certificate : $
Certificate Rate : Variable
Original Certificate Principal
Balance of all Investor
Certificates : $
CUSIP No. :
Date of Pooling and
Servicing Agreement :
Certificate No. : 1
Cut-Off Date :
First Distribution
Date: :
Stated Maturity Date :
ML REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 199__-__
INVESTOR CERTIFICATE
evidencing a percentage interest in the distributions
allocable to the Investor Certificates evidencing an
undivided interest in a Trust consisting primarily of a
pool of adjustable rate home equity revolving credit line
loans serviced by
MERRILL LYNCH CREDIT CORPORATION
This Certificate does not represent an obligation of or interest in MLCC
Mortgage Investors, Inc. (the "Transferor"), Merrill Lynch Credit Corporation
or the Trustee referred to below or any of their affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Certificate Principal Balance of this Certificate by the Original Certificate
Principal Balance of all Investor Certificates) in certain monthly
distributions with respect to a Trust consisting primarily of a pool of home
equity revolving credit line loans (the "Mortgage Loans"), transferred by the
Transferor to the Trustee and serviced by Merrill Lynch Credit Corporation
(in such capacity, the "Servicer", including any successor Servicer under the
Agreement referred to below). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the
Transferor, the Servicer, and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
This Certificate is one of the Investor Certificates from a duly
authorized issue of Certificates designated as ML Revolving Home Equity Loan
Asset Backed Certificates, Series 199__-__, representing, to the extent
specified in the Agreement, an undivided interest in: (i) the Mortgage Loans,
to the extent of their Trust Balances, and the proceeds thereof, (ii)
collections in respect of the Trust's interest in the Mortgage Loans received
on or after the Cut-off Date, (iii) an irrevocable and unconditional limited
financial guarantee insurance policy (the "Policy"), (iii) property that
secured a Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure or otherwise, (iv) the interest of the Trust in certain
hazard insurance policies covering the Mortgaged Properties, and (v) certain
other property relating to the Mortgage Loans (collectively, the "Trust
Assets").
On each Distribution Date, the Trustee shall distribute to each Investor
Certificateholder of record on the related Record Date (other than the final
distribution) by check mailed to such Certificateholder at the address
appearing in the Certificate Register, or upon written request of a Holder of
an Investor Certificate received by the Trustee at least five Business Days
prior to the related Record Date, by wire transfer (but only if such Certifi-
cateholder is the Depository or such Certificateholder owns of record one or
more Investor Certificates which have principal denominations aggregating at
least $5,000,000), or by such other means of payment as such Certifi-
cateholder and the Trustee shall agree. Distributions among Investor
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Investor Certificates held by such Investor
Certificateholders. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Trustee, of the
pendency of such distribution, and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or if such day is not a Business Day, then on
the next succeeding Business Day (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last day preceding
the month of such Distribution Date (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and
the amount required to be distributed to Holders of Investor Certificates on
such Distribution Date under the terms of the Agreement.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the funds
on deposit in the Certificate Account for payment hereunder, and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
As provided in the Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than distributions
to the Investor Certificateholders and, subject to certain conditions in the
Agreement, Mortgage Loans may, at the election of the Transferor, be removed
from the Trust and transferred to the Transferor (as defined in the
Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
It is the intention of the Transferor and the Investor
Certificateholders that the Investor Certificates will be indebtedness for
federal, state and local income and franchise tax purposes and for purposes
of any other tax imposed on or measured by income. The Transferor, the
Trustee and the Holder of this Certificate (or Certificate Owner) by
acceptance of this Certificate (or, in the case of a Certificate Owner, by
virtue of such Certificate Owner's acquisition of a beneficial interest
herein) agrees to treat the Investor Certificates (or beneficial interest
therein), for purposes of federal, state and local income or franchise taxes
and any other tax imposed on or measured by income, as indebtedness secured
by the Trust Assets and to report the transactions contemplated by the
Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of this Certificate agrees that it will cause any
Certificate Owner acquiring an interest in this Certificate through it to
comply with the Agreement as to treatment as indebtedness for federal, state
and local income and franchise tax purposes and for purposes of any other tax
imposed on or measured by income.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the
Certificate Registrar for such purpose, accompanied by a written instrument
of transfer in form satisfactory to the Trustee, if so required by the
Trustee, be duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of
authorized denominations, if applicable, and evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of a like tenor in authorized
denominations (in the case of the Investor Certificates) and evidencing the
same aggregate Percentage Interest, as requested by the Holder surrendering
the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee or the Certificate Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee, the Transferor, the Servicer, the Certificate Insurer and
the Certificate Registrar and any agent of the foregoing may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee, the Transferor, the Servicer, the
Certificate Insurer, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment in
full of all amounts owing to the Certificate Insurer and (B) the earliest of:
(i) the retransfer to the Servicer of the Investor Certificateholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust Fund for an amount equal to the sum of
(a) the Certificate Principal Balance, (b) accrued and unpaid Certificate
Formula Interest through the day preceding the final Distribution Date, (c)
any Unpaid Certificate Interest Shortfall, and (d) any accrued and unpaid
Investor Loss Reduction Amounts through the day preceding such final
Distribution Date; (ii) the day following the Distribution Date on which the
distribution made to Investor Certificateholders has reduced the Certificate
Principal Balance to zero; (iii) the final payment or other liquidation (or
any Monthly Advance with respect thereto) of the Trust Balance of the last
Mortgage Loan remaining in the Trust Fund (including without limitation the
disposition of the Mortgage Loans) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan; and (iv) the Stated Maturity Date.
The Servicer, or in the event the Servicer does not exercise its option
to terminate the Trust Fund, the Certificate Insurer, may effect an early
retirement of the Certificates by paying the Final Termination Price and
accepting retransfer of the Trust Assets pursuant to the terms of the
Agreement on any Distribution Date after the Certificate Principal Balance is
less than or equal to 10% of the Original Investor Certificate Principal
Balance and all amounts due and owing to the Certificate Insurer have been
paid; provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of certain person named in the
Agreement. Upon retirement of the Certificates in accordance with Section
10.01 of the Agreement, the Trustee shall execute such documents and
instruments of transfer presented by the Servicer or Certificate Insurer and
take such other actions as the Servicer or Certificate Insurer may reasonably
request to effect the retransfer of the Mortgage Loans to the Servicer or
Certificate Insurer.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed as of the date set forth.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
not in its individual capacity but solely
as Trustee
------------------------------
Authorized Officer
Countersigned:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
By:
--------------------------------
Authorized Officer of
Bankers Trust Company of California, N.A.,
not in its individual capacity
but solely as Trustee
EXHIBIT B
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE INVESTOR
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS
OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, THAT IF SUCH
TRANSFEREE IS AN INSURANCE COMPANY THAT THE TRANSFEREE IS AN INSURANCE
COMPANY WHICH IS PURCHASING THIS CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE
PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER PTCE 95-60 OR A
PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05(c) OF THE AGREEMENT REFERRED
TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Date of Pooling and Servicing
Agreement: :
Cut-off Date :
Percentage Interest : 100%
Certificate No. : 1
First Distribution Date :
Stated Maturity Date :
ML REVOLVING HOME MORTGAGE LOAN ASSET BACKED CERTIFICATES,
SERIES 199__-__
TRANSFEROR CERTIFICATE
evidencing a percentage interest in the distributions
allocable to the Transferor Certificates evidencing an
undivided interest in a Trust consisting primarily of a
pool of adjustable rate home equity loan revolving credit
line loans serviced by
MERRILL LYNCH CREDIT CORPORATION
This Certificate does not represent an obligation of or interest in MLCC
Mortgage Investors, Inc. (the "Transferor"), Merrill Lynch Credit Corporation
or the Trustee referred to below or any of their affiliates. Neither this
Certificate nor the underlying Trust Assets are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that ___________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate in the entire
interest not allocated to the Investor Certificates in certain monthly
distributions with respect to a Trust consisting primarily of a pool of
mortgage loans (the "Mortgage Loans"), sold by the Transferor and serviced by
Merrill Lynch Credit Corporation (the "Servicer", including any successor
Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Transferor, the Servicer, and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned
in the Agreement. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
This Certificate evidences a Transferor Certificate from a duly
authorized issue of Certificates designated as ML Revolving Home Equity Loan
Asset Backed Certificates, Series 199__-__, and representing, to the extent
specified in the Agreement, an undivided ownership interest in: (i) the
Mortgage Loans, to the extent of their Trust Balances, and the proceeds
thereof, (ii) collections in respect of the Trust's interest in the Mortgage
Loans received on or after the Cut-off Date, (iii) property that secured a
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure or otherwise, (iv) the interest of the Trust in certain hazard
insurance policies covering the Mortgaged Properties, and (v) certain other
property relating to the Mortgage Loans (collectively, the "Trust Assets").
The certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Assets, all as more specifically set
forth in the Agreement. The Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds available in
accordance with the terms of the Agreement for payment hereunder and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Investor Certificates.
No transfer of a Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. There shall be delivered to the Trustee
and the Servicer a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Servicer that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from which Act and laws or is being made pursuant to said Act
and laws, which Opinion of Counsel shall not be an expense of the Trustee or
the Servicer, and the Trustee and the Servicer shall require the transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to the Trustee and the Servicer certifying to the Trustee and
the Servicer the facts surrounding such transfer, which Investment letter
shall not be an expense of the Trustee or the Servicer; provided that such
Opinion of Counsel shall not be required in the case of transfers by or to
Merrill Lynch, Pierce, Fenner & Smith Incorporated or an affiliate thereof.
The Holder of a Transferor Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Servicer and the
Certificate Insurer against any liability that may result if the transfer is
not so exempt or if not made in accordance with such federal and state laws.
As provided in the Agreement and subject to certain limitations set
forth therein, and subject to the restrictions set forth on the first page
hereof, neither this Certificate nor any legal or beneficial interest herein
may be, directly or indirectly, purchased, transferred, sold, pledged,
assigned or otherwise disposed of, and any proposed transferee hereof shall
not become the registered Holder hereof, without the satisfaction of the
conditions set forth in Section 6.05 of the Agreement.
No service charge will be made for any such registration of Transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Trustee, the Servicer, the Certificate Insurer and the Certificate
Registrar and any agent of the foregoing may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee, the Servicer, the Certificate Insurer, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment in
full of all amounts owing to the Certificate Insurer and (B) the earliest of:
(i) the retransfer to the Servicer of the Investor Certificateholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust Fund for an amount equal to the sum of
(a) the Certificate Principal Balance, (b) accrued and unpaid Certificate
Formula Interest through the day preceding the final Distribution Date, (c)
any Unpaid Certificate Interest Shortfall, and (d) any accrued and unpaid
Investor Loss Reduction Amounts through the day preceding such final
Distribution Date; (ii) the day following the Distribution Date on which the
distribution made to Investor Certificateholders has reduced the Certificate
Principal Balance to zero; (iii) the final payment or other liquidation (or
any Monthly Advance with respect thereto) of the Trust Balance of the last
Mortgage Loan remaining in the Trust Fund (including without limitation the
disposition of the Mortgage Loans) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan; and (iv) the Stated Maturity Date.
The Servicer, or in the event the Servicer does not exercise its option
to terminate the Trust Fund, the Certificate Insurer, may effect an early
retirement of the Certificates by paying the Final Termination Price and
accepting retransfer of the Trust Assets pursuant to the terms of the
Agreement on any Distribution Date after the Investor Certificate Principal
Balance is less than or equal to 10% of the Original Investor Certificate
Principal Balance and all amounts due and owing to the Certificate Insurer
have been paid; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of certain person named in
the Agreement. Upon retirement of the Certificates in accordance with
Section 10.01 of the Agreement, the Trustee shall execute such documents and
instruments of transfer presented by the Servicer or Certificate Insurer and
take such other actions as the Servicer or Certificate Insurer may reasonably
request to effect the retransfer of the Mortgage Loans to the Servicer or
Certificate Insurer.
Any purported Transfer of a Transferor Certificate in violation of the
restriction on Transfer will be null and void and vest no rights to the
purported Transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed as of the date set forth.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
not in its individual capacity but solely
as Trustee
------------------------------
Authorized Officer
Countersigned:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
By:
--------------------------------
Authorized Officer of
Bankers Trust Company of California, N.A.,
not in its individual capacity
but solely as Trustee
EXHIBIT C
REVERSE OF INVESTOR CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as ML Revolving Home Equity Loan Asset Backed Certificates, Series
199__-__ (herein called the "Certificates"), and representing, to the extent
specified in the Agreement, an undivided interest in: (i) the Trust Balances
of the Mortgage Loans and the proceeds thereof, (ii) collections in respect
of the Trust's interest in the Mortgage Loans received on or after the Cut-
off Date, (iii) an irrevocable and unconditional limited financial guarantee
insurance policy (the "Policy"), (iii) property that secured a Mortgage Loan
and which has been acquired by foreclosure or deed in lieu of foreclosure or
otherwise, (iv) the interest of the Trust in certain hazard insurance
policies covering the Mortgaged Properties, and (v) certain other property
relating to the Mortgage Loans.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the funds
on deposit in the Certificate Account for payment hereunder and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained
by the Certificate Registrar for such purpose, accompanied by a written
instrument of transfer in form satisfactory to the Trustee, if so required by
the Trustee, be duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Certificates of
authorized denominations, if applicable, and evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of a like tenor in
authorized denominations (in the case of the Investor Certificates) and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trustee, the Transferor, the Servicer, the Certificate Insurer
and the Certificate Registrar and any agent of the foregoing may treat the
Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Transferor, the Servicer, the
Certificate Insurer, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment in
full of all amounts owing to the Certificate Insurer and (B) the earliest of:
(i) the retransfer to the Servicer of the Investor Certificateholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust Fund for an amount equal to the sum of
(a) the Certificate Principal Balance, (b) accrued and unpaid Certificate
Formula Interest through the day preceding the final Distribution Date, (c)
any Unpaid Certificate Interest Shortfall, and (d) any accrued and unpaid
Investor Loss Reduction Amounts through the day preceding such final
Distribution Date; (ii) the day following the Distribution Date on which the
distribution made to Investor Certificateholders has reduced the Certificate
Principal Balance to zero; (iii) the final payment or other liquidation (or
any Monthly Advance with respect thereto) of the Trust Balance of the last
Mortgage Loan remaining in the Trust Fund (including without limitation the
disposition of the Mortgage Loans) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan; and (iv) the Stated Maturity Date.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
___________________
___________________
- ---------------------------------------------------------------
(Please Print or Typewrite Name and Address of Assignee)
- ---------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby
does irrevocably constitute and appoint
Attorney
- -------------------------------------------------------
to transfer the within Certificate on the books kept for the
registration thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty)
----------------------------
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Certificate in
every particular, without alteration or
enlargement or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
EXHIBIT D
REVERSE OF TRANSFEROR CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as ML Revolving Home Equity Loan Asset Backed Certificates, Series
199__-__ (herein called the "Certificates"), and representing, to the extent
specified in the Agreement, an undivided interest in: (i) the Trust Balances
of the Mortgage Loans and the proceeds thereof, (ii) collections in respect
of the Trust's interest in the Mortgage Loans received on or after the Cut-
off Date, (iii) an irrevocable and unconditional limited financial guarantee
insurance policy (the "Policy"), (iii) property that secured a Mortgage Loan
and which has been acquired by foreclosure or deed in lieu of foreclosure or
otherwise, (iv) the interest of the Trust in certain hazard insurance
policies covering the Mortgaged Properties, and (v) certain other property
relating to the Mortgage Loans.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the funds
on deposit in the Certificate Account for payment hereunder and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Transferor, the Servicer and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Transferor, the
Servicer and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 66%
and (ii) of the Certificate Insurer. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained
by the Certificate Registrar for such purpose, accompanied by a written
instrument of transfer in form satisfactory to the Trustee, if so required by
the Trustee, be duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Certificates of
authorized denominations, if applicable, and evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of a like tenor in
authorized denominations (in the case of the Investor Certificates) and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trustee, the Transferor, the Servicer, the Certificate Insurer
and the Certificate Registrar and any agent of the foregoing may treat the
Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Transferor, the Servicer, the
Certificate Insurer, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (A) payment in
full of all amounts owing to the Certificate Insurer and (B) the earliest of:
(i) the retransfer to the Servicer of the Investor Certificateholders'
interest in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust Fund for an amount equal to the sum of
(a) the Certificate Principal Balance, (b) accrued and unpaid Certificate
Formula Interest through the day preceding the final Distribution Date, (c)
any Unpaid Certificate Interest Shortfall, and (d) any accrued and unpaid
Investor Loss Reduction Amounts through the day preceding such final
Distribution Date; (ii) the day following the Distribution Date on which the
distribution made to Investor Certificateholders has reduced the Certificate
Principal Balance to zero; (iii) the final payment or other liquidation (or
any Monthly Advance with respect thereto) of the Trust Balance of the last
Mortgage Loan remaining in the Trust Fund (including without limitation the
disposition of the Mortgage Loans) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan; and (iv) the Stated Maturity Date.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
___________________
___________________
- ---------------------------------------------------------------
(Please Print or Typewrite Name and Address of Assignee)
- ---------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby
does irrevocably constitute and appoint
Attorney
- -------------------------------------------------------
to transfer the within Certificate on the books kept for the
registration thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty)
----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Certificate in
every particular, without alteration or
enlargement or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
EXHIBIT E
(FORM OF NOTICE FOR CERTIFICATE
INSURANCE POLICY)
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
--------------------------------------------
Policy No. AB0129BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: ( )
AMBAC ASSURANCE CORPORATION
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No. AB0129BE
(the "Policy") issued by Ambac Assurance Corporation ("AMBAC"). Terms
capitalized herein and not otherwise defined shall have the meanings
specified in the Policy unless the context otherwise requires.
The Trustee hereby certifies as follows:
1. The Trustee is the Trustee under the Agreement for the Holders;
2. The relevant Distribution Date is (date);
3. Payment on the Certificates in respect of the Distribution Date was
due to be received on ______ under the Agreement, in an amount
equal to $________;
4. The Servicer has calculated the Nonpayment of an Insured Amount to
be $________, of which the Servicer has calculated that
$___________ represent amounts described in clauses (a) and (b), or
(y), as the case may be, of the definition thereof.
(5. $_________ has been designated as the Preference Amounts in respect
of ________ Distribution Dates by the Servicer pursuant to the
Servicing Certificate; such amount is therefore also due and owing
pursuant to the terms of the Agreement as a portion of the Insured
Amount;)
6. The Trustee has not heretofore made a demand for the Insured Amount
in respect of the Distribution Date;
7. The Trustee hereby requests the payment of the Insured Amount be
made by AMBAC under the Policy and directs that payment under the
Policy be made to the following account by bank wire transfer of
federal or other immediately available funds in accordance with the
terms of the Policy to:
___________________ Trustee's account number
8. The Trustee hereby agrees that, following receipt of the Insured
Amount from AMBAC, it shall (a) hold such amounts in trust and
apply the same directly to the distribution payment on the
Certificates when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by the
Trustee; and (d) maintain an accurate record of such payments with
respect to each Certificate and the corresponding claim on the
Policy and proceeds thereof.
By: Trustee
--------------------------
Title:
--------------------------
(Officer)
EXHIBIT F
---------
MORTGAGE LOAN SCHEDULE
A COPY ON ELECTRONIC MEDIUM (FLOPPY DISKETTE) OF THE MORTGAGE LOAN SCHEDULE
HAS BEEN FORWARDED TO THE TRUSTEE FOR THEIR FILES. A COPY OF THE MORTGAGE
LOAN SCHEDULE MAY BE OBTAINED FROM THE TRUSTEE.
EXHIBIT G
REQUEST FOR RELEASE OF DOCUMENTS
To: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
Re: ML Revolving Home Equity Loan
Asset Backed Certificates, Series 1997-1
----------------------------------------
In connection with the administration of the Mortgage Loans held by you
as Trustee pursuant to the Pooling and Servicing Agreement dated October 1,
1997 for the above referenced transaction, we request the release, and hereby
acknowledge receipt, of the Mortgage File for the Mortgage Loan described
below, for the reason indicated.
Mortgage Loan Number: Address to which Trustee should
Deliver the Trustee's
Mortgage File:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Reason for Requesting Trustee's Mortgage File (check one)
___ 1. Mortgage Loan Paid in Full
___ 2. Mortgage Loan Liquidated
___ 3. Mortgage Loan in Foreclosure
___ 4. Other (explain) __________________________
__________________________
If box 1 or 2 above is checked, and the Mortgage File was previously
released to us, please release to us our previous receipt on file with you.
If box 3 or 4 above is checked, upon our return of the above specified
Mortgage File to you as Trustee, please acknowledge your receipt by signing
in the space indicated below, and returning this form.
MERRILL LYNCH CREDIT CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Date:
------------------------------
Mortgage File returned to
Trustee
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By: _____________________
Name: ___________________
Title: __________________
Date: ___________________
