SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
July 26, 1999
ACE SECURITIES CORP. (as Depositor under the Pooling and Servicing
Agreement, dated as of July 1, 1999, providing for the issuance of
ACE Securities Corp. Home Equity Loan Pass-Through Certificates,
Series 1999-LB2)
ACE Securities Corp.
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-56213 56-2088493
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
6525 Morrison Boulevard
Suite 318
Charlotte, North Carolina 28211
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (704) 365-0569
No Change
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
The Registrant registered issuances of ACE Securities Corp. Home
Equity Loan Pass-Through Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
by a Registration Statement on Form S-3 (Registration File No. 333-56213) (the
"Registration Statement"). Pursuant to the Registration Statement, the
Registrant issued $408,413,000 in aggregate principal amount of Class A, Class
M1, Class M2 and Class B Certificates of its ACE Securities Corp. Home Equity
Loan Trust 1999-LB2 Home Equity Loan Pass-Through Certificates on July 29,
1999. This Current Report on Form 8-K is being filed to satisfy an
undertaking, contained in the definitive Prospectus dated July 26, 1999, as
supplemented by the Prospectus Supplement dated July 26, 1999 (the "Prospectus
Supplement"), to file a copy of the Pooling and Servicing Agreement (as
defined below) executed in connection with the issuance of the Certificates, a
form of which was filed as an exhibit to the Registration Statement.
The Certificates were issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), attached hereto as Exhibit
4.1, dated as of July 1, 1999, among ACE Securities Corp., as depositor (the
"Depositor"), Long Beach Mortgage Company, as servicer (the "Servicer"), and
First Union National Bank, as trustee (the "Trustee"). The "Certificates"
consist of the following classes: Class A, Class M1, Class M2 and Class B. The
Certificates evidence beneficial ownership interest in a trust fund (the
"Trust Fund") that consists primarily of a pool of fixed and adjustable rate,
conventional, first lien residential mortgage loans (the "Mortgage Loans")
with an aggregate outstanding principal balance of $416,860,973 as of July 1,
1999, together with certain other assets. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to them in the Pooling
and Servicing Agreement.
Item 7. Financial Statements; Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1* Underwriting Agreement, dated June 24, 1999, between ACE
Securities Corp., German American Capital Corporation and
Deutsche Bank Securities Inc.
1.2 Terms Agreement, dated July 26, 1999, among ACE Securities
Corp., German American Capital Corporation and Deutsche Bank
Securities Inc.
4.1 Pooling and Servicing Agreement, dated as of July 1, 1999,
among ACE Securities Corp., as Depositor, Long Beach
Mortgage Company, as Servicer, and First Union National
Bank, as Trustee.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACE SECURITIES CORP.
By: /s/ Elizabeth Eldridge
----------------------------
Name: Elizabeth Eldridge
Title: Vice President
Dated: August 3, 1999
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1* Underwriting Agreement, dated June 24,
1999, between ACE Securities Corp., German
American Capital Corporation and Deutsche
Bank Securities Inc.
1.2 Terms Agreement, dated July 26, 1999, among ACE Securities
Corp., German American Capital Corporation and Deutsche Bank
Securities Inc.
4.1 Pooling and Servicing Agreement, dated as
of July 1, 1999, among ACE Securities
Corp., as Depositor, Long Beach Mortgage
Company, as Servicer, and First Union
National Bank, as Trustee.
_____________
* Incorporated by reference to the Depositor's Current Report on Form
8-K dated June 24, 1999, filed with the Securities and Exchange
Commission on July 13, 1999 (File No. 333-56213).
POOLING AGREEMENT
ACE SECURITIES CORP.,
as Depositor
LONG BEACH MORTGAGE COMPANY,
as Servicer
and
FIRST UNION NATIONAL BANK,
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 1999
---------------
Home Equity Loan Trust 1999-LB2
Pass-Through Certificates
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: ...................................................2
Section 1.02. Provisions of General Application. ............................27
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans; Special Deposit; Priority
and Subordination of Ownership Interests. .....................28
Section 2.02. Possession of Mortgage Files; Access to Mortgage Files.........29
Section 2.03. Delivery of Mortgage Loan Documents. ..........................29
Section 2.04. Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. ......................31
Section 2.05. Execution of Certificates......................................33
Section 2.06. Further Action Evidencing Assignment. .........................33
Section 2.07. Conveyance of the Subsequent Mortgage Loans. ..................33
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer. ..............................34
Section 3.02. Representations, Warranties and Covenants of the Depositor. ...35
Section 3.03. Purchase And Substitution. ....................................36
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates. .............................................37
Section 4.02. Registration of Transfer and Exchange of Certificates. ........38
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. ............43
Section 4.04. Persons Deemed Owners. ........................................43
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. Appointment of the Servicer. ..................................43
Section 5.02. Subservicers. .................................................45
Section 5.03. Collection of Certain Mortgage Loan Payments; Collection
Account. ......................................................46
Section 5.04. Permitted Withdrawals from the Collection Account. ............48
Section 5.05. Payment of Taxes, Insurance and Other Charges. ......... ....49
Section 5.06. Maintenance Of Casualty Insurance. ............................49
Section 5.07. Maintenance of Mortgage Impairment Insurance Policy. ..........50
Section 5.08. Fidelity Bond; Errors and Omissions Policy. ...................50
Section 5.09. Collection of Taxes, Assessments and Other Items;
Servicing Account. ............................................51
Section 5.10. Periodic Filings With The Securities And Exchange
Commission; Additional Information. ...........................51
Section 5.11. Enforcement of Due-on-Sale Clauses; Assumption Agreements......51
Section 5.12. Realization Upon Defaulted Mortgage Loans. ....................52
Section 5.13. Trustee to Cooperate; Release of Mortgage Files. ..............53
Section 5.14. Servicing Fee; Servicing Compensation. ........................54
Section 5.15. Reports to the Trustee and the Depositor; Collection Account
Statements. ...................................................55
Section 5.16. Annual Statement as to Compliance. ............................55
Section 5.17. Annual Independent Public Accountants' Servicing Report........55
Section 5.18. Purchase of Defaulted Mortgage Loans. .........................56
Section 5.19. Reports to be Provided by the Servicer. .......................56
Section 5.20. Adjustment of Servicing Compensation In Respect of Prepaid
Mortgage Loans. ...............................................57
Section 5.21. Periodic Advances. ............................................57
Section 5.22. Inspections. ..................................................58
Section 5.23. Maintenance of Corporate Existence and Licenses; Merger or
Consolidation of the Servicer. ..............................................58
Section 5.24. Assignment of Agreement by Servicer; Servicer Not to Resign. ..58
Section 5.25. Information Reports to be Filed by the Servicer................59
Section 5.26. MERS. .........................................................59
Section 5.27. Waiver of Prepayment Premiums. ................................59
Section 5.28. Adjustable Rate Mortgage Loans. ...............................59
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01. Establishment of Certificate Accounts; Deposits to the
Certificate Accounts. .........................................60
Section 6.02. Permitted Withdrawals from the Certificate Account. ...........60
Section 6.03. Collection of Money. ..........................................60
Section 6.04. [Reserved].....................................................61
Section 6.05. Distributions. ................................................61
Section 6.06. Investment of Accounts. .......................................63
Section 6.07. Reports by Trustee. ...........................................64
Section 6.08. Additional Reports by Trustee. ................................67
Section 6.09. Compensating Interest. ........................................67
Section 6.10. [Reserved].....................................................67
Section 6.11. Allocation of Realized Losses. ................................67
Section 6.12. Pre-Funding Account. ..........................................68
Section 6.13. Capitalized Interest Account. .................................68
Section 6.14. Determination of LIBOR. .......................................68
Section 6.15. The Basis Risk Reserve Fund. ..................................69
ARTICLE VII
DEFAULT
Section 7.01. Events of Default. ............................................69
Section 7.02. Trustee to Act; Appointment of Successor. .....................71
Section 7.03. Waiver of Defaults. ...........................................74
ARTICLE VIII
TERMINATION
Section 8.01. Termination. ..................................................74
Section 8.02. Additional Termination Requirements. ..........................75
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee. ............................................76
Section 9.02. Certain Matters Affecting the Trustee. ........................77
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. ........78
Section 9.04. Trustee May Own Certificates. .................................78
Section 9.05. Payment of Trustee's Fees. ....................................78
Section 9.06. Eligibility Requirements for Trustee. .........................79
Section 9.07. Resignation and Removal of the Trustee. .......................79
Section 9.08. Successor Trustee. ............................................80
Section 9.09. Merger or Consolidation of Trustee. ...........................80
Section 9.10. Appointment of Co-Trustee or Separate Trustee..................81
Section 9.11. Appointment of Custodians. ....................................81
Section 9.12. Appointment of Agent. .........................................82
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration. ........................................82
Section 10.02. Prohibited Transactions and Activities. ......................85
Section 10.03. Trustee and Servicer Indemnification. ........................85
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Limitation on Liability of the Depositor and the Servicer.....86
Section 11.02. Acts of Certificateholders. ..................................87
Section 11.03. Amendment. ...................................................88
Section 11.04. Recordation of Agreement. ....................................89
Section 11.05. Notices. .....................................................89
Section 11.06. Severability of Provisions. ..................................90
Section 11.07. Counterparts. ................................................90
Section 11.08. Successors and Assigns. ......................................90
Section 11.09. Headings. ....................................................90
Section 11.10. [Reserved]....................................................90
Section 11.11. Third Party Beneficiary. .....................................90
Section 11.12. Intent of the Parties. .......................................90
Section 11.13. Notice to Rating Agencies.....................................90
Section 11.14. Governing Law. ...............................................91
Section 11.15. Appointment of Agent. ........................................91
EXHIBITS
Exhibit A [Reserved]
Exhibit B-1 Forms of Regular Certificates
Exhibit B-2 Form of Residual Certificate
Exhibit C Mortgage File
Exhibit D Mortgage Loan Schedule
Exhibit E Acknowledgment of Receipt
Exhibit F Initial Certification
Exhibit G Final Certification
Exhibit H Request For Release of Documents
Exhibit I Form of Residual Transfer Affidavit And Agreement
Exhibit J Form of Residual Transferor Certificate
Exhibit K Form of ERISA Affidavit
Exhibit L Form of Liquidation Report
Exhibit M Certificate Re: Prepaid Loans
Exhibit N Subsequent Transfer Instrument
Exhibit O Form of Investor Representation Letter
Exhibit P Form of Transferor Representation Letter
Exhibit Q Form of Rule 144A Investment Representation
Exhibit R Premium Exhibit
POOLING AND SERVICING AGREEMENT, dated as of July 1, 1999, by and
among ACE Securities Corp., a Delaware corporation, in its capacity as
depositor (the "Depositor"), Long Beach Mortgage Company, a Delaware
corporation, in its capacity as servicer (the "Servicer"), and First Union
National Bank, a national banking association, in its capacity as trustee (the
"Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell certificates (collectively, the
"Certificates"), to be issued hereunder in the classes listed below (each, a
"Class"), which in the aggregate will evidence the entire beneficial ownership
interest in the Trust Fund (as defined herein), consisting of the Mortgage
Loans and certain other assets specified herein. As provided herein, the
Trustee will make an election to treat the assets of the Trust Fund (other
than the Basis Risk Reserve Fund) as a real estate mortgage investment conduit
(a "REMIC") for federal income tax purposes. The Regular Certificates (as
defined herein) will represent ownership of "regular interests" in the REMIC,
and the Class R Certificates will constitute the sole Class of "residual
interest" in the REMIC for purposes of the REMIC Provisions (as defined
herein) under federal income tax law.
The following table sets forth the Class designation, Interest Rate,
initial Class Principal Amount (or Class Notional Amount) (each as defined
herein), and minimum denominations for each Class of Certificates constituting
the interests in the Trust Fund created hereunder.
Initial Class
Principal Interest Minimum
Class Amount Rate Denomination
--------------- ---------- ------------
A.............. $335,448,000.00 (1) $25,000
M1............. 28,430,000.00 (2) 25,000
M2............. 26,135,000.00 (3) 25,000
B.............. 18,400,000.00 (4) 25,000
R.............. (5) (5) (6)
- -------------------------------
(1) The Interest Rate with respect to any Distribution Date for the Class A
Certificates is the per annum rate equal to the lesser of (i) LIBOR plus
0.350% and (ii) the Net Funds Cap for such date; provided, that if the
Residual Certificateholder does not exercise its option to purchase the
Mortgage Loans and other property of the Trust Fund pursuant to Section
8.01(b) on the Distribution Date on which it is first entitled to do so,
then with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above shall be LIBOR plus 0.700%.
(2) The Interest Rate with respect to any Distribution Date for the Class M1
Certificates is the per annum rate equal to the lesser of (i) LIBOR plus
0.700% and (ii) the Net Funds Cap for such date; provided, that if the
Residual Certificateholder does not exercise its option to purchase the
Mortgage Loans and other property of the Trust Fund pursuant to Section
8.01(b) on the Distribution Date on which it is first entitled to do so,
then with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above shall be LIBOR plus 1.050%.
(3) The Interest Rate with respect to any Distribution Date for the Class M2
Certificates is the per annum rate equal to the lesser of (i) LIBOR plus
1.250% and (ii) the Net Funds Cap for such date; provided, that if the
Residual Certificateholder does not exercise its option to purchase the
Mortgage Loans and other property of the Trust Fund pursuant to Section
8.01(b) on the Distribution Date on which it is first entitled to do so,
then with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above shall be LIBOR plus 1.875%.
(4) The Interest Rate with respect to any Distribution Date for the Class B
Certificates is the per annum rate equal to the lesser of (i) LIBOR plus
2.850% and (ii) the Net Funds Cap for such date; provided, that if the
Residual Certificateholder does not exercise its option to purchase the
Mortgage Loans and other property of the Trust Fund pursuant to Section
8.01(b) on the Distribution Date on which it is first entitled to do so,
then with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above shall be LIBOR plus 4.275%.
(5) The Class R Certificate will be issued without a Class Principal Amount
and will not bear interest.
(6) The Class R Certificate will be issued as a single Certificate evidencing
the entire Percentage Interest in such Class.
The Mortgage Loans (as defined herein) have an aggregate Principal
Balance (as defined herein) as of the Cut-off Date equal to $416,860,972.94.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: Whenever used herein, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings.
AccepteD Servicing Practices: The Servicer's normal servicing
practices, which in all material respects will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
and others' account mortgage loans of the same type as the Mortgage Loans in
the jurisdictions in which the related Mortgaged Properties are located, which
are exercised with prudent and reasonable care and which give due
consideration to the Certificateholders' reliance on the Servicer.
Account: Any Eligible Account established pursuant to Sections 5.03,
5.09, 6.01, 6.04, 6.12, 6.13 or 6.15 hereof.
Accrual Period: With respect to any Distribution Date and any Class
of LIBOR Certificates, the one-month period beginning on the immediately
preceding Distribution Date (or on the Closing Date, in the case of the first
Accrual Period) and ending on the day immediately preceding the related
Distribution Date. With respect to any Distribution date and any other Class
of Certificates, the calendar month immediately preceding the month in which
such Distribution Date occurs.
Act: The Securities Act of 1933, as amended.
Addition Notice: Not applicable.
Adjustable Rate Mortgage Loan: Any Mortgage Loan as to which the
related Mortgage Note provides for the adjustment of the Mortgage Rate
applicable thereto.
Adjusted Net Mortgage Rate: Not applicable.
Adverse REMIC Event: As defined in Section 10.01(f).
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agency Agreement: The Agency Agreement dated July 29, 1999, among the
Trustee, Bankers Trust Company, the Depositor and the Servicer.
Agreement: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
Applied Loss Amount: With respect to any Distribution Date, the
amount, if any, by which (x) the aggregate Certificate Principal Amount of the
Certificates after giving effect to distributions on such date, but before
giving effect to any application of the Applied Loss Amount with respect to
such date, exceeds (y) the Total Loan Balance for such date.
Appraised Value: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at
the time of the origination of the related Mortgage Loan, and (ii) the sales
price of the Mortgaged Property at such time of origination, except in the
case of a Mortgaged Property securing a refinanced or modified Mortgage Loan
as to which it is the lesser of the appraised value determined above or the
appraised value determined in an appraisal at the time of refinancing or
modification, as the case may be.
Assignment Of Mortgage: With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders.
Authorized Denomination: With respect to each Class of Certificates,
the applicable minimum denomination specified in the Preliminary Statement
hereto.
Balloon Mortgage Loan: Any Mortgage Loan having an original term to
maturity that is shorter than its amortization schedule, and a final Monthly
Payment that is disproportionately large in comparison to other Monthly
Payments.
Balloon Payment: The final scheduled payment under the terms of a
Balloon Mortgage Loan.
Basis Risk Reserve Fund: A fund created as part of the Trust Fund
pursuant to Section 6.15 of this Agreement but which is not an asset of any
REMIC.
Basis Risk Shortfall: With respect to any Distribution Date and any
Class of Certificates other than the Residual Certificates, the amount by
which the Interest Rate applicable to such Certificate for such date,
determined without regard to the Net Funds Cap for such date but subject to
the Net Maximum Interest Rate, exceeds such Net Funds Cap.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by the
Depository; provided, that after the occurrence of a condition whereupon
book-entry registration and transfer are no longer permitted and Definitive
Certificates are to be issued to Certificateholders, such Book-Entry
Certificates shall no longer be "Book-Entry Certificates." As of the Closing
Date, the following Classes of Certificates constitute Book-Entry
Certificates: Class A, Class M1, Class M2 and Class B.
Business Day: Any day other than (a) a Saturday or Sunday or (b) a
day on which banking institutions in the State of New York, the State of
California or (if other than New York) the city in which the Trustee's
Corporate Trust Division is located are authorized or obligated by law or
executive order to be closed.
Capitalized Interest Account: Not applicable.
Capitalized Interest Amount: Not applicable.
Carryforward Interest: With respect to any Distribution Date and each
Class of Certificates, the sum of (i) the amount, if any, by which (x) the sum
of (A) Current Interest for such Class for the immediately preceding
Distribution Date and (B) any unpaid Carryforward Interest for such Class for
such immediately preceding Distribution Date exceeds (y) the amount
distributed in respect of interest on such Class on such immediately preceding
Distribution Date, and (ii) interest on such amount for the related Accrual
Period at the applicable Interest Rate.
Certificate: Any certificate of a Class identified in the Preliminary
Statement hereto executed by the Trustee on behalf of the Trust Fund and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits B-1 and B-2.
Certificate Account: The account established in accordance with
Section 6.01(a) hereof and maintained by the Trustee, in the name of "First
Union National Bank, as Trustee of ACE Securities Corp. Home Equity Loan Trust
1999-LB2 under the Pooling and Servicing Agreement dated as of July 1, 1999."
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register, solely for the purposes of giving
any consent (except any consent required to be obtained pursuant to Section
11.03), waiver, request or demand pursuant to this Agreement, any Certificate
registered in the name of the Depositor or the Servicer or any Affiliate
thereof shall be deemed not to be outstanding and the rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of rights necessary to effect any such consent has been obtained,
except as otherwise provided in Section 11.03. The Trustee shall be entitled
to rely upon a certification of the Depositor or the Servicer in determining
whether any Certificates are registered in the name of a respective Affiliate.
Certificate Principal Amount: With respect to any Certificate other
than any Notional Certificate or Residual Certificate, the initial Certificate
Principal Amount thereof, less the amount of all principal distributions
previously made with respect to such Certificate and any Applied Loss Amount
previously allocated to such Certificate. The Notional and Residual
Certificates are issued without Certificate Principal Amounts.
Certificate Register: As described in Section 4.02(a).
Certificate Registrar: Bankers Trust Company.
Class: All Certificates having the same class designation.
Class B Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, by which (x) the sum of (i) the
aggregate Certificate Principal Amount of the Class A, Class M1 and Class M2
Certificates, in each case after giving effect to distributions on such
Distribution Date, and (ii) the Class Principal Amount of the Class B
Certificates immediately prior to such Distribution Date exceeds (y) the
lesser of (i) the product of (A) if a Cumulative Loss Trigger Event has not
occurred with respect to such date, 93.00%, and if a Cumulative Loss Trigger
Event has occurred with respect to such date, 88.50%, and (B) the Total Loan
Balance for such Distribution Date and (ii) the amount, if any, by which the
Total Loan Balance for such Distribution Date exceeds $2,084,305.
Class M1 Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, by which (x) the sum of (i) the Class
Principal Amount of the Class A Certificates after giving effect to
distributions on that Distribution Date, and (ii) the Class Principal Amount
of the Class M1 Certificates immediately prior to such Distribution Date
exceeds (y) the lesser of (i) the product of (A) if a Cumulative Loss Trigger
Event has not occurred with respect to such date, 71.64%, and if a Cumulative
Loss Trigger Event has occurred with respect to such date, 67.14%, and (B) the
Total Loan Balance for such Distribution Date and (ii) the amount, if any, by
which the Total Loan Balance for such Distribution Date exceeds $2,084,305.
Class M2 Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, by which (x) the sum of (i) the
aggregate Certificate Principal Amount of the Class A and Class M1
Certificates, in each case after giving effect to distributions on that
Distribution Date, and (ii) the Class Principal Amount of the Class M2
Certificates immediately prior to such Distribution Date exceeds (y) the
lesser of (i) the product of (A) if a Cumulative Loss Trigger Event has not
occurred with respect to such date, 84.18%, and if a Cumulative Loss Trigger
Event has occurred with respect to such date, 79.68% and (B) the Total Loan
Balance for such Distribution Date and (ii) the amount, if any, by which the
Total Loan Balance for such Distribution Date exceeds $2,084,305.
Class Notional Amount: Not applicable.
Class Principal Amount: With respect to each Class of Certificates
other than the Residual Certificates and any Class of Notional Certificates,
the aggregate of the Certificate Principal Amounts of all Certificates of such
Class at the date of determination.
Closing Date: July 29, 1999.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Account: The account established in accordance with
Section 5.03(b) hereof and maintained by the Servicer, in the name of "First
Union National Bank, as Trustee of ACE Securities Corp. Home Equity Loan Trust
1999-LB2 under the Pooling and Servicing Agreement dated as of July 1, 1999".
Compensating Interest: As defined in Section 6.09.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and
a Proprietary Lease.
Cooperative Loan Documents: With respect to any Cooperative Loan, (i)
the Cooperative Shares, together with a stock power in blank; (ii) the
original executed Security Agreement and the assignment of the Security
Agreement endorsed in blank; (iii) the original executed Proprietary Lease and
the assignment of the Proprietary Lease endorsed in blank; (iv) the original
executed Recognition Agreement and the assignment of the Recognition Agreement
(or a blanket assignment of all Recognition Agreements) endorsed in blank; (v)
the executed UCC-1 financing statement with evidence of recording thereon,
which has been filed in all places required to perfect the security interest
in the Cooperative Shares and the Proprietary Lease; and (vi) executed UCC-3
financing statements (or copies thereof) or other appropriate UCC financing
statements required by state law, evidencing a complete and unbroken line from
the mortgagee to the Trustee with evidence of recording thereon (or in a form
suitable for recordation).
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Division: The principal office of the Trustee, at
which its corporate trust business shall be administered, which office at the
date of execution of this Agreement is located at 230 South Tryon Street, 9th
Floor, Charlotte, North Carolina 28288-1179.
Cumulative Loss Percentage: With respect to any Distribution Date,
the aggregate of all Realized Losses from the Cut-off Date through the close
of the Due Period immediately preceding such Distribution Date, expressed as a
percentage of the Cut-off Date Loan Balance.
Cumulative Loss Trigger Event: A Cumulative Loss Trigger Event will
have occurred with respect to any Distribution Date if (a) the Cumulative Loss
Percentage for such Distribution Date is greater than (b) the Targeted
Cumulative Loss Percentage for such Distribution Date.
Current Interest: With respect to each Class of Certificates and any
Distribution Date, (a) the aggregate amount of interest accrued at the
applicable Interest Rate during the related Accrual Period on the Class
Principal Amount or Class Notional Amount of such Class immediately prior to
such Distribution Date, on the basis of a 360-day year and the actual number
of days in such Accrual Period, minus (b) any Relief Act Shortfall for such
date.
Curtailment: With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess
of the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
Custodial Agreement: Any custodial agreement entered into by the
Trustee and a Custodian pursuant to the terms of this Agreement.
Custodian: As defined in Section 2.02(c).
Cut-off Date: July 1, 1999.
Cut-off Date Loan Balance: The Total Loan Balance as of the Cut-off
Date.
DCR: Duff & Phelps Credit Rating Co., or its successor in interest.
Deferred Amount: With respect to any Distribution Date and each Class
B Certificate, the aggregate of Applied Loss Amounts previously applied in
reduction of the Certificate Principal Amount thereof, less any amounts
previously reimbursed in respect thereof.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
Deleted Mortgage Loan: A Mortgage Loan replaced by or to be replaced
by a Qualified Substitute Mortgage Loan.
Delinquency Rate: With respect to any Due Period, the fraction,
expressed as a percentage, the numerator of which is the aggregate outstanding
principal balance of all Mortgage Loans 60 or more days Delinquent, all
Mortgage Loans in foreclosure and all REO Mortgage Loans as of the close of
business on the last day of such Due Period, and the denominator of which is
the Total Loan Balance for the related Distribution Date.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a 31-
day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
delinquent," "90 days delinquent" and so on.
Delinquency Trigger Event: A Delinquency Trigger Event will have
occurred with respect to any Distribution Date if the Three Month Delinquency
Rate for such Distribution Date equals or exceeds 50% of the Senior
Enhancement Percentage for such Distribution Date.
Depositor: ACE Securities Corp., a Delaware corporation, and any
successor thereto.
Depository: The Depository Trust Company, 55 Water Street, New York,
New York 10041 and any successor Depository hereafter named. The nominee of
the initial Depository for purposes of registering those Certificates that are
to be Book-Entry Certificates is Cede & Co. The Depository shall at all times
be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended.
Determination Date: The close of business on the 15th day of each
month, or if such 15th day is not a Business
Day, the immediately preceding Business Day.
Direct Participant: Any broker-dealer, bank or other financial
institution for which the Depository holds Book Entry Certificates from time
to time as a securities depositary.
Disqualified Non-United States Person: A transferee of a Class R
Certificate other than a person that (i) is not a Non-United States Person or
(ii) is a Non-United States Person that holds a Class R Certificate in
connection with the conduct of a trade or business within the United States
and has furnished the transferor and the Trustee with an effective Internal
Revenue Service Form 4224 or (iii) is a Non-United States Person that has
delivered to both the transferor and the Trustee an opinion of a nationally
recognized tax counsel to the effect that the transfer of a Class R
Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of a Class R
Certificate will not be disregarded for federal income tax purposes.
Disqualified Organization: Any of (i) the United States, any State or
political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the FHLMC, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (unless such organization is subject to the tax imposed
by Section 511 of the Code on unrelated business taxable income), or rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (iv) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided to the Trustee that the holding of an ownership
interest in a Class R Certificate by such Person may cause the REMIC or any
Person having an ownership interest in any Class of Certificates (other than
such Person) to incur liability for any federal tax imposed under the Code
that would not otherwise be imposed but for the transfer of an ownership
interest in the Class R Certificate to such Person. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code.
Distribution Date: The 25th day of any month or if such 25th day is
not a Business Day, the first Business Day immediately following, commencing
in August 1999.
Due Date: The first day of each calendar month.
Due Period: With respect to each Distribution Date, the period
beginning on the opening of business on the second day of the calendar month
preceding the calendar month in which such Distribution Date occurs, and
ending at the close of business on the first day of the calendar month in
which such Distribution Date occurs.
Eligible Account: Either (A) a segregated account or accounts
maintained with an institution (which may include the Trustee, provided such
institution otherwise meets these requirements) whose deposits are insured by
the FDIC, the unsecured and uncollateralized debt obligations of which
institution shall be rated AA (or the equivalent) or better by each Rating
Agency and in the highest short term rating category by each Rating Agency,
and which is (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution (including the Trustee) duly organized, validly existing and in
good standing under the applicable banking laws of any state, (iii) a national
banking association duly organized, validly existing and in good standing
under the federal banking laws, (iv) a principal subsidiary of a bank holding
company, or (v) approved in writing by each Rating Agency or (B) a segregated
trust account or accounts maintained in the trust department of a federal or
state chartered depository institution, acting in its fiduciary capacity.
ERISA: As defined in Section 4.02(m) hereof.
ERISA-Restricted Certificate: Any Class M1, Class M2 or Class B
Certificate.
Event Of Default: One or more of the events described in Section 7.01
hereof.
Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (a) Monthly Excess Interest, if any, for such date and (b)
the Overcollateralization Deficiency, if any, for such date.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FNMA: Fannie Mae and any successor thereto.
Fitch: Fitch ICBA, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: Any Mortgage Loan as to which the related
Mortgage Note provides for a fixed Mortgage Rate.
GAAP: Generally accepted accounting principles.
Index: The index specified in the related Mortgage Note for
calculation of the Mortgage Rate thereof.
Indirect Participant: Any financial institution for whom any Direct
Participant holds an interest in a Book-Entry Certificate.
Initial Capitalized Interest Amount: Not applicable.
Initial LIBOR Rate: Not applicable.
Initial Mortgage Loan: Not applicable.
Insurance Policy: Any standard hazard insurance policy, flood
insurance policy, earthquake insurance policy or title insurance policy
relating to a Mortgage Loan or a Mortgaged Property.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
Interest Rate: With respect to each Class of Certificates and any
Distribution Date, the applicable per annum rate set forth or described in the
Preliminary Statement hereto.
Interest Remittance Amount: With respect to any Distribution Date,
the sum of (i) all interest collected (other than Payaheads) or advanced in
respect of Monthly Payments on the Mortgage Loans during the related Due
Period, less (x) the related Servicing Fees to the extent provided in this
Agreement and (y) unreimbursed Periodic Advances and, without duplication,
Nonrecoverable Advances due to the Servicer or the Trustee with respect to the
Mortgage Loans, to the extent allocable to interest and to the extent provided
in this Agreement, (ii) any Compensating Interest paid by the Servicer with
respect to such Distribution Date, (iii) the portion of the Loan Purchase
Price paid for any Mortgage Loan that was purchased from the Trust Fund during
the related Prepayment Period, to the extent allocable to interest, (iv) the
portion of any Substitution Adjustment paid with respect to the Mortgage Loans
during the related Prepayment Period allocable to interest, (v) all Net
Liquidation Proceeds, Insurance Proceeds, Net REO Proceeds, Released Mortgaged
Property Proceeds and other recoveries collected with respect to such Mortgage
Loans during the related Prepayment Period, to the extent allocable to
interest, and (vi) any amounts paid by the Servicer and the Trustee in respect
of investment losses on amounts on deposit in the Collection Account and the
Certificate Account. The Interest Remittance Amount does not include
Prepayment Premiums.
Junior Mortgage Loan: Any Mortgage Loan secured by a junior lien on
the related Mortgaged Property.
LIBOR: With respect to each Accrual Period, the per annum rate
determined pursuant to Section 6.14 on the basis of London interbank offered
rate quotations for one-month Eurodollar deposits, as such quotations may
appear on the display designated as page 3750 on the Dow Jones Telerate
Service (or such other page as may replace such page on that service for the
purpose of displaying London interbank offered quotations of major banks).
LIBOR Certificate: Any Class A, Class M1, Class M2 or Class B
Certificate.
LIBOR Determination Date: The second London Business Day preceding
the commencement of each Accrual Period.
Liquidated Mortgage Loan: A Mortgage Loan with respect to which the
related Mortgaged Property has been acquired, liquidated or foreclosed and
with respect to which the Servicer determines, in accordance with Accepted
Servicing Practices, that all Liquidation Proceeds which it expects to recover
have been recovered or that the cost of obtaining any additional recoveries
therefrom would exceed the amount of such recoveries.
Liquidation Expenses: Expenses incurred by the Servicer in connection
with the liquidation of any defaulted Mortgage Loan or property acquired in
respect thereof (including, without limitation, legal fees and expenses,
committee or referee fees, and, if applicable, brokerage commissions and
conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.05, 5.06 and 5.12 respecting the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration
or preservation of the related Mortgaged Property. Liquidation Expenses shall
not include any previously incurred expenses in respect of an REO Mortgage
Loan which have been netted against related REO Proceeds.
Liquidation Proceeds: Amounts received by the Servicer (including
Insurance Proceeds) in connection with the liquidation of defaulted Mortgage
Loans or property acquired in respect thereof, whether through foreclosure,
sale or otherwise, including payments in connection with such Mortgage Loans
received from the Mortgagor, other than amounts required to be paid to the
Mortgagor pursuant to the terms of the applicable Mortgage or to be applied
otherwise pursuant to law.
Loan Purchase Price: With respect to any Mortgage Loan purchased from
the Trust Fund pursuant to this Agreement or the Purchase Agreement, the sum
of (i) the outstanding principal balance of such Mortgage Loan as of the date
of purchase, (ii) all interest accrued thereon and unpaid to the end of the
Due Period during which such purchase occurs, (iii) the amount of any
Servicing Advances remaining unreimbursed with respect to such Mortgage Loan
and (iv) the amount of any Servicing Advances reimbursed other than from
collections or other recoveries in respect of such Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of such Mortgage Loan, as of the date of origination of the Mortgage
Loan, divided by the Appraised Value of the related Mortgaged Property.
London Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Maintenance: With respect to any Cooperative Unit, the rent or fee
paid by the Mortgagor to the Cooperative Corporation pursuant to the
Proprietary Lease.
Majority Certificateholders: The Holder or Holders of Certificates
evidencing Percentage Interests in excess of 51% of each Class outstanding.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
Corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related
Mortgage, or an Assignment of Mortgage, has been or will be recorded in the
name of MERS, as agent for the holder from time to time of the Mortgage Note.
Monthly Excess Cashflow: With respect to any Distribution Date, the
sum of (x) Monthly Excess Interest, if any, for such date and (y) the
Overcollateralization Release Amount, if any, for such date.
Monthly Excess Interest: With respect to any Distribution Date, the
amount of any Interest Remittance Amount remaining after application pursuant
to clauses first through fifth of Section 6.05(b)(i) on such date.
Monthly Payment: As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the scheduled payment of principal and interest due
thereon for such Due Date (after adjustment for Deficient Valuations occurring
prior to such Due Date but before any adjustment to such amortization schedule
by reason of any bankruptcy, other than Deficient Valuations or similar
proceeding or any moratorium or similar waiver or grace period).
Moody's: Moody's Investors Service, or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
lien on the Mortgaged Property.
Mortgage File: The mortgage documents listed in Exhibit C attached
hereto pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement; provided
that whenever the term "Mortgage File" is used to refer to documents actually
received by the Trustee or the Custodian on behalf of the Trustee, such term
shall not be deemed to include such additional documents required to be added
unless they are actually so added.
Mortgage Impairment Insurance Policy: As defined in Section 5.07.
Mortgage Loan: An individual mortgage loan that is assigned and
transferred to the Trustee pursuant to this Agreement and identified on
Exhibit D hereto, together with the rights and obligations of a holder thereof
and payments thereon and proceeds therefrom (other than payments of interest
that accrued on each Mortgage Loan up to and including the Due Date therefor
occurring on or prior to the Cut-off Date), the Mortgage Loans originally
subject to this Agreement being identified on the Mortgage Loan Schedule. As
applicable, Mortgage Loan shall be deemed to refer to the related REO
Property.
Mortgage Loan Schedule: The list of the Mortgage Loans transferred to
the Trustee or the Custodian on behalf of the Trustee on or before the Closing
Date or Subsequent Transfer Date as part of the Trust Fund and attached hereto
as Exhibit D and delivered in computer readable format, which list shall set
forth at a minimum the following information as to each Mortgage Loan:
(i) last name of Mortgagor;
(ii) the Mortgage Loan identifying number;
(iii) the city, state and zip code of the Mortgaged Property;
(iv) the type of property;
(v) the current Monthly Payment as of the Cut-off Date;
(vi) the original number of months to maturity;
(vii) the scheduled maturity date;
(viii) the Principal Balance as of the Cut-off Date (with
respect to an Initial Mortgage Loan) or subsequent Cut-off Date
(with respect to a Subsequent Mortgage Loan);
(ix) the Loan-to-Value Ratio at origination;
(x) the Mortgage Rate as of the date of origination;
(xi) the Mortgage Rate as of the Cut-off Date (with respect
to an Initial Mortgage Loan) or Subsequent Cut-off Date (with respect
to a Subsequent Mortgage Loan);
(xii) the Appraised Value;
(xiii) the stated purpose of the loan at origination;
(xiv) the type of occupancy at origination;
(xv) the documentation type;
(xvi) the loan classification; and
(xvii) the Servicing Fee with respect to such Mortgage Loan,
expressed as a rate per annum.
Such schedule may consist of multiple reports that collectively set
forth all of the information required.
Mortgage Note: The original, executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified on the
Mortgage Loan Schedule.
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues under the related Mortgage Note.
Mortgaged Property: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate in a single parcel of land improved by a
Residential Dwelling.
Mortgagor: The obligor on a Mortgage Note.
Net Excess Spread: With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is equal to the
product of (i) the amount, if any, by which (a) the Optimal Interest
Remittance Amount for such Distribution Date exceeds (b) the Current Interest
payable with respect to the Certificates for such date and (ii) twelve, and
the denominator of which is the Total Loan Balance for such date.
Net Funds Cap: With respect to any Distribution Date, the per annum
rate equal to the fraction, expressed as a percentage, the numerator of which
is the product of (i) the Optimal Interest Remittance Amount for such date and
(ii) twelve, and the denominator of which is the Total Loan Balance for the
immediately preceding Distribution Date.
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and net
of any unpaid Servicing Fees, unreimbursed Periodic Advances and unreimbursed
Servicing Advances made by the Servicer. For all purposes of this Agreement,
Net Liquidation Proceeds shall be allocated first to accrued and unpaid
interest on the related Mortgage Loan and then to the unpaid principal balance
thereof.
Net Maximum Interest Rate: With respect to any Class of LIBOR
Certificates and any Distribution Date, the per annum rate equal to (a) the
weighted average (by Principal Balance) of the maximum interest rates
applicable to the Adjustable Rate Mortgage Loans under the applicable Mortgage
Notes and the Mortgage Rates applicable to the Fixed Rate Mortgage Loans,
minus (b) the Total Expense Rate.
Net Mortgage Rate: With respect to each Mortgage Loan at any time of
determination, a rate equal to the Mortgage Rate on such Mortgage Loan minus
the Total Expense Rate.
Net REO Proceeds: As to any REO Mortgage Loan, REO Proceeds net of,
without duplication, any unpaid Servicing Fees, unreimbursed Periodic Advances
and unreimbursed Servicing Advances made by the Servicer. For all purposes of
this Agreement, Net REO Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid principal
balance thereof.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan. As of the Closing Date, each Mortgage Loan is a Non-MERS Mortgage Loan.
Nonrecoverable Advances: With respect to any Mortgage Loan, (a) any
Periodic Advance or Servicing Advance previously made and not reimbursed from
late collections pursuant to Section 5.04(a), or (b) a Periodic Advance
proposed to be made in respect of a Mortgage Loan or REO Property, either of
which, in the good faith business judgment of the Servicer, as evidenced by an
Officer's Certificate delivered to the Trustee no later than the Business Day
following such determination would not be ultimately recoverable pursuant to
Section 5.04(a).
Non-United States Person: Any Person other than a United States
Person.
Notional Certificate: None.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the President or a Vice President and the Treasurer, the Secretary, one
of the Assistant Treasurers or Assistant Secretaries or a Servicing Officer of
the Seller, the Servicer, or the Depositor, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, which opinion shall
be reasonably acceptable in form and substance to the Trustee and delivered to
the Trustee from counsel experienced in matters relating to the subject of
such opinion; except that any opinion of counsel relating to (a) the
qualification of the Trust Fund as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of counsel who (i) is in fact independent of the
Seller, the Servicer and the Trustee, (ii) does not have any direct financial
interest or any material indirect financial interest in the Seller or the
Servicer or the Trustee or in an Affiliate thereof and (iii) is not connected
with the Seller or the Servicer or the Trustee as an officer, employee,
director or person performing similar functions.
Optimal Interest Remittance Amount: With respect to each Distribution
Date, the product of (1)(x) the weighted average of the Net Mortgage Rates of
the Mortgage Loans as of the first day of the related Due Period, divided by
(y) twelve, and (2) the Total Loan Balance for the immediately preceding
Distribution Date.
Original Pre-Funded Amount: Not applicable.
Originator: Long Beach Mortgage Company, a Delaware corporation, in
its capacity as Originator under the
Purchase Agreement.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan
(including an REO Mortgage Loan) which was not the subject of a Principal
Prepayment in Full prior to such Due Date, which did not become a Liquidated
Mortgage Loan prior to such Due Date, and which was not purchased by the
Servicer, the Seller or the Originator prior to such Due Date.
Overcollateralization Amount: With respect to any Distribution Date,
the amount, if any, by which (x) the Total Loan Balance for such Distribution
Date exceeds (y) the aggregate Certificate Principal Amount of the
Certificates after giving effect to distributions on such Distribution Date.
Overcollateralization Deficiency: With respect to any Distribution
Date, the amount, if any, by which (x) the Targeted Overcollateralization
Amount for such Distribution Date exceeds (y) the Overcollateralization Amount
for such Distribution Date, calculated for this purpose after giving effect to
the reduction on such Distribution Date of the Certificate Principal Amounts
of the Certificates resulting from the distribution of the Principal
Remittance Amount (but not any Extra Principal Distribution Amount) on such
Distribution Date, but before the allocation of any Applied Loss Amount on
such Distribution Date.
Overcollateralization Release Amount: With respect to any
Distribution Date, the amount, if any, by which (a) the Overcollateralization
Amount for such date exceeds (b) the Targeted Overcollateralization Amount for
such date.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Owner-Occupied Mortgaged Property: A Residential Dwelling as to which
the related Mortgagor represented an intent to occupy as such Mortgagor's
primary, secondary or vacation residence at the origination of the Mortgage
Loan.
Payahead: With respect to any Mortgage Loan and any Due Date
therefor, any Monthly Payment received by the Servicer during any Due Period
in addition to the Monthly Payment due on such Due Date, intended by the
related Mortgagor to be applied on a subsequent Due Date.
Percentage Interest: With respect to a Regular Certificate and any
date of determination, the portion evidenced by such Certificate, expressed as
a percentage rounded to four decimal places, equal to a fraction the numerator
of which is the initial Certificate Principal Amount represented by such
Certificate and the denominator of which is the initial Class Principal Amount
or Class Notional Amount of such Class of Certificates. With respect to a
Class R Certificate and any date of determination, the portion evidenced
thereby as stated on the face of such Certificate.
Periodic Advance: The aggregate of the advances with respect to
Mortgage Loans and REO Properties required to be made by the Servicer on any
Servicer Remittance Date pursuant to Section 5.21 hereof, the amount of any
such advances being equal to the sum of: (i) with respect to the Mortgage
Loans other than REO Properties as described in clause (ii) below, all Monthly
Payments (net of the related Servicing Fee) other than any Balloon Payment on
such Mortgage Loans that were Delinquent as of the related Determination Date,
plus (ii) with respect to each REO Property, which REO Property was acquired
during or prior to the related Prepayment Period and as to which an REO
Disposition did not occur during the related Prepayment Period, an amount
equal to the Monthly Payment (net of the related Servicing Fee) for the most
recently ended Due Period for the related Mortgage Loan minus the net income
from such REO Property transferred to the related Certificate Account for such
Distribution Date, minus (iii) the amount of any advance otherwise required
for such Distribution Date pursuant to clauses (i) and (ii) above which the
Servicer has determined to be a Nonrecoverable Advance.
Permitted Investments: As used herein, Permitted Investments shall be
limited to the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States and any obligation of, or guaranties by,
FHLMC or FNMA (other than senior debt obligations and mortgage
pass-through certificates guaranteed by FHLMC or FNMA) shall be a
Permitted Investment; but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances (having original maturities of not
more than 365 days) issued by any bank or trust company incorporated
under the laws of the United States or any state thereof and subject
to supervision and examination by federal or state banking
authorities, provided that at the time of such investment or
contractual commitment providing for such investment the short-term
debt obligations of such bank or trust company at the date of
acquisition thereof have been rated in its highest rating by each
Rating Agency; provided that any such certificates of deposit must be
secured at all times by collateral described in clause (a) or (b)
above, such collateral must be held by a third party and the Trustee
must have a perfected first priority security interest in such
collateral;
(c) commercial paper (having original maturities of not more
than 180 days) rated in its highest rating by each Rating Agency;
(d) investments in money market funds rated in its highest
rating by each Rating Agency, which funds are registered under the
Investment Company Act of 1940 and whose shares are registered under
the Act; and
(e) other investments approved by the Rating Agencies in writing
delivered to the Trustee;
provided that each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only
interest with respect to the obligations underlying such instrument or (y)
both principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provided a yield to maturity at par greater than 120% of the yield
to maturity at par of the underlying obligations; and provided, further, that
no instrument described hereunder may be purchased at a price greater than
par.
Permitted Transferee: Any transferee of a Class R Certificate other
than a Disqualified Non-United States Person or Disqualified Organization.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency
or political subdivision thereof.
Plan: As defined in Section 4.02(m).
Pre-Funded Amount: Not applicable.
Pre-Funding Account: Not applicable.
Pre-Funding Period: Not applicable.
Prepayment Interest Excess: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Prepayment
Period and from the first day through the 15th day of a calendar month of a
Principal Prepayment in Full, an amount equal to any payment of interest
received in connection with such Principal Prepayment in Full, less the
Servicing Fee, representing interest accrued after the Due Date in such
Prepayment Period.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Prepayment
Period of a Curtailment or of a Principal Prepayment in Full from the 16th day
through the last day of a calendar month, an amount equal to (a) 30 days'
interest on the Principal Balance of such Mortgage Loan at a per annum rate
equal to the Mortgage Rate minus the rate at which the Servicing Fee is
calculated minus (b) the amount of interest actually remitted by the Mortgagor
in connection with such Principal Prepayment in Full or Curtailment less the
Servicing Fee for such Mortgage Loan in such month.
Prepayment Period: With respect to any Distribution Date, the period
beginning on the Cut-off Date, in the case of the first Distribution Date, and
on the day immediately following the close of the immediately preceding
Prepayment Period, in the case of each succeeding Distribution Date, and
ending on the 15th day (or if that day is not a Business Day, the immediately
preceding Business Day) of the month in which that Distribution Date occurs.
Prepayment Premium: Any prepayment fee, penalty, charge or premium
paid by a Mortgagor under the terms of the related Mortgage Note in connection
with a Principal Prepayment in Full or Curtailment.
Principal Balance: As to any Mortgage Loan and Distribution Date, the
principal balance of such Mortgage Loan as of the Due Date preceding such date
of determination as specified for such Due Date in the amortization schedule
(before any adjustment to such amortization schedule by reason of any
bankruptcy (other than Deficient Valuations) or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to Principal
Prepayments in Full or Curtailments received prior to the close of the related
Prepayment Period, Deficient Valuations incurred prior to such Due Date, to
any Curtailments applied by the Servicer in reduction of the unpaid principal
balance of such Mortgage Loan as of the close of the related Prepayment Period
and to the payment of principal due on or before such Due Date and
irrespective of any delinquency in payment by the related Mortgagor. The
Principal Balance of a Mortgage Loan that becomes a Liquidated Mortgage Loan
prior to the close of the related Prepayment Period shall be zero.
Principal Distribution Amount: With respect to any Distribution Date,
an amount equal to the sum of (a) the Principal Remittance Amount minus any
Overcollateralization Release Amount for such date and (b) any Extra Principal
Distribution Amount for such date.
Principal Prepayment in Full: Any payment or other recovery of
principal on a Mortgage Loan equal to the outstanding principal balance
thereof, received in advance of the final scheduled Due Date.
Principal Remittance Amount: With respect to any Distribution Date,
the sum of (i) all principal collected (other than Payaheads) or advanced in
respect of Monthly Payments on the Mortgage Loans during the related Due
Period, (ii) all Principal Prepayments in Full and all Curtailments received
during the related Prepayment Period, (iii) the outstanding principal balance
of each Mortgage Loan that was purchased from the Trust Fund during the
related Prepayment Period, (iv) the portion of any Substitution Adjustment
paid with respect to the Mortgage Loans during the related Prepayment Period
allocable to principal, and (v) all Net Liquidation Proceeds, Insurance
Proceeds, Net REO Proceeds, Released Mortgaged Property Proceeds and other
recoveries collected with respect to such Mortgage Loans during the related
Prepayment Period, to the extent allocable to principal, as reduced, in each
case to the extent applicable, without duplication, by unreimbursed Periodic
Advances and Nonrecoverable Advances due to the Servicer or the Trustee, to
the extent allocable to principal and as provided in this Agreement.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated July 26, 1999, together
with the accompanying prospectus dated July 26, 1999, relating to the Class A,
Class M1, Class M2 and Class B Certificates.
Purchase Agreement: The Mortgage Loan Purchase Agreement dated as of
July 1, 1999, among the Originator, the Seller and the Depositor.
Qualified Mortgage: "Qualified Mortgage" shall have the meaning set
forth in the definition thereof at Section 860G(a)(3) of the Code (or any
successor statute thereto) (but without regard to the rule in Treasury
Regulation Section 1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any similar provision).
Qualified Substitute Mortgage Loan: A mortgage loan substituted by
the Originator for a Deleted Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding principal balance, after deduction of
all Monthly Payments due and received in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the Principal Balance
of the Deleted Mortgage Loan and not less than 90% of the Principal Balance of
the Deleted Mortgage Loan (the amount of any shortfall to be paid by the
Originator in the month of substitution), (ii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iii) have a Mortgage Rate not less than the Mortgage
Rate of the Deleted Mortgage Loan, (iv) have a Servicing Fee Rate as provided
herein for all Mortgage Loans subject to this Agreement, (v) with respect to
each Adjustable Rate Mortgage Loan, have a minimum rate not less than that of
the Deleted Mortgage Loan, (vi) with respect to each Adjustable Rate Mortgage
Loan, have a maximum rate not less than that of the Deleted Mortgage Loan,
(vii) with respect to each Adjustable Rate Mortgage Loan, have a margin not
less than that of the Deleted Mortgage Loan, (viii) with respect to each
Adjustable Rate Mortgage Loan, have a periodic rate cap equal to that of the
Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio equal to or less than
the Loan-to-Value Ratio of the Deleted Mortgage Loan, (x) with respect to each
Adjustable Rate Mortgage Loan, have the same adjustment frequency as that of
the Deleted Mortgage Loan, (xi) with respect to each Adjustable Rate Mortgage
Loan, have the same Index as the Deleted Mortgage Loan, (xii) comply as of the
date of substitution with each representation and warranty set forth in
Section 6 of the Purchase Agreement, (xiii) be in the same credit grade
category as the Deleted Mortgage Loan (xiv) have a Prepayment Premium of the
same type as that of the Deleted Mortgage Loan, (xv) is of the same or better
property type or is a single family dwelling and the same or better occupancy
status or is a primary residence as the Mortgage Loan being replaced, (xvi)
shall be a first lien on the Mortgaged Property, (xvii) shall not provide for
a Balloon Payment (and if such related Mortgage Loan provided for a Balloon
Payment, such Qualified Substitute Mortgage Loan shall have an original
maturity of not less than the original maturity of such related Mortgage
Loan), (xviii) shall be a fixed rate Mortgage Loan or an Adjustable Rate
Mortgage Loan if the Mortgage Loan being replaced is an Adjustable Rate
Mortgage Loan, (xix) satisfies the criteria set forth from time to time in the
definition thereof at Section 860G(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust, (xx) satisfies the representations and
warranties set forth in Sections 5(b)(viii), (xii) and (xiv) of the Purchase
Agreement, (xxi) shall not be 30 days or more delinquent, (xxii) with respect
to each Adjustable Rate Mortgage Loan, shall have a next adjustment date not
more than two months later than the next adjustment date of the Deleted
Mortgage Loan, and (xxiii) shall have the same Due Date as the Mortgage Loan
being replaced.
In the event that one or more mortgage loans are proposed to be
substituted for one or more Mortgage Loans, the foregoing tests may be met on
a weighted average basis, except that the requirements of clauses (ii), (iii),
(v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xix), (xx), (xxii),
and (xxiii) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan.
Rating Agency: Each of Moody's, S&P and Fitch.
Realized Loss: With respect to any Distribution Date, the aggregate
of the amount of losses with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the Prepayment Period preceding such
Distribution Date, equal to (i) the unpaid principal balance of each such
Liquidated Mortgage Loan, plus accrued interest thereon in accordance with the
amortization schedule at the time applicable thereto at the applicable
Mortgage Rate from the Due Date as to which interest was last paid with
respect thereto through the last day of the month in which such Mortgage Loan
became a Liquidated Mortgage Loan, plus, without duplication, the amount of
any Periodic Advances and Servicing Advances paid by the related Mortgagor,
minus (ii) Net Liquidation Proceeds with respect to such Liquidated Mortgage
Loan.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the related Cooperative Corporation and the originator of
such Mortgage Loan to establish the rights of such originator in the related
Cooperative Property.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
Reference Banks: As defined in Section 6.14.
Regular Certificate: Each Certificate other than a Residual
Certificate.
Regular Certificateholder: Each Holder of a Regular Certificate.
Released Mortgaged Property Proceeds: As to any Mortgage Loan,
proceeds received by the Servicer in connection with (a) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation
or (b) any release of part of the Mortgaged Property from the lien of the
related Mortgage, whether by partial condemnation, sale or otherwise; which
are not released to the Mortgagor in accordance with applicable law, Accepted
Servicing Practices and this Agreement.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Shortfall: With respect to any Distribution Date and each
Mortgage Loan as to which there has been a reduction in the amount of interest
collected with respect to the related Due Period as a result of application of
the Relief Act, the amount by which (a) interest collectible on such Mortgage
Loan during such Due Period is less than (b) one month's interest on the
Principal Balance of such Mortgage Loan at the applicable Mortgage Rate before
giving effect to the Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Maturity Date: August 25, 2031.
REMIC Opinion: As defined in Section 10.02.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations promulgated thereunder and published
rulings, notices and announcements, as the foregoing may be in effect from
time to time.
REO Acquisition: The acquisition of any REO Property pursuant to
Section 5.12.
REO Disposition: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
REO Mortgage Loan: Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related
Mortgage Note is discharged and the related Mortgaged Property is held as part
of the Trust Fund.
REO Proceeds: Proceeds received in respect of any REO Mortgage Loan
(including, without limitations, proceeds from the rental of the related REO
Property).
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the
REMIC Provisions.
Representation Letter: Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Book-Entry Certificates
registered in the Certificate Register under the nominee name of the
Depository.
Request for Release: A request for release in substantially the form
attached as Exhibit H hereto.
Required Reserve Fund Deposit: With respect to any Distribution Date
on which the Net Excess Spread is less than 0.25%, the amount by which (a) the
sum of any Basis Risk Shortfall, any Unpaid Basis Risk Shortfall, and the
product of 1.00% and the Total Loan Balance for such date exceeds (b) the
amount on deposit in the Basis Risk Reserve Fund immediately prior to such
date. With respect to any Distribution Date on which the Net Excess Spread is
equal to or greater than 0.25%, the amount by which (a) the sum of any Basis
Risk Shortfall, any Unpaid Basis Risk Shortfall, and $1,000 exceeds (b) the
amount on deposit in the Basis Risk Reserve Fund immediately prior to such
date.
Reserve Interest Rate: As defined in Section 6.14.
Residential Dwelling: A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development, a townhouse or
a manufactured housing unit which is non-mobile.
Residual Certificate: Any Class R Certificate.
Residual Certificateholder: Any Holder of a Residual Certificate.
Responsible Officer: When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Senior Trust Officer,
Trust Officer, Assistant Trust Officer, Assistant Treasurer, any Assistant
Secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers who has direct responsibility for the administration of this
Agreement or to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Seller or the Servicer, the
President or any Vice President, Assistant Vice President, or any Secretary or
Assistant Secretary.
Restricted Certificate: Any Class R Certificate.
S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or its successor in interest.
SEC: As defined in Section 5.10.
Security Agreement: With respect to any Cooperative Loan, the
agreement between the owner of the related Cooperative Shares and the
originator of the related Mortgage Note that defines the terms of the security
interest in such Cooperative Shares and the related Proprietary Lease.
Seller: German American Capital Corporation, a Maryland corporation,
or its successor in interest.
Senior Certificate: Any Class A Certificate.
Senior Enhancement Percentage: With respect to any Distribution Date,
the fraction, expressed as a percentage, the numerator of which is the sum of
the aggregate Certificate Principal Amount of the Class M1, Class M2 and Class
B Certificates and the Overcollateralization Amount (which amount, for
purposes of this definition, shall not be less than zero), in each case
calculated after giving effect to distributions on such date, and the
denominator of which is the Total Loan Balance for such date.
Senior Mortgage Loan: With respect to any Junior Mortgage Loan, a
mortgage loan on the related Mortgaged Property that is senior to the lien
provided by such Junior Mortgage Loan.
Senior Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, by which (x) the Class Principal Amount
of the Class A Certificates immediately prior to such Distribution Date
exceeds (y) the lesser of (i) the product of (A) if a Cumulative Loss Trigger
Event has not occurred with respect to such date, 58.00%, and if a Cumulative
Loss Trigger Event has occurred with respect to such date, 53.50%, and (B) the
Total Loan Balance for such Distribution Date and (ii) the amount, if any, by
which the Total Loan Balance for such Distribution Date exceeds $2,084,305.
Servicer: Long Beach Mortgage Company, a Delaware corporation, or any
successor appointed as herein provided.
Servicer Remittance Date: With respect to any Distribution Date, the
24th day of the month in which such Distribution Date occurs, or if such 24th
day is not a Business Day, the Business Day immediately preceding such 24th
day.
Servicer Termination Test: The Servicer Termination Test is satisfied
for any date of determination if the Cumulative Loss Percentage for such
period does not exceed 7.00%.
Servicing Account: The account created and maintained pursuant to
Section 5.09.
Servicing Advances: All reasonable and customary "out-of-pocket"
costs and expenses relating to a borrower default or delinquency or other
unanticipated event incurred by the Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property including,
without limitation, taxes and insurance costs, (b) any enforcement or judicial
proceedings, including foreclosures, (c) the management and liquidation of the
REO Property, including reasonable fees paid to any independent contractor in
connection therewith, (d) compliance with the obligations under Sections 5.05,
5.07, 5.09, 5.12 or 5.21(b), all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Servicer to the
extent provided in Section 5.04.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 5.14.
Servicing Fee: As to each Mortgage Loan, the annual fee payable to
the Servicer and the related Subservicer, if any, as indicated on the related
Mortgage Loan Schedule. Such fee shall be equal to the product the Servicing
Fee Rate and the outstanding principal balance of the Mortgage Loans at the
start of the related Due Period. Such fee shall be calculated and payable
monthly only from the amounts received in respect of interest on such Mortgage
Loan and shall be computed on the basis of the same principal amount and for
the period respecting which any related interest payment on a Mortgage Loan is
computed. The Servicing Fee includes any servicing fees owed or payable to any
Subservicer.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any employee of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Trustee by the Servicer, as such list may from time to time be amended.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Stepdown Date: The earlier to occur of (a) the first Distribution
Date after the Class Principal Amount of the Senior Certificates has been
reduced to zero and (b) the later to occur of (x) the Distribution Date in
August 2002 and (y) the first Distribution Date on which the Senior
Enhancement Percentage (calculated for this purpose after giving effect to
payments or other recoveries on the Mortgage Loans during the related Due
Period but before giving effect to distributions on any Certificates on such
Distribution Date) is greater than or equal to 42.00% if a Cumulative Loss
Trigger Event has not occurred with respect to such date, or 46.50% if a
Cumulative Loss Trigger Event has occurred with respect to such date.
Subsequent Cut-off Date: Not applicable.
Subsequent Mortgage Loan: Not applicable.
Subsequent Transfer Date: Not applicable.
Subsequent Transfer Instrument: Not applicable.
Subservicer: Any Person that satisfies the requirements of Section
5.02 with which the Servicer has entered into a Subservicing Agreement
pursuant to the terms of this Agreement.
Subservicing Agreement: The contract between the Servicer and any
Subservicer.
Substitution Adjustment: As to any date on which a substitution
occurs pursuant to Sections 2.04 or 3.03, the sum of (i) the amount (if any)
by which the aggregate unpaid principal balances of the Qualified Substitute
Mortgage Loans (after application of principal payments received on or before
the date of substitution of any Qualified Substitute Mortgage Loans as of the
date of substitution), are less than the aggregate of the unpaid principal
balances of the related Deleted Mortgage Loans, (ii) interest accrued and
unpaid on the related Deleted Mortgage Loans, (iii) the amount of any
Servicing Advances remaining unreimbursed with respect to such Deleted
Mortgage Loans and (iv) the amount of any Servicing Advances reimbursed other
than from collections or other recoveries in respect of such Deleted Mortgage
Loans.
Targeted Cumulative Loss Percentage: With respect to any Distribution
Date occurring during the time periods set forth below, the percentage
specified below for such time period:
Targeted Cumulative
Periods (dates inclusive) Loss Percentage
------------------------- ------------------
August 1999 - July 2000............ 0.25%
August 2000 - July 2001............ 0.75%
August 2001 - July 2002............ 1.75%
August 2002 - July 2003............ 3.25%
August 2003 and thereafter.............. 4.25%
Targeted Overcollateralization Amount: With respect to any
Distribution Date (a) prior to the Stepdown Date, and if a Cumulative Loss
Trigger Event has not occurred for such Distribution Date, the product of
3.50% and the Cut-off Date Balance; (b) prior to the Stepdown Date, and if a
Cumulative Loss Trigger Event has occurred for such Distribution Date, the
product of 5.75% and the Cut-off Date Balance; (c) on and after the Stepdown
Date, and if a Cumulative Loss Trigger Event has not occurred for such
Distribution Date, the greater of (i) the product of 7.00% and the Total Loan
Balance for the related Distribution Date, and (ii) the product of 0.50% and
the Cut-Off Date Balance; and (d) on and after the Stepdown Date, and if a
Cumulative Loss Trigger Event has occurred for such Distribution Date, the
greater of (i) the product of 11.50% and the Total Loan Balance for such
Distribution Date, and (ii) the product of 0.50% and the Cut-off Date Balance.
Tax Matters Person: The Person or Persons appointed pursuant to
Section 10.01(c) from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) of the Trust Fund.
Tax Return: The federal income tax return on Internal Revenue Service
Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, "Quarterly Notice to Residual Interest Holders
of REMIC Taxable Income or Net Loss Allocation", or any successor forms, to be
filed on behalf of the Trust Fund due to its classification as a REMIC under
the REMIC Provisions, together with any and all other information reports or
returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provision of federal, state or local tax laws
in connection with the Trust Fund.
Three Month Delinquency Rate: With respect to any Distribution Date,
the average of the Delinquency Rates for each of the three (or one and two, in
the case of the first and second Distribution Dates) immediately preceding Due
Periods.
Total Distribution Amount: With respect to any Distribution Date, the
sum of the Interest Remittance Amount for such date, the aggregate of the
Principal Remittance Amounts for such date and the aggregate of the Prepayment
Premiums received by the Servicer during the Prepayment Period immediately
preceding such date.
Total Expense Rate: With respect to any Distribution Date, the sum of
the Servicing Fee Rate and the Trustee Fee Rate for such date.
Total Loan Balance: The aggregate of the Principal Balances of all
Mortgage Loans at the date of determination.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer Affidavit And Agreement: As defined in Section 4.02(j).
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
Trust Fund: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (a) such Mortgage Loans as from time to time are subject to
this Agreement, together with the Mortgage Files relating thereto and all
collections thereon and proceeds thereof due after the Cut-off Date, (b) such
assets as from time to time are identified as deposited in the Certificate
Account, (c) such assets as from time to time are identified as REO Property
and collections thereon and proceeds thereof, (d) assets that are deposited in
the Accounts, including amounts on deposit in the Accounts and invested in
Permitted Investments, (e) the Trustee's rights with respect to the Mortgage
Loans under all insurance policies required to be maintained pursuant to this
Agreement and any Insurance Proceeds, (f) Liquidation Proceeds, (g) Released
Mortgaged Property Proceeds, (h) REO Proceeds, (i) the rights (but not the
obligations) of the Depositor under the Purchase Agreement to the extent
assigned to the Trustee hereunder, (j) the Basis Risk Reserve Fund, including
amounts on deposit from time to time therein, (k) the Depositor's security
interest in any collateral pledged to secure the Mortgage Loans, including the
Mortgaged Properties, and (l) any and all proceeds of the foregoing.
Trustee: First Union National Bank, a national banking association,
or its successor in interest, or any successor trustee appointed as herein
provided.
Trustee Fee: As to any Distribution Date, the fee payable to the
Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to the product of 1/12 of the Trustee Fee Rate and Total Loan Balance of
each Mortgage Loan as of the immediately preceding Due Date.
Trustee Fee Rate: 0.0095% per annum.
Trustee Remittance Report: As defined in Section 6.07.
UCC: The Uniform Commercial Code in effect in the applicable
jurisdiction.
UCC Financing Statement: A financing statement executed and filed
pursuant to the UCC.
United States Person: (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia; (iii) a partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia (unless provided otherwise by future Treasury regulations); (iv) an
estate whose income is includible in gross income for United States income tax
purposes regardless of its source; or (v) a trust, if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more U.S. Persons have authority to control all
substantial decisions of the trust. Notwithstanding the last clause of the
preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as U.S. Persons prior to
such date, may elect to continue to be U.S. Persons.
Unpaid Basis Risk Shortfall: With respect to any Distribution Date
and any Certificate, the aggregate of all Basis Risk Shortfalls with respect
to such Certificate remaining unpaid from previous Distribution Dates, plus
interest accrued thereon at the applicable Interest Rate (calculated without
giving effect to the applicable Net Funds Cap).
Unpaid REO Amortization: As to any REO Mortgage Loan and any month,
the aggregate of the installments of principal and accrued interest (adjusted
to the related Net Mortgage Rate) deemed to be due in such month and in any
prior months that remain unpaid, calculated in accordance with Section 5.12.
Section 1.02. Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined in this Article include the plural as well
as the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest (other than with respect to the
Mortgage Loans, or as otherwise specifically set forth herein) provided for
herein shall be made on the basis of a 360-day year consisting of twelve
30-day months. All calculations of interest with respect to any Mortgage Loan
provided for herein shall be made in accordance with the terms of the related
Mortgage Note and Mortgage.
(f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Certificates, Prepayments in Full
and Curtailments with respect to any Mortgage Loan are deemed to be received
on the date they are applied in accordance with customary servicing practices
consistent with the terms of the related Mortgage Note and Mortgage to reduce
the outstanding principal balance of such Mortgage Loan on which interest
accrues.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans; Special Deposit; Priority
and Subordination of Ownership Interests. (a) The Depositor does hereby sell,
transfer, assign, set over and convey to the Trustee without recourse but
subject to the provisions of this Section 2.01 and the other terms and
provisions of this Agreement, all of the right, title and interest of the
Depositor in and to the Mortgage Loans (other than interest and principal due
thereon on or before the Cut-off Date), and all other assets included or to be
included in the Trust Fund for the benefit of the Certificateholders. In
connection with such transfer and assignment, the Depositor does hereby also
irrevocably transfer, assign, set over and otherwise convey to the Trustee all
of its rights under the Purchase Agreement, other than Section 17 thereof. The
Trustee hereby accepts such assignment, and shall be entitled to exercise all
rights of the Depositor under the Purchase Agreement as if, for such purpose,
it were the Depositor.
(b) The rights of the Certificateholders to receive payments with
respect to the Mortgage Loans in respect of the Certificates, and all
ownership interests of the Certificateholders in such payments, shall be as
set forth in this Agreement. In this regard, all rights of the Class R
Certificateholders to receive payments in respect of the Class R Certificates
are subject and subordinate to the preferential rights of the Regular
Certificateholders to receive payments in respect of the Regular Certificates.
In accordance with the foregoing, the ownership interest of the Class R
Certificateholders in amounts deposited in the Certificate Account and the
Basis Risk Reserve Fund from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement.
(c) It is intended that the conveyance of the Mortgage Loans and the
other assets to be included in the Trust Fund by the Depositor to the Trustee
as provided in this Section be, and be construed as, a sale of the Mortgage
Loans and the other assets to be included in the Trust Fund by the Depositor
to the Trustee for the benefit of the Certificateholders. It is, further, not
intended that such conveyance be deemed a pledge of the Mortgage Loans and
such other assets by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor. However, in the event that the Mortgage Loans and
the other assets to be included in the Trust Fund are held to be property of
the Depositor, or if for any reason this Agreement is held or deemed to create
a security interest in the Mortgage Loans and such other assets, then it is
intended that, (a) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York UCC and the
UCC of any other applicable jurisdiction; (b) the conveyance provided for in
this Section shall be deemed to be (1) a grant by the Depositor to the Trustee
of a security interest in all of the Depositor's right (including the power to
convey title thereto), title and interest, whether now owned or hereafter
acquired, in and to (A) the Mortgage Loans, including the Mortgage Notes, the
Mortgages, any related insurance policies and all other documents in the
related Mortgage Files, (B) all amounts payable to the holders of the Mortgage
Loans in accordance with the terms thereof and (C) all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all Liquidation
Proceeds, all Insurance Proceeds, all REO Proceeds, all Released Mortgaged
Property Proceeds, all amounts from time to time held or invested in the
Certificate Account, the Collection Account or the Basis Risk Reserve Fund,
whether in the form of cash, instruments, securities or other property and (2)
an assignment by the Depositor to the Trustee of any security interest in any
and all of the Seller's right (including the power to convey title thereto),
title and interest, whether now owned or hereafter acquired, in and to the
property described in the foregoing clauses (1)(A) and (B) granted by the
Seller to the Depositor pursuant to the Purchase Agreement; (c) the possession
by the Trustee or its agent of Mortgage Notes and such other items of property
as constitute instruments, money, negotiable documents or chattel paper shall
be deemed to be "possession by the secured party" or possession by a purchaser
or a person designated by such secured party, for purposes of perfecting the
security interest pursuant to the New York UCC and the UCC of any other
applicable jurisdiction (including, without limitation, Sections 9-305, 8-313
or 8-321 thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Trustee for the purpose of perfecting such security
interest under applicable law. The Depositor and, at the Depositor's
direction, the Seller and the Trustee shall, to the extent consistent with
this Agreement, take such reasonable actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans and other property of the Trust Fund, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of the
Agreement.
Section 2.02. Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the Mortgage File related to each
Mortgage Loan is vested in the Trustee for the benefit of the
Certificateholders.
(b) The Depositor has delivered or caused to be delivered the
Mortgage File related to each Mortgage Loan to the Trustee or the Custodian on
behalf of the Trustee.
(c) As provided in Section 9.11, the Trustee may enter into a
custodial agreement pursuant to which the Trustee will appoint a custodian (a
"Custodian") to hold the Mortgage Files in trust for the benefit of all
present and future Certificateholders; provided, however, that the Custodian
so appointed shall in no event be the Depositor or the Servicer or any Person
known to a Responsible Officer of the Trustee to be an Affiliate of the
Depositor or the Servicer.
(d) The Trustee shall cause the Custodian to afford the Depositor and
the Servicer reasonable access to all records and documentation regarding the
Mortgage Loans relating to this Agreement, such access being afforded at
customary charges, upon reasonable prior notice and during normal business
hours at the offices of the Custodian.
Section 2.03. Delivery of Mortgage Loan Documents. In connection with
each conveyance pursuant to Section 2.01 hereof, the Depositor has delivered
or does hereby agree to deliver or cause to be delivered to the Trustee (or
the Custodian on behalf of the Trustee) on or before the Closing Date, the
Mortgage Loan Schedule and each of the following documents for each Mortgage
Loan sold by the Seller to the Depositor and sold by the Depositor to the
Trust Fund:
(i) The original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsements from the originator of such
Mortgage Loan to the Originator, endorsed by the Originator without
recourse in the following form: "Pay to the order of __________________,
without recourse" and signed manually or by facsimile in the name of the
Originator by an authorized officer;
(ii) The original Mortgage with evidence of recording indicated
thereon;
(iii) An original assignment of the Mortgage, in form acceptable for
recordation in the jurisdiction in which the related Mortgaged Property
is located (except for the assignee's name and recordation information
not yet received), such assignment to be in blank and signed in the name
of the Originator by an authorized officer; (iv) The originals of all
intervening assignments of the Mortgage (with evidence of recording
thereon) showing a complete chain of assignments from the originator of
such Mortgage Loan to the Originator;
(v) Any assumption, modification, consolidation or extension
agreements (with evidence of recording thereon);
(vi) The original policy of title insurance (or the original
commitment for title insurance, if the policy is being held by the title
insurance company pending recordation of the Mortgage); and
(vii) The certificate of primary mortgage guaranty insurance, if any,
issued with respect to such Mortgage Loan.
With respect to each Non-MERS Mortgage Loan as to which the Depositor
has received recording information by the Closing Date, the Depositor shall
cause, within 30 days following the Closing Date, and with respect to each
other Non-MERS Mortgage Loan, the Depositor shall cause, within 30 days of
receipt of such recording information, Assignments of Mortgages to "First
Union National Bank, as Trustee of ACE Securities Corp. Home Equity Loan Trust
1999-LB2 under the Pooling and Servicing Agreement dated as of July 1, 1999"
to be submitted for recording in the appropriate jurisdictions; provided, that
the Depositor shall not be required to record an Assignment of Mortgage if the
Depositor furnishes to the Trustee, on or before the Closing Date, at the
Depositor's expense, an Opinion of Counsel with respect to the relevant
jurisdiction that such recording is not necessary to protect the Trustee's
interest in the related Mortgage Loans (in form and substance satisfactory to
the Trustee and the Rating Agencies); provided further, notwithstanding the
delivery of any legal opinions, each Assignment of Mortgage shall be recorded
by the Trustee upon the earliest to occur of: (i) the occurrence of an Event
of Default, or (ii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Originator.
The Depositor shall deliver the title insurance policy or title
searches, the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments (other
than unrecorded warehouse assignments), to the Trustee or its Custodian,
within 15 days of receipt thereof by the Originator (but in any event, with
respect to any Mortgage as to which original recording information has been
made available to the Originator, within 12 months after the Closing Date).
In instances where the original recorded Mortgage or intervening
assignment (other than the Assignment of Mortgage) cannot be delivered to the
Trustee or its Custodian prior to or concurrently with the execution and
delivery of this Agreement due to a delay in connection with recording, the
Depositor may in lieu of delivering such original recorded Mortgage or
intervening assignment (other than the Assignment of Mortgage), deliver to the
Trustee or its Custodian a copy thereof, provided that the Originator provides
a copy of such document and certifies that the original Mortgage or
intervening assignment (other than the Assignment of Mortgage) has been
delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor. In all such instances, the
Depositor will deliver or cause to be delivered the original recorded Mortgage
or intervening assignment (other than the Assignment of Mortgage) to the
Trustee or its Custodian promptly upon receipt by the Originator of the
original recorded Mortgage or intervening assignment (other than the
Assignment of Mortgage) but in no event later than 12 months after the Closing
Date.
Notwithstanding anything to the contrary contained in this Section
2.03, in those instances where the public recording office retains the
original Mortgage, the Assignment of a Mortgage or the intervening assignments
of the Mortgage after it has been recorded, the Depositor shall be deemed to
have satisfied its obligations hereunder (and the Originator shall be deemed
to have satisfied its obligations under the Purchase Agreement) upon delivery
to the Trustee or its Custodian of a copy of such Mortgage, such Assignment or
intervening assignments of Mortgage certified by the public recording office
to be a true copy of the recorded original thereof.
With respect to each MERS Mortgage Loan, the Trustee and the
Servicer, at the expense of the Depositor, shall cause to be taken such
actions as are necessary to cause the Trustee to be clearly identified as the
owner of each such Mortgage Loan on the records of MERS for purposes of the
system of recording transfers of beneficial ownership of mortgages maintained
by MERS.
Within a period of 30 days from the Closing Date, the Trustee shall,
or shall cause the Custodian to, complete the endorsement of each Mortgage
Note and each Assignment of Mortgage and assignment of leases, if any, in the
name of the Trustee on behalf of the Trust Fund.
(b) In the event that any such original document is required pursuant
to the terms of this Section 2.03 to be a part of a Mortgage File, such
document shall be delivered promptly by the Depositor to the Trustee or its
Custodian. If the Servicer receives any such original document, the Servicer
agrees further that it does not and will not have or assert any beneficial
ownership interest in the Mortgage Loans or the Mortgage Files, and shall
transfer such original to the Trustee or the Custodian on behalf of the
Trustee.
Section 2.04. Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. (a) The Trustee agrees to execute and
deliver, or cause to be executed and delivered, to the Depositor, the Servicer
and the Seller with respect to each Mortgage Loan, on or prior to the Closing
Date, an acknowledgment of receipt of the original Mortgage Note (with any
exceptions noted), and, subject to the review provided for in this Section,
its receipt of the Mortgage Files in substantially the form attached as
Exhibit E hereto and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the definition of Trust Fund and delivered to the Trustee (or the
Custodian on behalf of the Trustee), as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Certificateholders. The
Trustee agrees, for the benefit of the Certificateholders, to review, or cause
to be reviewed, each Mortgage File within 45 Business Days after the Closing
Date (with respect to the Mortgage Loans), and to deliver or cause to be
delivered to the Seller, the Servicer and the Depositor a certification of the
Trustee or the Custodian on behalf of the Trustee substantially in the form
attached hereto as Exhibit F to the effect that, as to each Mortgage Loan
listed in the related Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.03 are in its possession
and that the Mortgage Notes have been endorsed as provided in Section 2.03,
(ii) each such document has been reviewed by it and has not been mutilated,
damaged, torn or otherwise physically altered (handwritten additions, changes
or corrections shall not constitute physical alteration if initialed by the
Mortgagor), appears regular on its face and relates to such Mortgage Loan, and
(iii) based on its examination and only as to the foregoing documents, the
information set forth on the Schedule of Mortgage Loans accurately reflects
the information set forth in the Mortgage File with respect to the Servicer's
loan number, maturity date, original principal balance, first payment date and
original term to maturity. The Trustee makes no representations as to and
shall not be responsible to verify (i) the validity, legality, enforceability,
sufficiency, due authorization, recordability or genuineness of any of the
documents contained in each Mortgage File or of any of the Mortgage Loans or
(ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
Within 180 days after the Closing Date, the Trustee shall deliver or
cause to be delivered to the Servicer, the Seller and the Depositor a final
certification of the Trustee or the Custodian substantially in the form
attached hereto as Exhibit G to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents required to be delivered to
it pursuant to Section 2.03 are in its possession and that the Mortgage Notes
have been endorsed as provided in Section 2.03, (ii) each such document has
been reviewed by it and has not been mutilated, damaged, torn or otherwise
physically altered (handwritten additions, changes or corrections shall not
constitute physical alteration if initialed by the Mortgagor), appears regular
on its face and relates to such Mortgage Loan, and (iii) based on its
examination and only as to the foregoing documents, the information set forth
on the Mortgage Loan Schedule accurately reflects the information set forth in
the Mortgage File with respect to the Servicer's loan number, maturity date,
original principal balance, first payment date and original term to maturity.
(b) If the Trustee (or its Custodian) during the process of reviewing
the Mortgage Files or otherwise finds any document constituting a part of a
Mortgage File which is not executed, has not been received, is unrelated to
the Mortgage Loan identified in the related Mortgage Loan Schedule, or does
not conform to the requirements of Section 2.03 or the description thereof as
set forth in the related Mortgage Loan Schedule, the Trustee shall promptly so
notify the Servicer, the Seller and the Originator. In performing any such
review, the Trustee (or its Custodian) may conclusively rely on the Seller as
to the purported genuineness of any such document and any signature thereon.
It is understood that the scope of the Trustee's (or its Custodian's) review
of the Mortgage Files is limited solely to confirming that the documents
listed in Section 2.03 have been executed and received and relate to the
Mortgage Files identified in the related Mortgage Loan Schedule and such
documents conform to the standard set forth in clauses (ii) and (iii) of the
immediately preceding paragraph. The Trustee shall enforce its rights as to
any defective Mortgage Loan document against the Seller and the Originator
under the Purchase Agreement for the benefit of Certificateholders. It is
understood and agreed that the Depositor has assigned to the Trustee certain
of its rights under the Purchase Agreement including the right to enforce any
remedy against the Seller and the Originator thereunder (other than under
Section 17 thereof). For purposes of calculating the amount the Servicer is
required to remit on the Servicer Remittance Date following such repurchase or
substitution, any Loan Purchase Price or Substitution Adjustment that is paid
and deposited in the related Collection Account as provided above shall be
deemed to have been deposited in the related Collection Account in the
Prepayment Period preceding such Servicer Remittance Date.
(c) Upon receipt by the Trustee or its Custodian of a certification
of a Servicing Officer of such substitution or purchase (which certification
shall be in the form of Exhibit H hereto) and, in the case of a substitution,
upon receipt of the related Mortgage File, and the deposit of the amounts
described above in the Collection Account, the Trustee shall, or shall cause
the Custodian to, release to the Servicer for release to the Seller and the
Originator, as applicable, the related Mortgage File and shall execute,
without recourse, and deliver such instruments of transfer furnished by the
Seller and the Originator, as applicable, as may be necessary to transfer such
Mortgage Loan to the Seller and the Originator, as applicable.
Section 2.05. Execution of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the delivery of the Mortgage Files
relating thereto to the Custodian on behalf of the Trustee and, concurrently
with such delivery, has executed, authenticated and delivered to or upon the
order of the Depositor, in exchange for the Mortgage Loans, the Mortgage Files
and the other assets included in the definition of Trust Fund, Certificates
duly authenticated by the Trustee in Authorized Denominations evidencing the
entire ownership of the Trust Fund.
Section 2.06. Further Action Evidencing Assignment. (a) The Depositor
agrees that, from time to time, at the Seller's expense, the Depositor shall
cause the Seller promptly to execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate,
or that the Servicer or the Trustee may reasonably request, in order to
perfect, protect or more fully evidence the transfer of ownership of the Trust
Fund or to enable the Trustee to exercise or enforce any of its rights
hereunder. Without limiting the generality of the foregoing, the Depositor
will, upon the request of the Servicer or of the Trustee, execute and file (or
cause to be executed and filed) such real estate filings, financing or
continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the Trustee, and
this Agreement shall constitute, a power of attorney to execute all documents
on its behalf under this Agreement as may be necessary or desirable to
effectuate the foregoing.
Section 2.07. Conveyance of the Subsequent Mortgage Loans. [Not
applicable.]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer. The Servicer hereby
represents and warrants to the Trustee, the Depositor and the
Certificateholders as of the Closing Date:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by the Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure its ability
to enforce each Mortgage Loan and to service the Mortgage Loans in accordance
with the terms of this Agreement;
(b) The Servicer has the full corporate power and authority to
service each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and has
duly authorized by all necessary corporate action on the part of the Servicer
the execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery thereof by the
Depositor and the Trustee, constitutes a legal, valid and binding obligation
of the Servicer, enforceable against the Servicer in accordance with its
terms, except to the extent that (a) the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(c) The execution and delivery of this Agreement by the Servicer, the
servicing of the Mortgage Loans by the Servicer hereunder, the consummation of
any other of the transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of business of the
Servicer and will not (A) result in a breach of any term or provision of the
charter or by-laws of the Servicer or (B) conflict with, result in breach,
violation or acceleration of, or result in a default under, the terms of any
other material agreement or instrument to which the Servicer is a party or by
which it may be bound, or any statute, order or regulation applicable to the
Servicer of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Servicer; and the Servicer is not a party
to, bound by, or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation
of any court, regulatory body, administrative agency or governmental body
having jurisdiction over it, which materially and adversely affects or, to the
Servicer's knowledge, would in the future materially and adversely affect, (x)
the ability of the Servicer to perform its obligations under this Agreement or
(y) the business, operations, financial condition, properties or assets of the
Servicer taken as a whole;
(d) The Servicer is an approved seller/servicer for Fannie Mae or
Freddie Mac in good standing and is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act;
(e) No litigation is pending, or to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this Agreement
or the ability of the Service to service the Mortgage Loans or to perform any
of its other obligations hereunder in accordance with the terms hereof; and
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated hereby, or if
any such consent, approval, authorization or order is required, the Service
has obtained the same.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive the delivery of the respective
Mortgage Files to the Trustee or to a Custodian, as the case may be, and inure
to the benefit of the Trustee and the Certificateholders. Section 3.02.
Representations, Warranties and Covenants of the Depositor. The Depositor
hereby represents, warrants and covenants to the Trustee, the Servicer and the
Certificateholders that as of the date of this Agreement or as of such date
specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions
contemplated hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or by-laws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust,
contract or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound;
(ii) results or will result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Depositor of any court or
governmental authority having jurisdiction over the Depositor or its
subsidiaries; or (iii) results in the creation or imposition of any lien,
charge or encumbrance which would have a material adverse effect upon the
Mortgage Loans or any documents or instruments evidencing or securing the
Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's
reasonable judgment, might materially and adversely affect the validity or
enforceability of the Mortgage Loans or the performance by the Depositor of
its obligations under this Agreement, or the validity or enforceability of
this Agreement;
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that would materially and adversely affect
its performance hereunder;
(h) Immediately prior to the sale and assignment by the Depositor to
the
Trustee on behalf of the Trust Fund of each Mortgage Loan, the Depositor had
good title to, and was the sole owner of, each Mortgage Loan subject to no
prior lien, claim, participation interest, mortgage, security interest,
pledge, charge or other encumbrance or other interest of any nature;
(i) Upon execution and delivery of this Agreement the Depositor
transferred all right, title and interest in the Mortgage Loans to the Trustee
on behalf of the Trust Fund; and
(j) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Depositor hereunder are not subject to the bulk transfer
laws of any similar statutory provisions in effect in any applicable
jurisdiction.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Mortgage Files to the Trustee or to the Custodian, as the case may
be, and shall inure to the benefit of the Trustee, the Servicer and the
Certificateholders.
Section 3.03. Purchase And Substitution. (a) Upon discovery by the
Seller, the Depositor, the Servicer or the Trustee of a breach of any of
representation or warranty set forth in Section 5 or Section 6 of the Purchase
Agreement which materially and adversely affects the value of any Mortgage
Loan or the interests of Certificateholders, the party discovering such breach
shall give prompt written notice to the others, and the Trustee shall enforce
its rights as to any Mortgage Loan with respect to which such a breach of
representation or warranty has occurred against the Seller or the Originator,
as applicable, under the Purchase Agreement for the benefit of
Certificateholders.
(b) Any Loan Purchase Price paid in connection with the repurchase of
a Deleted Mortgage Loan, and any Substitution Adjustment paid in connection
with the substitution of a Qualified Substitute Mortgage Loan, shall be
deposited into the Collection Account.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution (which date shall not be later than two
years after the Closing Date). Monthly Payments received with respect to
Qualified Substitute Mortgage Loans on or before the date of substitution will
be retained by the Seller or the Originator, as applicable. The Trust Fund
will own all payments received on the Deleted Mortgage Loan on or before the
date of substitution, and the Seller or the Originator, as applicable, will
thereafter be entitled to retain all amounts subsequently received in respect
of such Deleted Mortgage Loan. The Servicer shall give written notice to the
Trustee that such substitution has taken place and shall amend the Mortgage
Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the
terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan. Upon such substitution, such Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects.
(d) With respect to each Qualified Substitute Mortgage Loan to be
delivered to the Trustee (or its Custodian) pursuant to the terms of this
Article III in exchange for a Deleted Mortgage Loan: (i) the Seller or the
Originator, as applicable, shall deliver to the Trustee (or its Custodian) the
Mortgage File for the Qualified Substitute Mortgage Loan containing the
documents set forth in Section 2.03(a) along with a written certification
certifying as to the delivery of such Mortgage File and containing the
granting language set forth in Section 2.01(a); and (ii) the Seller or the
Originator, as applicable, will be deemed to have made, with respect to such
Qualified Substitute Mortgage Loan, each of the representations and warranties
made by it with respect to the related Deleted Mortgage Loan. As soon as
practicable after the delivery of any Qualified Substitute Mortgage Loan
hereunder, the Servicer, at the expense of the Depositor and with the
cooperation of the Servicer, shall (i) with respect to a Qualified Substitute
Mortgage Loan that is a Non-MERS Mortgage Loan, cause the Assignment of
Mortgage to be recorded if required pursuant to Section 2.03, or (ii) with
respect to a Qualified Substitute Mortgage Loan that is a MERS Mortgage Loan,
cause to be taken such actions as are necessary to cause the Trustee to be
clearly identified as the owner of each such Mortgage Loan on the records of
MERS if required pursuant to Section 2.03.
(e) It is understood and agreed that the obligations of the Seller
and the Originator set forth in Sections 4, 5, 6 and 7 of the Purchase
Agreement to cure, purchase or substitute for a defective Mortgage Loan
constitute the sole remedies of the Trustee and the Certificateholders
respecting a breach of the representations and warranties of the Seller and
the Originator set forth in Sections 5 and 6 of the Purchase Agreement. In
addition, it is understood and agreed that the Depositor has assigned to the
Trustee all of its rights under the Purchase Agreement (other than Section
17), including the right to enforce any remedy against the Seller or the
Originator as provided in Section 7 thereof. The Trustee shall give prompt
written notice to the Rating Agencies of any repurchase or substitution made
pursuant to this Section 3.03 or Section 2.04(b).
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates. The Certificates shall be
substantially in the forms annexed hereto as Exhibits B-1 and B-2. The
Certificates shall be issued in Authorized Denominations only. All
Certificates shall be executed by manual or facsimile signature on behalf of
the Trustee by an authorized officer and authenticated by the manual or
facsimile signature of an authorized officer. Certificates bearing the
signatures of individuals who were at the time of the execution of the
Certificates the authorized officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such
offices at the date of such Certificates. All Certificates issued hereunder
shall be dated the date of their authentication.
Section 4.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee, as registrar, shall cause to be kept a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee hereby appoints
the Certificate Registrar for the purpose of registering Certificates and
transfers of Certificates as herein provided.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust Fund and entitled to the same benefits under this
Agreement as the Certificates surrendered upon such registration of transfer
or exchange.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by
the Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any registration
of transfer or exchange of Certificates, but the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust Fund.
(e) It is intended that the Book-Entry Certificates be registered so
as to participate in a global book-entry system with the Depository, as set
forth herein. Each Class of Book-Entry Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Book-Entry Certificate of such Class with a denomination
equal to the initial Certificate Principal Amount of such Class. Upon initial
issuance, the ownership of each such Book-Entry Certificate shall be
registered in the Certificate Register in the name of Cede & Co., or any
successor thereto, as nominee for the Depository. The Depositor and the
Trustee are hereby authorized to execute and deliver the Representation Letter
with the Depository. With respect to Book-Entry Certificates registered in the
Certificate Register in the name of Cede & Co., as nominee of the Depository,
the Depositor, the Seller, the Servicer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Book-Entry Certificates from time to
time as a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Seller, the Servicer and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the records
of the Depository, Cede & Co., or any Direct or Indirect Participant with
respect to any Ownership Interest, (ii) the delivery to any Direct or Indirect
Participant or any other Person, other than a Certificateholder, of any notice
with respect to the Book-Entry Certificates or (iii) the payment to any Direct
or Indirect Participant or any other Person, other than a Certificateholder,
of any amount with respect to any distribution of principal or interest on the
Book-Entry Certificates. No Person other than a Certificateholder shall
receive a certificate evidencing such Book-Entry Certificate. Upon delivery by
the Depository to the Trustee of written notice to the effect that the
Depository has determined to substitute a new nominee in place of Cede & Co.,
and subject to the provisions hereof with respect to the payment of interest
by the mailing of checks or drafts to the Certificateholders appearing as
Certificateholders at the close of business on a Record Date, the name "Cede &
Co." in this Agreement shall refer to such new nominee of the Depository.
(f) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Book-Entry Certificates and the Depositor or the Depository is unable
to locate a qualified successor or (ii) the Depositor at its sole option
elects to terminate the book-entry system through the Depository, the
Book-Entry Certificates shall no longer be restricted to being registered in
the Certificate Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Depositor may determine that the
Book-Entry Certificates shall be registered in the name of and deposited with
a successor depository operating a global book-entry system, as may be
acceptable to the Depositor, or such depository's agent or designee but, if
the Depositor does not select such alternative global book-entry system, then
the Book-Entry Certificates may be registered in whatever name or names
Certificateholders transferring Book-Entry Certificates shall designate, in
accordance with the provisions hereof; provided, however, that any such
reregistration shall be at the expense of the Depositor.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Book-Entry Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Book-Entry Certificates as the case may be and all notices
with respect to such Book-Entry Certificates as the case may be shall be made
and given, respectively, in the manner provided in the Representation Letter.
(h) Except as provided in Section 4.02(i), no transfer, sale, pledge
or other disposition of a Restricted Certificate shall be made unless such
transfer, sale, pledge or other disposition is exempt from the registration
requirements of the Act, and any applicable state securities laws or is made
in accordance with said Act and laws. In the event that a transfer of a
Restricted Certificate is to be made under this Section 4.02(h), (i) the
Depositor may direct the Trustee to require an Opinion of Counsel in form and
substance satisfactory to the Trustee and the Depositor that such transfer
shall be made pursuant to an exemption, describing the applicable exemption
and the basis therefor, from said Act and laws or is being made pursuant to
said Act and laws, which Opinion of Counsel shall not be an expense of the
Trustee, the Depositor or the Servicer, provided that such Opinion of Counsel
will not be required in connection with the initial transfer of any such
Certificate by the Depositor or any affiliate thereof, to a non-affiliate of
the Depositor and (ii) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit O hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit P hereto, each acceptable to and in form
and substance satisfactory to the Depositor and the Trustee certifying to the
Depositor and the Trustee the facts surrounding such transfer, which
representation letters shall not be an expense of the Trustee, the Depositor
or the Servicer, provided that such representation letter will not be required
in connection with any transfer of any such Certificate by the Depositor to an
affiliate of the Depositor. Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Servicer against any liability that may result if the transfer is not
so exempt or is not made in accordance with such applicable federal and state
laws.
(i) Transfers of Restricted Certificates may be made in accordance
with this Section 4.02(i) if the prospective transferee of a Restricted
Certificate provides the Trustee and the Depositor with an investment letter
substantially in the form of Exhibit Q attached hereto, which investment
letter shall not be an expense of the Trustee, the Depositor or the Servicer,
and which investment letter states that, among other things, such transferee
is a "qualified institutional buyer" as defined under Rule 144A under the Act.
Such transfers shall be deemed to have complied with the requirements of
Section 4.02(h) hereof; provided, however, that no Transfer of any of the
Restricted Certificates may be made pursuant to this Section 4.02(i) by the
Depositor. Any such Certificateholder desiring to effect such transfer shall,
and does hereby agree to, indemnify the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such applicable federal and state
laws.
(j) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause
(vi) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale, and the rights of each
Person acquiring any Ownership Interest in a Residual Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall require delivery to
it, and shall not register the Transfer of any Residual Certificate until
its receipt of, an affidavit and agreement (a "Transfer Affidavit and
Agreement") attached hereto as Exhibit I from the proposed Transferee, in
form and substance satisfactory to the Trustee, representing and
warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in the
Residual Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in a
Residual Certificate, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of this Section 4.02(j) and
agrees to be bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if a
Responsible Officer of the Trustee has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer of an Ownership
Interest in a Residual Certificate to such proposed Transferee shall be
effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer
its Ownership Interest in a Residual Certificate and (y) not to transfer
its Ownership Interest unless it provides a certificate (attached hereto
as Exhibit J) to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee.
(v) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In addition,
no Transfer of a Residual Certificate shall be made unless the Trustee
shall have received a representation letter from the Transferee of such
Certificate to the effect that such Transferee is not a Disqualified
Non-United States Person and is not a Disqualified Organization.
Transfers of the Residual Certificates to Disqualified Non-United States
Persons and Disqualified Organizations are prohibited.
(vi) Any attempted or purported transfer of any Ownership Interest in
a Residual Certificate in violation of the provisions of this Section
4.02 shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall become a Holder
of a Residual Certificate in violation of the provisions of this Section
4.02, then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
transfer of such Residual Certificate. The Trustee shall notify the
Depositor upon receipt of written notice or discovery by a Responsible
Officer that the registration of transfer of a Residual Certificate was
not in fact permitted by this Section 4.02. Knowledge shall not be
imputed to the Trustee with respect to an impermissible transfer in the
absence of such a written notice or discovery by a Responsible Officer.
The Trustee shall be under no liability to any Person for any
registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the
transfer was registered after receipt of the related Transfer Affidavit
and Transfer Certificate. The Trustee shall be entitled, but not
obligated to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on such Residual Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Holder of such Certificate.
(k) The Trustee shall make available to the Internal Revenue Service
and those Persons specified by the REMIC Provisions, all information necessary
to compute any tax imposed (A) as a result of the transfer of an ownership
interest in a Residual Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Residual Certificates required to be provided to the Internal Revenue Service
and certain Persons as described in Treasury Regulations Sections
1.860D-1(b)(5) and 1.860E- 2(a)(5), and (B) as a result of any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust, estate or organization described in Section 1381 of the
Code that holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person who is a Disqualified
Organization. The Trustee may charge and shall be entitled to reasonable
compensation for providing such information as may be required from those
Persons which may have had a tax imposed upon them as specified in clauses (A)
and (B) of this paragraph for providing such information.
(l) No transfer of an ERISA-Restricted Certificate shall be made to
any Person unless the Trustee has received (A) a certificate substantially in
the form of Exhibit K hereto from such transferee or (B) an Opinion of Counsel
satisfactory to the Trustee and the Depositor to the effect that the purchase
and holding of such a Certificate will not constitute or result in the assets
of the Trust Fund being deemed to be "plan assets" subject to the prohibited
transactions provisions of ERISA or Section 4975 of the Code and will not
subject the Trustee or the Depositor to any obligation in addition to those
undertaken in this Agreement; provided, however, that the Trustee will not
require such certificate or opinion in the event that, as a result of a change
of law or otherwise, counsel satisfactory to the Trustee has rendered an
opinion to the effect that the purchase and holding of an ERISA-Restricted
Certificate by a Plan or a Person that is purchasing or holding such a
Certificate with the assets of a Plan will not constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code. The
preparation and delivery of the certificate and opinions referred to above
shall not be an expense of the Trust Fund, the Trustee or the Depositor.
Notwithstanding the foregoing, no opinion or certificate shall be required for
the initial issuance of the ERISA-Restricted Certificates.
(m) No transfer of a Residual Certificate or any interest therein
shall be made to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Code
(each, a "Plan"), unless the prospective transferee of such Residual
Certificate provides the Servicer and the Trustee with a certification of
facts and, at the prospective transferee's expense, an Opinion of Counsel
which establish to the satisfaction of the Servicer and the Trustee that such
transfer will not result in a violation of Section 406 of ERISA or Section
4975 of the Code or cause the Servicer or the Trustee to be deemed a fiduciary
of such Plan or result in the imposition of an excise tax under Section 4975
of the Code. In the absence of their having received the certification of
facts or Opinion of Counsel contemplated by the preceding sentence, the
Trustee and the Servicer shall require the prospective transferee of any
Residual Certificate to certify in the form of Exhibit O or Exhibit Q that (A)
it is neither (i) a Plan nor (ii) a Person who is directly or indirectly
purchasing a Residual Certificate on behalf of, as named fiduciary of, as
trustee of, or with assets, of a Plan and (B) all funds used by such
transferee to purchase such Certificates will be funds held by it in its
general account which it reasonably believes do not constitute "plan assets"
of any Plan.
(n) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall
execute, authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon
surrender of the Certificates to be exchanged at such office. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. No service charge shall be made for any
transfer or exchange of 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 Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled by the Trustee.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee such security or
indemnity as may reasonably be required by each of 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,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
Percentage Interest, but bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section 4.03, the Trustee
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and their fees and
expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 4.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Depositor, the Seller and the
Trustee may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances
pursuant to Section 6.05 and for all other purposes whatsoever, and the
Servicer, the Depositor, the Seller and the Trustee shall not be affected by
notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. Appointment of the Servicer. Acting directly or through
one or more Subservicers as provided in Section 5.02, the Servicer shall
service and administer the Mortgage Loans on behalf of the Trustee and in the
best interests of and for the benefit of the holders of Certificates in
accordance with this Agreement and the terms of the respective Mortgage Loans,
and Accepted Servicing Practices, and shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable but
without regard to: (i) any relationship that the Servicer, any Subservicer or
any Affiliate of the Servicer or any Subservicer may have with the related
Mortgagor; (ii) the ownership of any Certificate by the Servicer or any
Affiliate of the Servicer; (iii) the Servicer's obligation to make Periodic
Advances or Servicing Advances; or (iv) the Servicer's or any Subservicer's
right to receive compensation for its services hereunder or with respect to
any particular transaction.
Subject to Section 5.02 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to
all or certain of the Mortgage Loans through a Subservicer as it may from time
to time designate, but no such designation of a Subservicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Subservicer shall have the rights and powers of the Servicer which have been
delegated to such Subservicer with respect to such Mortgage Loans under this
Agreement; provided, however, the Servicer shall remain primarily liable for
all duties and obligations of the Servicer hereunder.
Without limiting the generality of the foregoing, but subject to
Sections 5.12 and 5.13, the Servicer in its own name or in the name of a
Subservicer is hereby authorized and empowered to execute and deliver, on
behalf of itself, the Certificateholders and the Trustee or any of them, (i)
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, (ii) to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to
effect ownership of any Mortgaged Property in the name of the Servicer on
behalf of the Trustee, and (iii) to hold title to any Mortgaged Property upon
such foreclosure or deed in lieu of foreclosure on behalf of the Trustee. The
Trustee hereby grants to the Servicer, and this Agreement shall constitute, a
power of attorney to execute all documents on its behalf under this Agreement
as may be necessary or desirable to effectuate the provisions of this
paragraph; provided, however, that instruments of satisfaction, cancellation,
release or discharge shall only be executed with respect to Mortgage Loans
paid in full or foreclosed (or with respect to which payment in full has been
escrowed). Revocation of the power of attorney created by the preceding
sentence shall take effect upon (i) the receipt by the Servicer of written
notice thereof from the Trustee, (ii) an Event of Default or (iii) the
termination of the Trust Fund. The Trustee shall execute any documentation
furnished to it by the Servicer for recordation by the Servicer in the
appropriate jurisdictions, as shall be necessary to effectuate the foregoing.
Subject to Sections 5.12 and 5.13, the Trustee shall, if necessary, execute
additional powers of attorney to the Servicer or any Subservicer and furnish
them with any other documents as the Servicer or such Subservicer shall
reasonably request to enable the Servicer and such Subservicer to carry out
their respective servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the
Trustee the details concerning the servicing of the Mortgage Loans on computer
generated tape, diskette or other machine readable format which is mutually
agreeable.
The Servicer shall give prompt written notice to the Trustee of any
action, of which the Servicer has actual knowledge, to (i) assert a claim
against the Trust Fund or (ii) assert jurisdiction over the Trust Fund.
Servicing Advances incurred by the Servicer or any Subservicer in
connection with the servicing of the Mortgage Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges)
on any Mortgaged Property shall be recoverable by the Servicer or such
Subservicer to the extent provided in Section 5.21(b) hereof.
Section 5.02. Subservicers. (a) The Servicer may enter into
Subservicing Agreements for any servicing and administration of Mortgage Loans
with any institution which, (v) is an institution approved as a mortgage loan
originator by the Federal Housing Administration or an institution, the
deposit accounts of which are insured by the FDIC, (w) a FHLMC or FNMA
approved mortgage servicer, (x) is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Subservicing
Agreement, (y) has experience servicing mortgage loans that are similar to the
Mortgage Loans and (z) has equity of not less than $5,000,000 (as determined
in accordance with generally accepted accounting principles). The Servicer
shall give written notice to the Trustee, the Certificateholders and the
Rating Agencies of the appointment of any Subservicer. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Mortgage
Loans when any Subservicer has received such payments. Each Subservicer shall
be required to service the Mortgage Loans in accordance with this Agreement
and any such Subservicing Agreement shall be consistent with and not violate
the provisions of this Agreement. Each Subservicing Agreement shall provide
that the Trustee (if acting as successor Servicer) or any other successor
Servicer shall have the option to terminate such agreement without payment of
any fees if the original Servicer is terminated or resigns. The Servicer shall
deliver to the Trustee copies of all Subservicing Agreements, and any
amendments or modifications thereof promptly upon the Servicer's execution and
delivery of such instrument.
The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Subservicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Mortgage Loans. The Servicer shall be entitled to enter into
any agreement with a Subservicer for indemnification of the Servicer by such
Subservicer and nothing contained in such Subservicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and to either itself directly service the related Mortgage Loans or
enter into a Subservicing Agreement with a successor Subservicer that
qualifies under this Section.
As part of its servicing activities hereunder, the Servicer (except
as otherwise provided in the last sentence of this paragraph), for the benefit
of the Trustee and the Certificateholders, shall enforce the obligations of
each Subservicer under the related Subservicing Agreement and of the
Originator and the Seller under the Purchase Agreement, including, without
limitation, any obligation to make advances in respect of delinquent payments
as required by a Subservicing Agreement, or to purchase a Mortgage Loan on
account of missing or defective documentation or on account of a breach of a
representation, warranty or covenant, as described in Section 3.03 hereof and
Section 7 of the Purchase Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of any Subservicing
Agreement, and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Servicer, in
its good faith business judgment, would require were it the owner of the
related Mortgage Loans. The Servicer shall pay the costs of such enforcement
(except against the Seller) at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of
the related Mortgage Loans, or (ii) from a specific recovery of costs,
expenses or attorneys' fees against the party against whom such enforcement is
directed. Enforcement of the Purchase Agreement against the Originator shall
be effected by the Servicer to the extent it is not the Originator, and
otherwise by the Trustee, in accordance with the foregoing provisions of this
paragraph.
(c) Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer shall be deemed to be
between the Subservicer and the Servicer alone and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Subservicer except as set forth in paragraph (d) below. The Servicer shall be
solely liable for all fees and expenses owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees and expenses.
(d) In connection with the assumption of the responsibilities, duties
and liabilities and of the authority, power and rights of the Servicer
hereunder by the Trustee pursuant to Section 7.02 or by another successor
Servicer, it is understood and agreed that the Servicer's rights and
obligations under any Subservicing Agreement then in force between the
Servicer and a Subservicer shall be assumed simultaneously by the Trustee or
other successor Servicer without act or deed on part of the Trustee except
that (i) the predecessor Servicer shall not thereby be relieved of any
liability or obligations under any Subservicing Agreement that arose before it
ceased to be the Servicer and (ii) none of the Trustee, its designee or any
successor Servicer shall be deemed to have assumed any liability or obligation
of the predecessor Servicer that arose before it ceased to be the Servicer;
provided, however, that the Trustee (if acting as successor Servicer) or any
other successor Servicer may terminate the Subservicer as provided in Section
5.02.
The Servicer shall, upon the reasonable request of the Trustee but at
the expense of the Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Subservicing Agreements to
the assuming party.
Section 5.03. Collection of Certain Mortgage Loan Payments;
Collection Account. (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 and the terms and provisions of any applicable Insurance Policy,
follow Accepted Servicing Practices.
(b) The Servicer shall establish and maintain in the name of the
Trustee the Collection Account, in trust for the benefit of the
Certificateholders. The Collection Account shall be established and maintained
as an Eligible Account. If the Collection Account ceases to be an Eligible
Account hereunder, then the Servicer shall immediately be required to
establish a new Collection Account that is an Eligible Account and transfer
all funds on deposit in such existing Collection Account to such new
Collection Account. If the Servicer fails to fulfill such requirement, then
the Collection Account shall thenceforth be held as a trust account with a
depository institution selected by the Trustee. The Servicer shall notify the
Trustee if there is a change in the name, account number or institution
holding the Collection Account.
The Servicer shall deposit in the Collection Account (i) on the
Closing Date, any amounts representing Monthly Payments on the Mortgage Loans
due or to be applied as of a date after the Cut-off Date and (ii) thereafter,
on a daily basis within one Business Day of receipt of good funds (except as
otherwise permitted herein), the following payments and collections received
or made by it:
(i) all payments received after the Cut-off Date on account of
principal on the Mortgage Loans (other than payments of principal due on
or prior to the Cut-off Date) and all Principal Prepayments in Full,
Curtailments and all Net REO Proceeds collected after the Cut-off Date;
(ii) all payments received after the Cut-off Date on account of
interest on the Mortgage Loans (other than payments of interest that
accrued on each Mortgage Loan up to and including the Cut-off Date),
including all Prepayment Premiums;
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.04 and 3.03; and
(vii) any amount expressly required to be deposited in the Collection
Account in accordance with certain provisions of this Agreement,
including, without limitation Sections 2.04(b), 2.04(c), 3.03(b),
3.03(c), 5.06, 5.07 and 5.18 of this Agreement; provided, however, that
the Servicer shall be entitled, at its election, either (a) to withhold
and to pay to itself the applicable Servicing Fee from any payment on
account of interest or other recovery (including Net REO Proceeds) as
received and prior to deposit of such payments in the Collection Account
or (b) to withdraw the applicable Servicing Fee from the Collection
Account after the entire payment or recovery has been deposited therein.
The Servicer shall invest the funds in the Collection Account only in
Permitted Investments, and any such investment shall mature no later than the
Business Day immediately preceding the next Servicer Remittance Date. No
Permitted Investment shall be sold or disposed of at a gain prior to maturity.
All income (other than any gain from a sale or disposition of the type
referred to in the preceding sentence) realized from any such Permitted
Investment shall be for the benefit of the Servicer as additional servicing
compensation and may only be withdrawn from the Collection Account by the
Servicer immediately following the remittance to the Trustee on each Servicer
Remittance Date by the Servicer in accordance with the terms hereof. The
amount of any net losses incurred in respect of any such investments shall be
deposited in the Collection Account by the Servicer out of its own funds
immediately as realized.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of those described in the
first paragraph of Section 5.14 need not be deposited by the Servicer in the
Collection Account. If the Servicer deposits in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Collection Account, any provision herein to the contrary
notwithstanding. All funds deposited by the Servicer in the Collection Account
shall be held in the Collection Account for the account of the Trustee in
trust for the Certificateholders until disbursed in accordance with Section
6.01 or withdrawn in accordance with Section 5.04.
(c) The Collection Account may be transferred to a different
depository institution so long as such transfer is to an Eligible Account.
Section 5.04. Permitted Withdrawals from the Collection Account. The
Servicer may, from time to time, make withdrawals from the Collection Account
for the following purposes:
(a) to reimburse itself for any accrued unpaid Servicing Fees and for
unreimbursed Periodic Advances and Servicing Advances; provided, however, that
the Servicer's right to reimbursement for unpaid Servicing Fees and
unreimbursed Servicing Advances and Periodic Advances shall be limited to late
collections on the related Mortgage Loan and to Liquidation Proceeds, REO
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the related Mortgagor
or otherwise relating to the Mortgage Loan in respect of which such
unreimbursed amounts are owed limited as follows: The Servicer's right to
reimbursement of unpaid Servicing Fees shall be limited to the portion of such
amounts allocable to interest; the Servicer's right to reimbursement of
Periodic Advances from late collections shall be limited to the portion of any
Monthly Payment allocable to principal and interest; and the Servicer's right
to reimbursement of Servicing Advances from late collections shall be limited
to amounts allocable to escrow payments for taxes, assessments or insurance,
to the extent that such Servicing Advances were made for such purposes.
(b) to reimburse itself for any Periodic Advances and Servicing
Advances determined to have become Nonrecoverable Advances and amounts
reimbursable to itself pursuant to Section 11.01, such reimbursement to be
made from any funds in the Collection Account;
(c) [Reserved]
(d) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein;
(e) to pay itself Servicing Compensation owed pursuant to Section
5.14 hereof to the extent not retained or paid pursuant to Sections 5.03 or
5.14;
(f) to pay to the Seller or the Originator, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that has
been repurchased or replaced pursuant to Sections 2.04 or 3.03 or to pay to
itself with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased pursuant to Section 8.01 all amounts received
thereon and not required to be distributed as of the date on which the related
repurchase or purchase price or Principal Balance, as the case may be, was
determined;
(g) to pay to the Seller with respect to each Mortgage Loan the
amount of interest accrued and unpaid on such Mortgage Loan on the Cut-off
Date;
(h) to remit to the Trustee amounts to be deposited into the
Certificate Account in the amounts and in the manner provided for herein;
(i) to pay itself any net interest earned on or net investment income
earned with respect to funds in the Collection Account;
(j) to pay to the Trustee, any amounts payable or reimbursable
thereto under Section 9.05 hereof, and to the Servicer, any amounts payable or
reimbursable thereto under Section 7.02 (with respect to Servicer set-up
expenses and with respect to successor Servicers) hereof; and
(k) to clear and terminate the Collection Account upon the
termination of this Agreement.
The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.05. Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting casualty insurance coverage. With respect to each Mortgage Loan as
to which the Servicer maintains escrow accounts, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the
Mortgaged Property and the status of primary mortgage guaranty insurance
premiums, if any, and casualty insurance coverage and shall obtain, from time
to time, all bills for the payment of such charges (including renewal
premiums) and shall effect payment thereof prior to the applicable penalty or
termination date and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in any escrow
account which shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. To the extent that a Mortgage does not provide for escrow payments,
the Servicer shall, if it has received notice of a default or deficiency,
monitor such payments to determine if they are made by the Mortgagor. The
Servicer shall effect payment of taxes, assessments, primary mortgage or
hazard insurance premiums and other charges which are or may become a lien
upon the Mortgaged Property prior to the applicable penalty or termination
date and at a time appropriate for securing maximum discounts allowable but
the Servicer shall be required to so advance only to the extent that such
advances, in the good faith judgment of the Servicer, will be recoverable by
the Servicer pursuant to Section 5.04 out of Liquidation Proceeds, Insurance
Proceeds or other recoveries.
Section 5.06. Maintenance Of Casualty Insurance. (a) The Servicer
shall cause to be maintained with respect to each Mortgage Loan fire insurance
with extended coverage on the related Mortgaged Property in an amount which is
at least equal to the least of (i) the current principal balance of such
Mortgage Loan, (ii) the amount necessary to fully compensate for any damage or
loss to the improvements that are a part of such property on a replacement
cost basis and (iii) the maximum insurable value of the improvements that are
a part of such Mortgaged Property, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. The Servicer shall maintain the insurance policies
required hereunder in the name of the mortgagee, its successors and assigns,
and shall be named as loss payee. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid principal balance
of the related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan so permit. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property or REO
Property is at any time in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the
Servicer will cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the unpaid principal balance of the related Mortgage Loan and (ii) the maximum
amount of such insurance available for the related Mortgaged Property under
the national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program). The Insurance
Policies shall require the insurer to provide the mortgagee with 30 days'
notice prior to any cancellation or as otherwise required by law.
(b) Amounts collected by the Servicer under any Insurance Policies
net of amounts remitted to the Mortgagor for repairs shall be deposited into
the Collection Account, subject to withdrawal pursuant to Section 5.04.
Section 5.07. Maintenance of Mortgage Impairment Insurance Policy. In
the event that the Servicer shall obtain and maintain a blanket policy (a
"Mortgage Impairment Insurance Policy") with an insurer having a General
Policy Rating of A:X or better in Best's Key Rating Guide insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first two sentences of
Section 5.06, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property or REO
Property a policy complying with the first two sentences of Section 5.06, and
there shall have been one or more losses which would have been covered by such
policy, deposit to the Collection Account from its own funds the amount not
otherwise payable under the blanket policy because of such deductible clause.
In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of
itself, the Trustee and Certificateholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such Insurance
Policy.
Section 5.08. Fidelity Bond; Errors and Omissions Policy. The
Servicer (including the Trustee if it shall become the Servicer hereunder)
agrees to maintain errors and omissions coverage and a fidelity bond, each at
least to the extent required by Section 305 of Part I of FNMA Guide or any
successor provision thereof; provided, however, that in any event that the
fidelity bond or the errors and omissions coverage is no longer in effect, the
Servicer shall notify the Trustee and the Trustee shall promptly give such
notice to the Certificateholders and shall secure replacement coverage in
conformity with this Section.
Section 5.09. Collection of Taxes, Assessments and Other Items;
Servicing Account. In addition to the Collection Account, the Servicer shall
establish and maintain a Servicing Account, which shall be an Eligible
Account, and shall deposit therein all payments by Mortgagors for taxes,
assessments, primary mortgage or hazard insurance premiums or comparable
items. Withdrawals from the Servicing Account may be made to effect payment of
taxes, assessments, primary mortgage or hazard insurance premiums or
comparable items, to reimburse the Servicer out of related collections for any
advances made in the nature of any of the foregoing, to refund to any
Mortgagors any sums determined to be overages, or to pay any interest owed to
Mortgagors on such account to the extent required by law or to clear and
terminate the Servicing Account at the termination of this Agreement upon the
termination of the Trust Fund.
Section 5.10. Periodic Filings With The Securities And Exchange
Commission; Additional Information. The Depositor shall prepare or cause to be
prepared the initial current report on Form 8-K and thereafter the Trustee
shall prepare or cause to be prepared, on the basis of information supplied by
the Servicer, Form 10-Ks and Form 10-Qs (if necessary), or monthly current
reports on Form 8-K, on behalf of the Trust Fund, as may be required by
applicable law, for filing with the Securities and Exchange Commission (the
"SEC"). The Trustee shall sign each such report on behalf of the Trust Fund.
The Trustee will forward a copy of each such report to the Depositor promptly
after such report has been filed with the SEC. The Trustee agrees to use its
best efforts to seek to terminate such filing obligation promptly after the
period during which such filings are required under the Securities Exchange
Act of 1934. Promptly after filing a Form 15 or other applicable form with the
SEC in connection with such termination, the Trustee shall deliver to the
Depositor a copy of such form together with copies of confirmations of receipt
by the SEC of each report filed therewith on behalf of the Trust Fund.
The Servicer and the Depositor each agree to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within their control and customarily generated related to
this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the SEC.
Section 5.11. Enforcement of Due-on-Sale Clauses; Assumption
Agreements. When a Mortgaged Property has been or is about to be conveyed by
the Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause contained
in the related Mortgage or Mortgage Note; provided, however, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the
reasonable belief of the Servicer, is not enforceable under applicable law. In
such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, unless prohibited by applicable law or the Mortgage documents, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as Mortgagor and
becomes liable under the Mortgage Note. In connection with any assumption or
substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual in its general
mortgage originating activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption
and modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the
continued effectiveness of any applicable hazard insurance policy, or a new
policy meeting the requirements of this Section is obtained. The Servicer
shall notify the Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Trustee the original copy of such
assumption or substitution agreement (indicating the Mortgage File to which it
relates) which copy shall be added by the Trustee to the related Mortgage File
and which shall, for all purposes, be considered a part of such Mortgage File
to the same extent as all other documents and instruments constituting a part
thereof. The Servicer shall be responsible for recording any such assumption
or substitution agreements. In connection with any such assumption or
substitution agreement, no material term of the Mortgage Loan (including,
without limitation, the required monthly payment on the related Mortgage Loan,
the stated maturity, the outstanding principal amount or the Mortgage Rate)
shall be changed nor shall any required monthly payments of principal or
interest be deferred or forgiven. Any fee collected by the Servicer or the
Subservicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption which the Servicer
may be restricted by law from preventing, for any reason whatsoever.
Section 5.12. Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall foreclose upon or otherwise comparably effect the ownership in
the name of the Trustee on behalf of the Trust Fund of Mortgaged Properties
relating to defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has
not purchased pursuant to Section 5.18. In connection with such foreclosure or
other conversion, the Servicer shall use Accepted Servicing Practices. Any
amounts so advanced including any amounts described below regarding
environmental inspections shall constitute "Servicing Advances" within the
meaning of Section 5.21(b) hereof. The Servicer shall sell any REO Property
within 35 months from the close of the taxable year of its acquisition by the
Trust Fund, at such price as the Servicer in good faith deems necessary to
comply with this covenant unless the Servicer obtains for the Trustee, an
Opinion of Counsel (the expense of which opinion shall be a Servicing Advance)
experienced in federal income tax matters acceptable to the Trustee, addressed
to the Trustee and the Servicer, to the effect that the holding by the Trust
Fund of such REO Property for any greater period will not result in the
imposition of taxes on "Prohibited Transactions" of the Trust Fund or any
REMIC as defined in Section 860F of the Code or cause either REMIC to fail to
qualify as a REMIC under the REMIC Provisions at any time that any
Certificates are Outstanding. Notwithstanding the generality of the foregoing
provisions, the Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to
fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by any REMIC created hereunder
of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of
the interests of the Certificateholders, rent the same, or any part thereof,
as the Servicer deems to be in the best interest of the Certificateholders for
the period prior to the sale of such REO Property.
Notwithstanding anything to the contrary herein, the Servicer shall
be under no obligation to foreclose upon or otherwise convert the ownership of
any Mortgaged Property which it believes may be contaminated with or affected
by hazardous or toxic wastes or substances. If the Servicer has actual
knowledge of any environmental or hazardous waste risk with respect to the
Mortgaged Property that the Servicer is contemplating acquiring in foreclosure
or deed in lieu of foreclosure, the Servicer will cause an environmental
inspection of the Mortgaged Property in accordance with Accepted Servicing
Practices. If such environmental audit or report reveals or if the Servicer
has knowledge or notice that such Mortgaged Property contains toxic wastes or
substances, the Servicer shall, in accordance with Accepted Servicing
Practices, take such action as it deems to be in the best interests of
Certificateholders.
(b) The Servicer shall determine, with respect to each defaulted
Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall
become a Liquidated Mortgage Loan.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Mortgage Loan unless, in the Servicer's good
faith judgment, such modification, waiver or amendment would minimize the loss
that might otherwise be experienced with respect to such Mortgage Loan and the
Servicer shall not: (i) permit (unless the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) any modification with respect to any
Mortgage Loan that would change the Mortgage Rate, reduce or increase the
Principal Balance (except for reductions resulting from actual payments of
principal) or extend the maturity date of such Mortgage Loan or (ii) permit
any modification, waiver or amendment of any term of any Mortgage Loan that
would both (A) effect an exchange or reissuance of such Mortgage Loan under
Section 1001 of the Code (or Treasury regulations promulgated thereunder) and
(B) cause any REMIC to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions after the
startup date" under the REMIC Provisions. Notwithstanding anything set out in
this Section 5.12(c) or elsewhere in this Agreement to the contrary, the
Servicer shall be permitted to modify, waive or amend any provision of a
Mortgage Loan if required by statute or a court of competent jurisdiction to
do so.
Section 5.13. Trustee to Cooperate; Release of Mortgage Files. (a)
Upon the payment in full of any Mortgage Loan (including any liquidation of
such Mortgage Loan through foreclosure or otherwise), or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall deliver to the Trustee or the
Custodian on behalf of the Trustee a written request and certification of the
Servicer substantially in the form attached hereto as Exhibit H signed by a
Servicing Officer which states the purpose of the release of a Mortgage File.
Upon receipt of such written request and certification, the Trustee or the
Custodian on behalf of the Trustee will promptly release the related Mortgage
File, in trust, to (i) the Servicer, (ii) an escrow agent or (iii) any
employee, agent or attorney of the Trustee. Upon any such payment in full, or
the receipt of such notification that such funds have been placed in escrow,
the Servicer is authorized to give, as attorney-in-fact for the Trustee and
the mortgagee under the Mortgage which secured the Mortgage Note, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument
of satisfaction or assignment, as the case may be, shall be delivered to the
Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall
be chargeable to the Collection Account, the Certificate Account, the Trustee
or the Trust Fund. In lieu of executing any such satisfaction or assignment,
as the case may be, the Servicer may prepare and submit to the Trustee a
satisfaction (or assignment without recourse, if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.
(b) [Reserved]
(c) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any applicable Insurance
Policy, the Custodian shall release the related Mortgage File to the Servicer,
promptly upon a written request and certification of the Servicer in form
attached hereto as Exhibit H signed by a Servicing Officer, which states the
purpose of the release of a Mortgage File. Such receipt shall obligate the
Servicer to return the Mortgage File to the Trustee or the Custodian on behalf
of the Trustee when the need therefore by the Servicer no longer exists.
(d) In all cases where the Servicer needs the Trustee to sign any
document or to release a Mortgage File within a particular period of time, the
Servicer shall notify a Responsible Officer of the Trustee by telephone of
such need and the Trustee shall thereon use its best efforts to comply with
the Servicer's needs, but in any event will comply within two Business Days of
such request.
(e) No costs associated with the procedures described in this Section
5.13 shall be an expense of the Trust Fund.
(f) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action
brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies
or rights provided by the Mortgage Note or Mortgage or otherwise available at
law or in equity. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
reason such documents or pleadings are required.
Section 5.14. Servicing Fee; Servicing Compensation. As compensation
for its activities hereunder, the Servicer shall be entitled to be paid (or to
retain) the amount of the related Servicing Fee with respect to each Mortgage
Loan, but only to the extent of payments or recoveries allocable to interest
thereon. Additional servicing compensation in the form of release fees, bad
check charges, assumption fees, late payment charges, or any other
servicing-related fees (other than Prepayment Premiums) and similar items may,
to the extent collected from Mortgagors, be retained by the Servicer, unless a
successor Servicer is appointed pursuant to Section 7.02 hereof, in which case
the successor Servicer shall be entitled to such fees as are agreed upon by
the Trustee and the successor Servicer. In addition, the Servicer shall be
entitled to retain, as additional servicing compensation, investment earnings,
net of losses, on amounts on deposit in the Collection Account and in the
Certificate Account, to the extent provided in Section 6.01.
The right to receive the Servicing Fee may not be transferred in
whole or in part except in connection with the transfer of all of the
Servicer's responsibilities and obligations under this Agreement.
The aggregate Servicing Fee shall be offset as provided in Section
5.20. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including maintenance of
the hazard insurance required by Section 5.05) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 5.15. Reports to the Trustee and the Depositor; Collection
Account Statements. Not later than 15 days after each Distribution Date, the
Servicer shall provide to the Trustee and the Depositor a statement, certified
by a Servicing Officer, setting forth the status of the Collection Account as
of the close of business on the last day of the immediately preceding calendar
month, showing, for the period covered by such statement, the aggregate of
deposits into and withdrawals from the Collection Account for each category of
deposit specified in Section 5.03 and each category of withdrawal specified in
Section 5.04 and the aggregate of deposits into the Certificate Accounts as
specified in Section 6.05(a). Such statement shall also state the aggregate
unpaid principal balance of all the Mortgage Loans as of the close of business
on the last day of the month preceding the month in which such Distribution
Date occurs. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request.
Section 5.16. Annual Statement as to Compliance. The Servicer, at its
own expense, will deliver to the Trustee, the Depositor, and the Rating
Agencies, on or before April 15 of each year, commencing in 2000, an Officer's
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Servicer during such preceding calendar year and of
performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
for such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the
nature and status thereof including the steps being taken by the Servicer to
remedy such default.
The Servicer shall deliver to the Trustee, the Depositor and the
Rating Agencies, promptly after having obtained knowledge thereof but in no
event later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or the
lapse of time would become an Event of Default.
Section 5.17. Annual Independent Public Accountants' Servicing
Report. On or before April 15 of each year, commencing in 2000, the Servicer,
at its own expense, shall cause to be delivered to the Trustee, the Depositor,
and the Rating Agencies a letter or letters of a firm of independent,
nationally recognized certified public accountants stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Servicer which includes an assertion that the Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to
the servicing of residential mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm
in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that
may be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by
Subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Subservicers. Immediately upon receipt of such report, the Servicer
shall furnish a copy of such report to the Trustee and each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trustee.
Section 5.18. Purchase of Defaulted Mortgage Loans. The Servicer
shall have the option, but not the obligation, to purchase for its own account
any Mortgage Loan that becomes 90 or more days Delinquent, in whole or in
part, or any Mortgage Loan as to which foreclosure proceedings have been
brought by the Servicer; provided, however, that the Servicer may not purchase
any such Mortgage Loan unless the Servicer has delivered to the Trustee, at
the Servicer's expense, an Opinion of Counsel acceptable to the Trustee to the
effect that such a purchase would not constitute a Prohibited Transaction for
the Trust Fund or otherwise subject the Trust Fund to tax and would not
jeopardize the status of the Trust Fund as a REMIC. Any such Mortgage Loan so
purchased shall be purchased by the Servicer on or prior to a Servicer
Remittance Date at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the Collection Account.
Section 5.19. Reports to be Provided by the Servicer. The Servicer
shall provide to the Trustee and the Depositor access to the documentation
regarding the Mortgage Loans, such access being afforded without charge but
only upon reasonable prior notice and during normal business hours at the
offices of the Servicer designated by it.
Upon any change in the format of the computer tape or file maintained
by the Servicer in respect of the Mortgage Loans, the Servicer shall deliver a
copy of such computer tape or file to the Trustee, and in addition shall
provide a copy of such computer tape or file to the Trustee at such other
times as the Trustee may reasonably request.
The Servicer shall deliver to the Depositor, the Seller and the
Trustee monthly, not later than the close of business on the 20th day of each
month (or, if such 20th day is not a Business Day, the immediately preceding
Business Day), such information, in a format mutually agreeable to the
Servicer and the Trustee, as is necessary for the calculation of distributions
and preparation of the reports required to be delivered by the Trustee under
Section 6.07.
Section 5.20. Adjustment of Servicing Compensation In Respect of
Prepaid Mortgage Loans. The aggregate amount of the Servicing Fees that the
Servicer shall be entitled to receive with respect to all of the Mortgage
Loans and each Distribution Date shall be offset on such Distribution Date by
an amount equal to the aggregate Compensating Interest with respect to all
Mortgage Loans that were subjects of Principal Prepayments in Full or
Curtailments during the month preceding the month of such Distribution Date,
calculated as provided in Section 6.09. The amount of any offset against the
aggregate Servicing Fee with respect to any Distribution Date under this
Section 5.20 shall be limited to the aggregate amount of the Servicing Fees
otherwise payable to the Servicer (without adjustment on account of Prepayment
Interest Shortfalls) with respect to such Distribution Date.
Section 5.21. Periodic Advances. (a) On or before each Servicer
Remittance Date, the Servicer shall be required to remit to the Trustee for
deposit to the Certificate Account out of the Servicer's own funds or from
collections on any Mortgage Loans that are not required to be remitted to the
Trustee on such Servicer Remittance Date (all or any portion of such amount to
be replaced on future Servicer Remittance Dates) any Periodic Advances for
such date.
The Servicer shall be permitted to reimburse itself on any Business
Day for any Periodic Advances paid from the Servicer's own funds, from late
collections on the related Mortgage Loan or as provided in Section 5.04.
Notwithstanding the foregoing, in the event that the Servicer
determines in accordance with the servicing standards set out herein that any
proposed Periodic Advance would be a Nonrecoverable Advance, the Servicer
shall not be required to make Periodic Advances with respect to such Mortgage
Loan. To the extent that the Servicer previously has made any Periodic Advance
with respect to a Mortgage Loan that the Servicer subsequently determines is a
Nonrecoverable Advance, the Servicer shall be entitled to reimbursement for
such aggregate Nonrecoverable Advances from collections on any Mortgage Loan
on deposit in the Collection Account. The Servicer shall give written notice
of such determination as to why such amount would not be recoverable to the
Trustee; the Trustee shall promptly furnish a copy of such notice to the
Holders of the Class R Certificates; provided, further, that the Servicer
shall be entitled to recover any unreimbursed Periodic Advances in accordance
with Section 5.04.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
relating to a Mortgagor delinquency or default or other unanticipated event
incurred in the performance of its servicing obligations, including, but not
limited to, (i) property preservation expenses, (ii) the cost of any
enforcement or judicial proceedings, including foreclosures, (iii) the cost of
the management and liquidation of REO Property, and (iv) advances required by
Section 5.12(a), except to the extent that such amounts are determined by the
Servicer in its reasonable business judgment not to be recoverable. Such costs
will constitute Servicing Advances. If the Servicer determines that a
Servicing Advance, if made, would be a Nonrecoverable Advance, the Servicer
shall make such Servicing Advance only if, in the good faith business judgment
of the Servicer, the making of such Servicing Advance is in the best interests
of the Certificateholders. To the extent that the Servicer previously has made
any Servicing Advance with respect to a Mortgage Loan that the Servicer
subsequently determines is a Nonrecoverable Advance, the Servicer shall be
entitled to reimbursement for such aggregate Nonrecoverable Advances from
collections on any Mortgage Loan on deposit in the Collection Account. The
Servicer shall give written notice of such determination as to why such amount
would not be recoverable to the Trustee; the Trustee shall promptly furnish a
copy of such notice to the Holders of the Class R Certificates; provided,
further, that the Servicer shall be entitled to recover any unreimbursed
Servicing Advances in accordance with Section 5.04.
(c) Any cost incurred by the Servicer or by Subservicers in effecting
the timely payment of taxes and assessments on a Mortgaged Property shall not,
for the purpose of calculating distributions to Certificateholders, be added
to the unpaid principal balance of the related Mortgage Loan, notwithstanding
that the terms of such Mortgage Loan so permit.
Section 5.22. Inspections. At any reasonable time and from time to
time upon reasonable notice, the Trustee, any Certificateholder of a Residual
Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
provided, however, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer, other than extraordinary costs and
expenses, which shall be paid by the inspecting party.
Section 5.23. Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer. (a) The Servicer will keep in full effect
its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at
all times under this Agreement.
(b) Any corporation into which the Servicer 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 Servicer shall be a
party or any corporation succeeding to all or substantially all of the
business or assets of the Servicer shall be the successor of the Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
Section 5.24. Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by consent of the Trustee,
which consent shall not be unreasonably withheld, or upon the determination
that the Servicer's duties hereunder are no longer permissible under
applicable law and that such incapacity cannot be cured by the Servicer
without incurring unreasonable expense. Any such determination that the
Servicer's duties hereunder are no longer permissible under applicable law
permitting the resignation of the Servicer shall be evidenced by a written
Opinion of Counsel to such effect delivered to the Trustee, the Seller and the
Depositor. No such assignment or resignation shall become effective until the
Trustee or a successor Servicer appointed in accordance with the terms of this
Agreement has assumed the Servicer's responsibilities and obligations
hereunder in accordance with Section 7.02. The Servicer shall provide the
Trustee and the Rating Agencies with 30 days prior written notice of its
intention to resign pursuant to this Section 5.24.
Section 5.25. Information Reports to be Filed by the Servicer. The
Servicer shall file information returns with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and cancellation of indebtedness income
with respect to any Mortgaged Property as required by Sections 6050H, 6050J
and 6050P of the Code, respectively.
Section 5.26. MERS. (a) The Servicer shall take such actions as are
necessary to cause the Trustee to be clearly identified as the owner of each
MERS Mortgage Loan on the records of MERS for purposes of the system of
recording transfers of beneficial ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the
MERS Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial ownership
or release of any security interest in such Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to Section
3.15 or Section 9.01 within 10 Business Days of such transfer of servicing.
The Servicer shall cooperate with the Trustee, the Servicer and any successor
Servicer to the extent necessary to ensure that such transfer of servicing is
appropriately reflected on the MERS system.
Section 5.27. Waiver of Prepayment Premiums. The Servicer shall not
waive any Prepayment Premium, whether in connection with a refinancing of a
Mortgage Loan that is related to a default or a reasonably foreseeable default
or otherwise, unless (i) such waiver would maximize recovery of total proceeds
with respect to such Mortgage Loan, taking into account the value of the
Prepayment Premium and the related Mortgage Loan and (ii) such waiver is
standard and customary in servicing similar mortgage loans. In no event shall
the Servicer waive any Prepayment Premium in connection with a refinancing of
a Mortgage Loan that is not related to a default or a reasonably foreseeable
default.
Section 5.28. Adjustable Rate Mortgage Loans. The Servicer shall
enforce each Adjustable Rate Mortgage Loan in accordance with its terms and
shall timely calculate, record, report and apply all interest rate adjustments
in accordance with the related Mortgage Note. The Servicer's records shall, at
all times, reflect the then Mortgage Rate and monthly payment and the Servicer
shall timely notify the Mortgagor of any changes to the Mortgage Rate or the
Mortgagor's monthly payment. If the Servicer fails to make either a timely or
accurate adjustment to the Mortgage Rate or monthly payment or to notify the
Mortgagor of such adjustments, upon the Servicer's discovery of such error and
such continued failure, the Servicer shall pay from its own funds any
shortage. If the Servicer's continued failure after notice thereof to make a
scheduled change affects the Trust Fund's rights to make future adjustments
under the terms of such Adjustable Rate Mortgage Loan, the Servicer shall
repurchase such Adjustable Rate Mortgage Loan in accordance with the
provisions hereof by depositing the Loan Purchase Price in the Collection
Account. Any amounts paid by the Servicer pursuant to this Section shall not
be an advance and shall not be reimbursable from the proceeds of any Mortgage
Loan.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01. Establishment of Certificate Accounts; Deposits to the
Certificate Accounts. (a) The Trustee shall establish and maintain a
Certificate Account in the name of the Trustee in trust for the benefit of the
Certificateholders. The Certificate Account shall be an Eligible Account.
(b) The Trustee shall invest the funds in the Certificate Account
only in Permitted Investments as directed in writing by the Servicer. With
respect to each Distribution Date, one day's investment income realized from
any such Permitted Investment shall be for the benefit of the Trustee as
additional compensation, and the remainder of the investment income from such
Permitted Investments with respect to such Distribution Date, if any, shall be
paid to the Servicer as additional servicing compensation. The amount of any
losses incurred in respect of any such investments shall be deposited in the
related Certificate Account by the Servicer out of its own funds immediately
as realized.
Section 6.02. Permitted Withdrawals from the Certificate Account. The
Trustee shall withdraw or cause to be withdrawn funds from the Certificate
Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Seller or the Originator, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that has
been repurchased or replaced pursuant to Section 2.04 or 3.03 or to pay to the
Servicer with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased all amounts received thereon and not required
to be distributed as of the date on which the related repurchase or purchase
price or Principal Balance was determined;
(c) to pay itself and the Servicer any interest earned on or
investment income earned with respect to funds in the Certificate Account as
provided in Section 6.01;
(d) to return to the Collection Account any amount deposited in the
Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon termination
of any of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)
through (e) listed above.
Section 6.03. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement, including all payments due on the Mortgage Loans in accordance with
the respective terms and conditions of such Mortgage Loans and required to be
paid over to the Trustee by the Servicer. The Trustee shall hold all such
money and property received by it as part of the Trust Fund and shall apply it
as provided in this Agreement.
Section 6.04. [Reserved]
Section 6.05. Distributions. (a) Not later than the close of business
on each Servicer Remittance Date, the Servicer shall remit to the Trustee for
deposit into the Certificate Account from funds on deposit in the Collection
Account an amount equal to the Total Distribution Amount.
(b) With respect to funds deposited in the Certificate Account, on
each Distribution Date, the Trustee shall make the following allocations,
disbursements and transfers, and each such allocation, transfer and
disbursement shall be treated as having occurred only after all preceding
allocations, transfers and disbursements have occurred:
(i) On each Distribution Date, the Trustee shall distribute the
Interest Remittance Amount for such date in the following order of
priority:
first, to the Trustee, the Trustee Fee for such date;
second, to the Class A Certificates, Current
Interest for such Class for such date and any Carryforward
Interest for such Class for such date;
third, to the Class M1 Certificates, Current Interest for
such Class for such date;
fourth, to the Class M2 Certificates, Current Interest for
such Class for such date;
fifth, to the Class B Certificates, Current Interest for
such Class for such date; and
sixth, for application as part of Monthly Excess Cashflow
for such date, as provided in subsection (b)(iii) of this
Section, any Interest Remittance Amount remaining after
application pursuant to clauses first through fifth above.
(ii) On each Distribution Date, the Trustee shall distribute the
Principal
Distribution Amount for such date as follows:
(1) On each Distribution Date (A) prior to the Stepdown Date or
(B) with respect to which a Delinquency Trigger Event has occurred,
the Trustee will distribute the Principal Distribution Amount for
such date in the following order of priority:
first, to the Class A Certificates, until the Class
Principal Amount has been reduced to zero;
second, to the Class M1 Certificates, until the Class
Principal Amount has been reduced to zero;
third, to the Class M2 Certificates, until the Class
Principal Amount has been reduced
to zero;
fourth, to the Class B Certificates, until the Class
Principal Amount has been reduced
to zero; and
fifth, for application as part of Monthly Excess Cashflow
for such date, as provided in subsection (b)(iii) of this
Section, any Principal Distribution Amount remaining after
application pursuant to clauses first through fourth above.
(2) On each Distribution Date (A) on and after the Stepdown Date
and (B) on any Distribution Date on which a Delinquency Trigger Event
has not occurred, the Trustee will distribute the Principal
Distribution Amount for such date in the following order of priority:
first, to the Class A Certificates, the lesser of (x) the
Principal Distribution Amount and (y) the Senior Principal
Distribution Amount for such date, until the Class Principal
Amount has been reduced to zero;
second, to the Class M1 Certificates, the lesser of (x) the
remaining Principal Distribution Amount and (y) the Class M1
Principal Distribution Amount for such date, until the Class
Principal Amount has been reduced to zero;
third, to the Class M2 Certificates, the lesser of (x) the
remaining Principal Distribution Amount and (y) the Class M2
Principal Distribution Amount for such date, until the Class
Principal Amount has been reduced to zero;
fourth, to the Class B Certificates, the lesser of (x) the
remaining Principal Distribution Amount and (y) the Class B
Principal Distribution Amount for such date, until the Class
Principal Amount has been reduced to zero; and
fifth, for application as part of Monthly Excess Cashflow
for such date, as provided in subsection (b)(iii) of this
Section, any Principal Distribution Amount remaining after
application pursuant to clauses first through fourth above.
(iii) On each Distribution Date, the Trustee shall distribute
the Monthly Excess Cashflow for such date, in the following order of
priority:
first, to the extent of Monthly Excess Interest, to fund
the Extra Principal Distribution Amount for such date;
second, to the Class M1 Certificates, any Carryforward
Interest for such date;
third, to the Class M1 Certificates, any Deferred Amount
for such date;
fourth, to the Class M2 Certificates, any Carryforward
Interest for such date; fifth, to the Class M2 Certificates, any
Deferred Amount for such date;
sixth, to the Class B Certificates, any Carryforward
Interest for such date;
seventh, to the Class B Certificates, any Deferred Amount
for such date;
eighth, for deposit into the Basis Risk Reserve Fund, as
required under Section 6.15(b) of this Agreement;
ninth, from the Basis Risk Reserve Fund, to the Class A
Certificates, in an amount equal to any outstanding Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class for
such date;
tenth, from the Basis Risk Reserve Fund, to the Class M1
Certificates, in an amount equal to any outstanding Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class for
such date;
eleventh, from the Basis Risk Reserve Fund, to the Class M2
Certificates, in an amount equal to any outstanding Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class for
such date;
twelfth, from the Basis Risk Reserve Fund, to the Class B
Certificates, in an amount equal to any outstanding Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class for
such date; and
thirteenth, to the Class R Certificate, any remaining
Monthly Excess Cashflow for such date.
(iv) On each Distribution Date, the Trustee shall distribute the
amount of all Prepayment Premiums received by the Servicer during the
related Prepayment Period to the holder of the Class R Certificate.
Section 6.06. Investment of Accounts. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account, other than the
Collection Account, held by the Trustee shall be invested and reinvested by
the Trustee, as directed in writing by the Servicer (with respect to the
Certificate Account) or the Depositor (with respect to any Pre-Funding Account
or Capitalized Interest Account) in one or more Permitted Investments bearing
interest or sold at a discount. If an Event of Default shall have occurred and
be continuing or if the Servicer does not provide investment directions, the
Trustee shall invest all Accounts in Permitted Investments described in
paragraph (d) of the definition of Permitted Investments. No such investment
in any Account shall mature later than the Business Day immediately preceding
the next Distribution Date (except that if such Permitted Investment is an
obligation of the Trustee, then such Permitted Investment shall mature not
later than such Distribution Date).
(b) Subject to Section 9.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any investment loss on any Permitted Investment
included therein (except to the extent that the Trustee is the obligor and has
defaulted thereon).
Section 6.07. Reports by Trustee. (a) On each Distribution Date the
Trustee shall provide to each Holder, to the Servicer, to Deutsche Bank
Securities Inc., to the Depositor and to the Rating Agencies a report (the
"Trustee Remittance Report"), setting forth information including, without
limitation, the following information:
(i) the amount of the distribution with respect to each Class of
Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments
in Full and Curtailments or other unscheduled recoveries of principal
included therein;
(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Class Principal Amount or Class Notional Amount of each
Class of Regular Certificates as of such Distribution Date after giving
effect to any payment of principal on such Distribution Date;
(v) the total of any Substitution Adjustments and any Loan Purchase
Price amounts included in such distribution;
(vi) the amounts, if any, of any Realized Losses for the Prepayment
Period immediately preceding such Distribution Date and the cumulative
amount of Realized Losses from the Closing Date;
(vii) the number of Mortgage Loans and the aggregate Principal
Balance of Mortgage Loans purchased or substituted for pursuant to
Sections 3.03 and 2.04 for the related Distribution Date and, since the
Closing Date, the cumulative number and Principal Balance of Mortgage
Loans purchased or substituted for pursuant to Sections 3.03 and 2.04;
(viii) the Interest Rate applicable to each Class of Certificates for
such Distribution Date;
(ix) the amount of any outstanding Carryforward Interest for each
Class of Certificates;
(x) the amount of any outstanding Basis Risk Shortfall and Unpaid
Basis Risk Shortfall for each Class of Certificates;
(xi) the amount of any unreimbursed Deferred Amount for the Class M1,
Class M2 and Class B Certificates;
(xii) the amount of any Periodic Advances included in distributions
on such Distribution Date;
(xiii) the amount of the Servicing Fees and Trustee Fee with respect
to such Distribution Date;
(xiv) the amount of any distribution to the Residual Certificates on
such Distribution Date;
(xv) the amount on deposit in the Basis Risk Reserve Fund before and
after withdrawals on such Distribution Date;
(xvi) the Targeted Overcollateralization Amount,
Overcollateralization Amount and Overcollateralization Deficiency for
such Distribution Date;
(xvii) the Senior Principal Distribution Amount for such Distribution
Date;
(xviii) the Class M1 Principal Distribution Amount for such
Distribution Date;
(xix) the Class M2 Principal Distribution Amount for such
Distribution Date;
(xx) the Class B Principal Distribution Amount for such Distribution
Date;
(xxi) LIBOR for such Distribution Date; and
(xxii) Monthly Excess Interest and Monthly Excess Cashflow for such
Distribution Date.
Items (i), (ii) and (iii) above shall, with respect to the Regular
Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by March 31 of each calendar year (or such earlier
date as may be required by applicable law or regulation) following any year
during which the Certificates are outstanding, the Trustee shall furnish a
report to each Holder of record if so requested in writing at any time during
each calendar year as to the aggregate of amounts reported pursuant to (i),
(ii) and (iii) with respect to the Certificates for such calendar year. Such
information shall be deemed to have been furnished if provided pursuant to the
requirements of the Code from time to time in force.
(b) All distributions made to each Class of Certificates on each
Distribution Date will be made on a pro rata basis among the
Certificateholders of such Class on the next preceding Record Date based on
the Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds at the expense
of such Certificateholder to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided complete wiring instructions by the
Record Date, and otherwise by check mailed to the address of such
Certificateholder appearing in the Certificate Register.
(c) In addition, on each Distribution Date the Trustee will provide to
each Holder, to the Servicer, to the Depositor and to the Rating Agencies,
together with the information described in subsection (a) preceding, the
following information with respect to the Mortgage Loans, based on information
provided by the Servicer, as of the following dates, as applicable: (1) with
respect to Monthly Payments, the close of business on the last day of the
related Due Period; (2) with respect to Principal Prepayments in Full,
Curtailments, Liquidation Proceeds, Insurance Proceeds, REO Proceeds, Released
Mortgaged Property Proceeds and any other unscheduled payments or recoveries,
and with respect to Realized Losses, the close of business on the last day of
the related Prepayment Period; (3) with respect to Mortgage Loans that are
Delinquent, the close of business on the last day of the immediately preceding
calendar month and (4) in all other cases, unless otherwise specified, the
close of business on the last day of the related Due Period:
(i) the total number of Mortgage Loans and the aggregate Principal
Balances thereof for such Distribution Date, together with the number and
aggregate Principal Balances of such Mortgage Loans and the percentage
(based on the aggregate Principal Balances of the Mortgage Loans) of all
Mortgage Loans (A) 30-59 days Delinquent, (B) 60-89 days Delinquent and
(C) 90 or more days Delinquent;
(ii) the number and aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans in
foreclosure proceedings and the number and aggregate Principal Balances
of all Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans which are also
included in any of the statistics described in the foregoing clauses
(i)(A), (i)(B) and (i)(C);
(iii) the number and aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans relating
to Mortgagors in bankruptcy proceedings and the number and aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of any such Mortgage
Loans which are also included in any of the statistics described in the
foregoing clauses (i)(A), (i)(B) and (i)(C);
(iv) the number and aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans relating
to REO Properties and the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal Balances
of the Mortgage Loans) of any such Mortgage Loans which are also included
in any of the statistics described in the foregoing clause (i)(A), (i)(B)
and (i)(C);
(v) the weighted average Mortgage Rate as of the Due Date occurring
in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of all
Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Total Loan Balance for such Distribution Date;
(ix) the number of REO Properties and aggregate Principal Balance of
REO Mortgage Loans;
(x) Liquidation Proceeds, Liquidation Expenses and Net Liquidation
Proceeds received by the Servicer during the related Prepayment Period;
(xi) the Three Month Delinquency Rate for such Distribution Date;
(xii) the Targeted Cumulative Loss Percentage for such Distribution
Date;
(xiii) the Cumulative Loss Percentage for such Distribution Date;
(xiv) the aggregate Principal Balance of the three Mortgage Loans
having the largest Principal Balances in the Mortgage Pool; and
(xv) the aggregate outstanding principal balance of Mortgage Loans
270 or more days Delinquent as of the close of the related Due Period.
Section 6.08. Additional Reports by Trustee. The Trustee shall report to
the Depositor and the Servicer with respect to the amount then held in each
Account (including investment earnings accrued or scheduled to accrue) held by
the Trustee and the identity of the investments included therein, as the
Depositor or the Servicer may from time to time request in writing.
Section 6.09. Compensating Interest. Not later than the close of business
on the Servicer Remittance Date prior to the Distribution Date, the Servicer
shall remit to the Trustee (without right or reimbursement therefor) for
deposit into the Certificate Account an amount equal to the lesser of (a) the
excess of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from Principal Prepayments in Full and
Curtailments during the related Prepayment Period over (ii) any Prepayment
Interest Excess resulting from Principal Prepayments in Full during such
Prepayment Period and (b) its aggregate Servicing Fees for such Distribution
Date and shall not have the right to reimbursement therefor (the "Compensating
Interest").
Section 6.10. [Reserved]
Section 6.11. Allocation of Realized Losses. On each Distribution Date,
the Class Principal Amounts of the Class M1, Class M2 and Class B Certificates
will be reduced by the amount of any Applied Loss Amount for such date, in the
following order of priority:
first, to the Class B Certificates, until the Class Principal Amount
thereof has been reduced to zero;
second, to the Class M2 Certificates, until the Class Principal
Amount thereof has been reduced to zero; and
third, to the Class M1 Certificates, until the Class Principal Amount
thereof has been reduced to zero.
Section 6.12. Pre-Funding Account. [Not applicable].
Section 6.13. Capitalized Interest Account. [Not applicable].
Section 6.14. Determination of LIBOR. If the outstanding Certificates
include any LIBOR Certificates, then on each LIBOR Determination Date the
Trustee shall determine LIBOR for the next succeeding Accrual Period by
reference to the display designated as page 3750 on the Dow Jones Telerate
Service (or such other page as may replace such page on that service for the
purpose of displaying London interbank offered quotations of major banks).
If such rate does not appear on Telerate Page 3750, the rate for such day
shall be determined on the basis of the rates at which deposits in United
States dollars are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on such day to banks in the London interbank market for a term
equal to the relevant Accrual Period. The Trustee shall request the principal
London office of each of the Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, LIBOR for the next
applicable Accrual Period shall be the arithmetic mean of those quotations.
As used herein, "Reference Banks" means leading banks selected by the
Trustee and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market.
If on any LIBOR Determination Date only one or none of the Reference
Banks provides the offered quotations, LIBOR for the next applicable Accrual
Period shall be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Trustee, at approximately 11:00 a.m., New York City
time, on such day for loans in United States dollars to leading European banks
for a term equal to the relevant Accrual Period. If on any LIBOR Determination
Date the Trustee is unable to determine LIBOR for an Accrual Period, LIBOR for
such Accrual Period shall be LIBOR as determined on the previous LIBOR
Determination Date.
Notwithstanding the foregoing, LIBOR for the next succeeding Accrual
Period shall not be based on LIBOR for the immediately preceding Accrual
Period for two consecutive LIBOR Determination Dates. If, under the procedures
described above, LIBOR for the next succeeding Accrual Period would be based
on LIBOR for the previous LIBOR Determination Date for the second consecutive
LIBOR Determination Date, the Trustee shall select an alternative index (over
which the Trustee has no control) used for determining Eurodollar lending
rates that is calculated and published (or otherwise made available) by an
independent third party.
The establishment of LIBOR by the Trustee and the Trustee's subsequent
calculation of the rate of interest applicable to the LIBOR Certificates for
the relevant Accrual Period, in the absence of manifest error, shall be final
and binding.
Section 6.15. The Basis Risk Reserve Fund. (a) On the Closing Date, the
Trustee shall establish and maintain in its name, in trust for the benefit of
the holders of the Class A, Class M1, Class M2 and Class B Certificates, a
Basis Risk Reserve Fund, into which the Depositor shall cause to be deposited
$1,000. The Basis Risk Reserve Fund shall be an Eligible Account, and funds on
deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trustee held pursuant to this Agreement.
(b) On each Distribution Date on which the Net Excess Spread is less than
0.25%, the Trustee shall transfer the Required Reserve Fund Deposit from the
Certificate Account to the Basis Risk Reserve Fund pursuant to Section
6.05(b)(iii). The Trustee shall make withdrawals from the Basis Risk Reserve
Fund to make distributions pursuant to Section 6.05(b)(iii).
(c) Funds in the Basis Risk Reserve Fund shall be invested in Permitted
Investments. The Class R Certificate shall evidence ownership of the Basis
Risk Reserve Fund solely for federal income tax purposes and for no other
purpose, and the Holder thereof shall direct the Trustee, in writing, as to
investment of amounts on deposit therein. In the absence of written
instructions from the Class R Certificateholder as to investment of funds on
deposit in the Basis Risk Reserve Fund, such funds shall be invested pursuant
to clause (d) of the definition of Permitted Investments. Any amounts on
deposit in the Basis Risk Reserve Fund on any Distribution Date in excess of
the Required Reserve Fund Deposit for such date after giving effect to
withdrawals therefrom pursuant to Section 6.05(b)(iii) on such date shall be
distributed to the Class R Certificate on such Distribution Date.
Upon termination of the Trust Fund, any amounts remaining in the Basis
Risk Reserve Fund shall be distributed to the Class R Certificateholder. Each
Class R Certificateholder, by its acceptance of a Class R Certificate,
acknowledges and agrees that such Certificateholder has and shall have no
present interest in the Basis Risk Reserve Fund and the amounts on deposit or
to be deposited therein, but shall have only a contingent interest in amounts
distributable on the Class R Certificate as provided in this Agreement.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default. (a) "Event of Default," wherever used
herein, means any one of the following events:
(i) any failure by the Servicer to remit to the Trustee any payment,
excluding any Periodic Advance and any Servicing Advance, required to be
made by the Servicer under the terms of this Agreement which continues
unremedied for one Business Day after delivery of notice thereof to the
Servicer;
(ii) any failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or to
the Servicer and the Trustee by any Certificateholder;
(iii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Servicer contained in this Agreement (or, if the
Servicer is the Originator, the failure of the Originator to repurchase a
Mortgage Loan as to which a breach has been established that requires a
repurchase pursuant to the terms of the Purchase Agreement), or the
failure of any representation and warranty made pursuant to Section 3.01
to be true and correct which continues unremedied for a period of 90 days
after the earlier of (A) the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer, as the case may be, by the Depositor or the Trustee or to the
Servicer and the Trustee by any Certificateholder and (B) actual
knowledge of such failure by a Servicing Officer or Responsible Officer
of the Servicer;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall
have remained in force, undischarged or unstayed for a period of 60 days
or shall have resulted in the entry of an order for relief or any such
adjudication or appointment;
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
the Servicer's property;
(vi) the Servicer shall admit in writing its inability to pay its
debts 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;
(vii) the Servicer no longer meets the qualifications of either a
FNMA or FHLMC seller/servicer;
(viii) the Servicer attempts to assign any of its rights or delegate
any of its duties hereunder other than in compliance with the terms of
this Agreement;
(ix) the Servicer shall fail to satisfy the Servicer Termination
Test;
(x) any failure of the Servicer to make any Periodic Advance on any
Servicer Remittance Date required to be made which continues unremedied
until 3:00 p.m. New York time on the Business Day immediately following
the Servicer Remittance Date.
(b) If an Event of Default described in this Section shall occur, then,
and in each and every such case, so long as such Event of Default shall not
have been remedied the Trustee may, and shall (x) in the case of an Event of
Default specified in clause (i) or clause (x) of Section 7.01(a), and (y) in
the case of any other Event of Default at the direction of the Majority
Certificateholders, by notice in writing to the Servicer terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, as servicer. Upon receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Mortgage Loans or otherwise,
shall, subject to Section 7.02, pass to and be vested in the Trustee or its
designee and the Trustee (or such other successor Servicer, as applicable) is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, at the expense of the Servicer,
any and all documents and other instruments and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents. The
Servicer agrees to cooperate (and pay any related costs and expenses) with the
Trustee or another successor Servicer, as applicable, in effecting the
termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee or
another successor Servicer, as applicable, for administration by it of all
amounts which shall at the time be credited by the Servicer to the Collection
Account or thereafter received with respect to the Mortgage Loans. The Trustee
shall promptly notify the Rating Agencies of the occurrence of an Event of
Default. Until a successor Servicer has been appointed, the Trustee shall be
the successor Servicer in all respects without further action, and all
authority and power of the Servicer under this agreement shall pass to and be
vested in the Trustee on and after the effective date of termination.
Section 7.02. Trustee to Act; Appointment of Successor. (a) On and after
the time that the Servicer receives a notice of termination pursuant to
Section 7.01, or the Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 5.24, or the Servicer
is removed as Servicer pursuant to Section 7.01, in which event the Trustee
shall promptly notify the Rating Agencies, and except as otherwise provided in
Section 7.01, the Trustee or another successor 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 arising on or after the date of
succession; provided, however, that the Trustee shall not be liable for any
actions or the representations and warranties of any servicer prior to it and
including, without limitation, the obligations of the Servicer set forth in
Sections 2.04 and 3.03. The Trustee, as successor Servicer, or any other
successor Servicer shall be obligated to pay Compensating Interest pursuant to
Section 6.09 in any event and to make advances pursuant to Section 5.21
unless, and only to the extent the Trustee as successor servicer determines
reasonably and in good faith that such advances would not be recoverable
pursuant to Section 5.04.
(b) Notwithstanding the above, the Trustee may, if it shall be unwilling
to so act, or shall, if it is unable to so act or if the Majority
Certificateholders so requests in writing to the Trustee, appoint, pursuant to
the provisions set forth in paragraph (f) below, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution 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. Notwithstanding the above, the Trustee shall perform all
obligations of the Servicer or the Trustee appoints a successor Servicer.
The Trustee shall, if it is unable to obtain a qualifying bid and is
prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing an home finance institution,
bank or mortgage servicing institution which has been designated as an
approved seller-servicer by FNMA or FHLMC for first and second home equity
loans and having equity of not less than $5,000,000, as determined in
accordance with generally accepted accounting principles 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. The
compensation of any successor Servicer (other than the Trustee in its capacity
as successor Servicer) so appointed shall be the amount agreed to between the
successor Servicer and the Trustee (up to a maximum of 0.50% per annum on the
outstanding Principal Balance of each Mortgage Loan), together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 5.14; provided, however, that if the Trustee
becomes the successor Servicer it shall receive as its compensation the same
compensation paid to the Servicer immediately prior to the Servicer's removal
or resignation. The successor Servicer shall be entitled to set-up expenses,
if any, in connection with becoming Servicer pursuant to Section 5.04(j)
hereof.
(c) [Reserved]
(d) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification by such successor of all Mortgagors of the transfer
of servicing to the extent that the predecessor Servicer fails to do so. The
predecessor Servicer agrees to cooperate with the Trustee and any successor
Servicer in effecting the termination of the predecessor Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Trustee
or such successor Servicer, as applicable, at the predecessor Servicer's cost
and expense, all documents and records reasonably requested by it to enable it
to assume the Servicer's functions hereunder and shall promptly also transfer
to the Trustee or such successor Servicer, as applicable, all amounts that
then have been or should have been deposited in the Collection Account by the
Servicer or that are thereafter received with respect to the Mortgage Loans.
Any collections received by the predecessor Servicer after such removal or
resignation shall be endorsed by it to the Trustee and remitted directly to
the Trustee or, at the direction of the Trustee, to the successor Servicer.
Any amounts and documents which are property of the Trust Fund held by the
predecessor Servicer shall be held in trust on behalf of the Trustee until
transferred to the successor Servicer or Trustee. Neither the Trustee nor any
other successor Servicer shall be held liable by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion
thereof caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer hereunder. No
appointment of a successor to the Servicer hereunder shall be effective until
written notice of such proposed appointment shall have been provided by the
Trustee to each Certificateholder. The Trustee shall not resign as Servicer
until a successor Servicer has been appointed.
(e) Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Servicer pursuant to Section 5.14. The
Servicer, the Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
(f) Notwithstanding anything to the contrary in this Article VII, upon
removal or resignation of the Servicer the Trustee shall (i) solicit bids from
prospective successor Servicers as described below and (ii) until such time as
another successor Servicer is appointed, assume the duties and obligations of
the Servicer. The Trustee agrees to act as Servicer during such solicitation
process and shall assume all duties and obligations of the Servicer. The
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions. Such public
announcement shall specify that the successor Servicer shall be entitled to
servicing compensation in accordance with this Agreement. The Trustee shall
negotiate and effect the sale, transfer and assignment of the servicing rights
and responsibilities hereunder to the qualified party submitting the highest
satisfactory bid as to the price it will pay to obtain servicing. The Trustee
shall deduct from any sum received by the Trustee from the successor to the
Servicer in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment
of the servicing rights and responsibilities hereunder. After such deductions,
the remainder of such sum less any amounts due the Trustee or the Trust from
the Servicer shall be paid by the Trustee to the predecessor Servicer at the
time of such sale, transfer and assignment to the Servicer's successor.
If the Servicer resigns or is replaced hereunder, the costs and expenses
of the successor Servicer relating to the transfer of servicing rights and
responsibilities remaining, if any, after deduction from the sale price as
described above shall be payable to the successor Servicer pursuant to Section
5.04(j) hereof.
(g) The Trustee or any other successor Servicer, upon assuming the duties
of Servicer hereunder, shall immediately (i) record all Assignments of
Mortgage not previously recorded in the name of the Trustee pursuant to
Section 2.03 as a result of an Opinion of Counsel and (ii) make all Periodic
Advances and Compensating Interest Payments and deposit them to the Collection
Account, which amounts the predecessor Servicer has theretofore failed to
remit with respect to the Mortgage Loans.
(h) The Servicer that is being removed or is resigning shall give notice
to the Mortgagors and to the Rating Agencies of the transfer of the servicing
to the successor.
(i) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer
including, but not limited to, the maintenance of the hazard insurance
policies, the fidelity bond and an errors and omissions policy pursuant to
Section 5.08 and shall be entitled to the Servicing Compensation and all of
the rights granted to the predecessor Servicer by the terms and provisions of
this Agreement. The appointment of a successor Servicer shall not affect any
liability or right of the predecessor Servicer which may have arisen or
accrued under this Agreement prior to its termination as Servicer (including,
without limitation, any deductible under an insurance policy) and any right to
reimbursement pursuant to Section 5.04 or otherwise under this Agreement, nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement.
Section 7.03. Waiver of Defaults. The Majority Certificateholders may, on
behalf of all Certificateholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VII; provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement unless otherwise specified in
such waiver. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Trustee to the Rating
Agencies.
ARTICLE VIII
TERMINATION
Section 8.01. Termination. (a) Subject to Section 8.02, this Agreement
shall terminate upon notice to the Trustee of either: (i) the disposition of
all funds with respect to the last Mortgage Loan and the remittance of all
funds due hereunder and the payment of all amounts due and payable to the
Trustee or (ii) mutual consent of the Servicer and all Certificateholders in
writing; provided, however, that in no event shall the Trust Fund established
by this Agreement terminate later than twenty-one years after the death of the
last surviving lineal descendant of Joseph P. Kennedy, late Ambassador of the
United States to the Court of St. James, alive as of the date hereof.
(b) In addition, subject to Section 8.02, the Residual Certificateholder
may, at its option and at its sole cost and expense, upon 20 days' prior
written notice to the Trustee, terminate this Agreement on any date on which
the Total Loan Balance is less than 10% of the sum of (x) the Cut-off Date
Loan Balance plus (y) the aggregate of the Principal Balances of any
Subsequent Mortgage Loans on their respective Subsequent Cut-off Dates, by
purchasing, during the Prepayment Period relating to the next succeeding
Distribution Date, all of the outstanding Mortgage Loans and REO Properties
for a price (the "Termination Price") equal to the sum of (i) the greater of
(x) 100% of the unpaid principal balance of each such outstanding Mortgage
Loan and each REO Property plus the aggregate amount of accrued and unpaid
interest on such Mortgage Loans through the related Due Period and (y) the
aggregate Certificate Principal Amount of the Regular Certificates, plus
interest accrued and unpaid thereon, (ii) any Deferred Amount not yet
reimbursed to the Class M1, Class M2 and Class B Certificateholders, (iii) any
unreimbursed Servicing Advances, and (iv) the fair market value of any other
property held by the Trust Fund. If the Residual Certificateholder does not
exercise such purchase option within three calendar months of the date on
which it is first entitled to do so, the Servicer shall have the option, at
its sole cost and expense, upon 20 days' prior written notice to Trustee, to
purchase all of the outstanding Mortgage Loans and REO Properties for the
Termination Price.
Any such purchase shall be accomplished by deposit into the
Certificate Account of the Termination Price. From the Termination Price so
deposited, the Trustee shall reimburse the Servicer for the amount of any
unpaid Servicing Fees, unreimbursed Periodic Advances and unreimbursed
Servicing Advances made by the Servicer with respect to the related Mortgage
Loans.
(c) [Reserved]
(d) Notice of any termination, specifying the Distribution Date upon
which the Trust Fund will terminate and that the Certificateholders shall
surrender their Certificates to the Trustee or the Certificate Registrar for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to the Certificateholders mailed during the month of
such final distribution before the Servicer Remittance Date in such month,
specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of the Certificates
at the office of the Trustee or the Certificate Registrar therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Trustee or the Certificate Registrar therein specified.
(e) In the event that not all Certificateholders surrender their
Certificates for cancellation within six months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within six months after the second notice, all of the Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates and
the cost thereof shall be paid out of the funds and other assets which remain
subject hereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall
be discharged of any responsibility for such funds and the Certificateholders
shall look only to such Class R Certificateholders for payment. Such funds
shall remain uninvested.
Section 8.02. Additional Termination Requirements. (a) In the event that
the Residual Certificateholder or the Servicer exercises its purchase option
with respect to the Trust Fund as provided in Section 8.01, the Trust Fund
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been furnished with an Opinion of Counsel to the effect
that the failure of the Trust Fund to comply with the requirements of this
Section 8.02 will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in Section 860F of the Code or (ii)
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Regular Certificates are outstanding:
(i) The Trustee shall establish a 90-day liquidation period for the
Trust Fund and specify the first day of such period in a statement
attached to the Trust Fund's final Tax Return pursuant to Treasury
Regulation Section 1.860F-1. The Trustee shall satisfy all the
requirements of a qualified liquidation under Section 860F of the Code
and any regulations thereunder;
(ii) During such 90-day liquidation period, and at or prior to the
time of making of the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Class R Certificates all
cash on hand in the Trust Fund (other than cash retained to meet claims),
and the REMIC shall terminate at that time.
(b) By their acceptance of the Class R Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for the Trust Fund, which authorization shall be binding upon all successor
Class R Certificateholders.
ARTICLE IX
CONCERNING 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 occurs and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs. Any permissive right of the Trustee
enumerated in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform on their face to the requirements of this Agreement;
provided, however, that the Trustee shall not be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Servicer or the Seller
hereunder. If any such instrument is found not to conform to the requirements
of this Agreement in a material manner, the Trustee shall take action as it
deems appropriate to have the instrument corrected.
The Trustee shall sign on behalf of the Trust Fund any tax return
that the Trustee is required to sign pursuant to applicable federal, state or
local tax laws.
The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of the Trust
Fund as a REMIC under the REMIC Provisions and to prevent the imposition of
any federal, state or local income, prohibited transaction, contribution or
other tax on the Trust Fund to the extent that maintaining such status and
avoiding such taxes are reasonably within the control of the Trustee and are
reasonably within the scope of its duties under this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing 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; and
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(a) The Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officers' Certificate,
Opinion of Counsel, 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;
(b) 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 therewith;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or to make any investigation
of matters arising hereunder or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of any of
the Certificateholders, pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default (which
has not been cured and of which a Responsible Officer of the Trustee has
actual knowledge or notice), 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 its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs;
(d) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document,
unless requested in writing to do so by at least a 25% Percentage Interest of
any Class of Regular Certificates; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by such
Certificateholders or this Agreement, the Trustee may require reasonable
security or indemnity against such expense, or liability from such
Certificateholders as a condition to taking any such action;
(f) 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;
(g) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act; and
(h) The Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates, other than the
signature of the Trustee on the Certificates and the certificate of
authentication, shall be taken as the statements of the Depositor or the
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to
the validity or sufficiency of this Agreement or of the Certificates or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Certificates and the certificate of authentication. The Trustee shall not
be accountable for the use or application by the Depositor or 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 Seller in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or any other
account by or on behalf of the Depositor or the Servicer, other than any funds
held by or on behalf of the Trustee in accordance with Article VI.
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 it would have if it were not Trustee.
Section 9.05. Payment of Trustee's Fees. The Trustee shall withdraw
from the Certificate Account on each Distribution Date and pay to itself the
Trustee Fee as provided in Section 6.05(b)(i). Except as otherwise provided in
this Agreement, the Trustee and any director, officer, employee or agent of
the Trustee shall be indemnified by the Trust Fund and held harmless against
any loss, liability or unanticipated out-of-pocket expense incurred or paid to
third parties (which expenses shall not include salaries paid to employees, or
allocable overhead, of the Trustee) in connection with the acceptance or
administration of its trusts hereunder or the Certificates, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder, but only to the extent
that indemnity otherwise available (to the extent actually received in a
reasonably timely manner) to the Trustee from the Servicer, Bankers Trust
Company, the Custodian and otherwise is insufficient to cover such losses,
liabilities or expenses. All such amounts shall be payable from funds in the
Collection Account as provided in Section 5.04.
The Servicer covenants and agrees to indemnify the Trustee and any
director, officer, employee or agent of the Trustee against any losses,
liabilities, damages, claims or expenses (including reasonable legal fees and
such related expenses) that may be sustained by the Trustee in connection with
this Agreement related to willful misfeasance, bad faith or negligence in the
performance of the Servicer's duties hereunder.
The provisions of this Section 9.05 shall survive the termination of
this Agreement and the removal or resignation of the Trustee.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation or a national banking
association organized and doing business under the laws of any state or the
United States of America or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal
or state authority and having a deposit rating of at least "A-" or the
equivalent by each Rating Agency. In addition, the Trustee shall at all times
be acceptable to the Rating Agencies rating the Certificates. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.07. The corporation or national banking
association serving as Trustee may have normal banking and trust relationships
with the Seller and their affiliates or the Servicer and its affiliates;
provided, however, that such corporation cannot be an affiliate of the
Servicer other than the Trustee in its role as successor to the Servicer.
Section 9.07. Resignation and Removal of the Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
notice thereof to the Depositor, the Servicer and to all Certificateholders;
provided, that such resignation shall not be effective until a successor
trustee is appointed and accepts appointment in accordance with the following
provisions. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor trustee who meets the eligibility requirements of
Section 9.06 by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee and to the successor trustee. A copy of
such instrument shall be delivered to the Certificateholders and the Servicer
by the Depositor. If no successor trustee shall have been so appointed and
have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee; provided, however,
that the resigning Trustee shall not resign and be discharged from the trusts
hereby created until such time as each Rating Agency rating the Certificates
approve the successor trustee.
If at any time 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 Servicer, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, or if the rating
of the long-term debt obligations of the Trustee is not acceptable to the
Rating Agencies in respect of mortgage pass-through certificates having a
rating equal to the then current rating on the Certificates or if the Trustee
fails to perform its duties in accordance with this Agreement, then the
Servicer may remove the Trustee and appoint a successor trustee who meets the
eligibility requirements of Section 9.06 by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders and the Depositor by the Servicer.
The Majority Certificateholders may at any time remove the Trustee
and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Servicer, one
complete set to the Trustee so removed and one complete set to the successor
so appointed. A copy of such instrument shall be delivered to the
Certificateholders and the Depositor by the Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 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 the
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee all of the Mortgage Files and related
documents and statements held by it hereunder, and the Servicer and the
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, 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 provided that the Servicer has received such Certificate
Register. If the Servicer fails to mail such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the 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 hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund,
and to vest in such Person or Persons, in such capacity, 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
Depositor and the Trustee may consider necessary or desirable. If the
Depositor shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in case an Event of Default shall have
occurred and be continuing, the Trustee 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
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Fund or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee solely at the direction of
the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article 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.
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. Appointment of Custodians. The Trustee may appoint one
or more Custodians to hold all or a portion of the Mortgage Files as agent for
the Trustee. The Trustee shall pay any and all fees and expenses of any
Custodian in accordance with each Custodial Agreement. The Trustee initially
appoints Chase Bank of Texas, N.A. as Custodian, and the Depositor and the
Servicer consent to such appointment. Subject to the terms of this Agreement,
the Trustee agrees to comply with the terms of each Custodial Agreement, if
any, and to enforce the terms and provisions thereof against the Custodian for
the benefit of the Certificateholders having an interest in any Mortgage File
held by such Custodian. Each Custodian shall be a depository institution or
trust company subject to supervision by federal or state authority, shall have
combined capital and surplus of at least $10,000,000 and shall be qualified to
do business in the jurisdiction in which it holds any Mortgage File. Each
Custodial Agreement may be amended only as provided in section 11.03 thereof.
Subject to the provisions of this Agreement, in no event shall the appointment
of any Custodian pursuant to a Custodial Agreement diminish the obligations of
the Trustee hereunder.
Section 9.12. Appointment of Agent. The Trustee hereby appoints
Bankers Trust Company as its agent and, as necessary, its attorney in fact,
for the purpose of performing the duties of the Trustee under this Agreement
and the Custodial Agreement (including payment of fees and expenses of the
Custodian) relating to compliance with the REMIC Provisions and related
reporting obligations (including payment by such agent of amounts otherwise
payable by the Trustee under Sections 10.01(c) and (d)), SEC reporting,
distributions and related reporting requirements, registration, execution and
authentication of Certificates in its capacity as Certificate Registrar,
establishment and maintenance of accounts and the holding of the Trust Fund
(other than the Mortgage Files), and such other obligations as are set forth
in the Agency Agreement, including but not limited to those obligations set
forth in Section 7.02 of this Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration. (a) The Trustee shall make an
election to treat the Trust Fund (exclusive of the Basis Risk Reserve Fund) as
a REMIC under the Code, and if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
purposes of the REMIC election, (i) each Class of Regular Certificates shall
be designated as representing ownership of "regular interests" and the Class R
Certificates shall be designated as the sole Class of "residual interest" in
the REMIC. The Trustee shall not permit the creation of any "interests" in the
REMIC (within the meaning of Section 860G of the Code) other than the REMIC
regular interests and the residual interest represented by the Certificates.
(b) The Closing Date is hereby designated as the Startup Day of the
REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses relating to any tax audit of the Trust
Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect thereto that involved the
Internal Revenue Service or state tax authorities), other than the expense of
obtaining any tax related Opinion of Counsel not obtained in connection with
such an audit and other than taxes, in either case except as specified herein;
provided, however, that if such audit resulted from the negligence of the
Servicer or the Depositor, then the Servicer or the Depositor, as the case may
be, shall pay such expenses. The Trustee, as agent for the tax matters person,
shall (i) act on behalf of the Trust Fund in relation to any tax matter or
controversy involving the Trust Fund and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by
any governmental taxing authority with respect thereto. The Holder of the
largest Percentage Interest in the Class R Certificates from time to time is
hereby designated as Tax Matters Person with respect to the REMIC and hereby
irrevocably appoints and authorizes the Trustee to act its agent to perform
the duties of the Tax Matters Person with respect to the REMIC. To the extent
authorized under the Code and the regulations promulgated thereunder, each
Holder of a Class R Certificate hereby irrevocably appoints and authorizes the
Trustee to be its attorney-in-fact for purposes of signing any Tax Returns
required to be filed on behalf of the Trust Fund.
(d) The Trustee shall prepare or cause to be prepared, sign and file
all of the Tax Returns in respect of the Trust Fund created hereunder, other
than Tax Returns required to be filed by the Servicer pursuant to Section
5.25. The expenses of preparing and filing such returns shall be borne by the
Trustee without any right of reimbursement therefor.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, REMIC Provisions or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, as required by the Code, the REMIC Provisions or other
such compliance guidance, the Trustee shall provide (i) to any Transferor of a
Class R Certificate and to the Internal Revenue Service such information as is
necessary for the application of any tax relating to the transfer of a Class R
Certificate to any Person who is not a Disqualified Organization, (ii) to
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of the Trust Fund. In addition, the Depositor
shall provide or cause to be provided to the Trustee, within ten (10) days
after the Closing Date, all information or data that the Trustee reasonably
determines to be relevant for tax purposes as to the valuations and issue
prices of the Certificates, including, without limitation, the price, yield,
prepayment assumption and projected cash flow of the Certificates. The
Depositor shall indemnify the Trustee and hold it harmless for any loss,
liability, damage, claim, or expense of the Trustee arising from any failure
of the Depositor to provide, or to cause to be provided, in response to the
reasonable requests of the Trustee made pursuant to this paragraph, accurate
information or data to the Trustee on a timely basis. The indemnification
provisions hereunder shall survive the termination of this Agreement.
(f) The Trustee shall take such action and shall cause the Trust Fund
created hereunder to take such action as shall be necessary to create or
maintain the status of the Trust Fund (exclusive of the Basis Risk Reserve
Fund) as a REMIC under the REMIC Provisions (and the Servicer shall assist it,
to the extent reasonably requested by it). The Trustee shall not take any
action, cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or
not taken, as the case may be, could (i) endanger the status of the Trust Fund
(exclusive of the Basis Risk Reserve Fund) as a REMIC or (ii) result in the
imposition of a tax upon the Trust Fund (including but not limited to the tax
on prohibited transactions as defined in Section 860F(a)(2) of the Code and
the tax on contributions to a REMIC set forth in Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless the Trustee received an
Opinion of Counsel (at the expense of the party seeking to take such action
but in no event shall such Opinion of Counsel be an expense of the Trustee) to
the effect that the contemplated action will not, with respect to the Trust
Fund created hereunder, endanger such status or result in the imposition of
such a tax. The Servicer shall not take or fail to take any action (whether or
not authorized hereunder) as to which the Trustee has advised it in writing
that it has received an Opinion of Counsel (which such Opinion of Counsel
shall not be an expense of the Trustee) to the effect that an Adverse REMIC
Event could occur with respect to such action. In addition, prior to taking
any action with respect to the Trust Fund or its assets, or causing the Trust
Fund to take any action which is not expressly permitted under the terms of
this Agreement, the Servicer will consult with the Trustee or its designee, in
writing, with respect to whether such action could cause an Adverse REMIC
Event to occur with respect to the Trust Fund, and the Servicer shall not take
any such action or cause the Trust Fund to take any such action as to which
the Trustee has advised it in writing that an Adverse REMIC Event could occur.
The Trustee may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not permitted
by this Agreement (but in no event shall such cost be an expense of the
Trustee). At all times as may be required by the Code, the Trustee will ensure
that substantially all of the assets of the Trust Fund (exclusive of the Basis
Risk Reserve Fund) will consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust Fund created hereunder as defined in Section 860F(a)(2) of the
Code on "net income from foreclosure property" of the Trust Fund as defined in
Section 860G(c) of the Code, on any contributions to the Trust Fund after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax
laws, such tax shall be charged (i) to the Trustee, if such tax arises out of
or results from a breach by the Trustee of any of its obligations under this
Article X, (ii) to the Servicer pursuant to Section 10.03 hereof, if such tax
arises out of or results from a breach by the Servicer of any of its
obligations under Article V or this Article X, or otherwise (iii) to the
Holders of the Residual Certificates.
(h) On or before April 15 of each calendar year, commencing April 15,
2000, the Trustee shall deliver to the Servicer and each Rating Agency a
certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article X.
(i) The Servicer and the Trustee shall, for federal income tax
purposes, maintain books and records with respect to the Trust Fund on a
calendar year and on an accrual basis.
(j) The Trustee shall not accept any contributions of assets to the
Trust Fund unless it shall have received an Opinion of Counsel (which such
Opinion of Counsel shall not be an expense of the Trustee) to the effect that
the inclusion of such assets in the Trust Fund will not cause the Trust Fund
(exclusive of the Basis Risk Reserve Fund) to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject the Trust Fund to
any tax under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances.
(k) Neither the Trustee nor the Servicer shall enter into any
arrangement by which the Trust Fund will receive a fee or other compensation
for services nor permit the Trust Fund to receive any income from assets other
than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(l) Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of
the Treasury Regulations, the "latest possible maturity date" of the Regular
Certificates is the REMIC Maturity Date.
(m) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and each Form
1066Q.
(n) The Trustee shall treat the Basis Risk Reserve Fund as an outside
reserve fund within the meaning of Treasury Regulation Section 1.860G-2(h)
that is owned by the Holder of the Class R Certificate and that is not an
asset of the REMIC. The Trustee shall treat the rights of the Class A, Class
M1, Class M2, and Class B Certificateholders to receive payments from the
Basis Risk Reserve Fund in the event of a Basis Risk Shortfall as rights in an
interest rate cap contract written by the Class R Certificateholder in favor
of the Class A, Class M1, Class M2, and Class B Certificateholders. Thus, each
Class A, Class M1, Class M2, and Class B Certificate shall be treated as
representing not only ownership of regular interests in the Trust Fund, but
also ownership of an interest in a discrete interest rate cap contract. For
purposes of determining the issue prices of the regular interests, the Trustee
shall assume that the interest rate cap contract has only a nominal value.
This provision is intended to satisfy the requirements of Treasury Regulation
Section 1.860G-2(i), concerning the treatment of property rights coupled with
regular interests, and shall be interpreted in a manner consistent with such
regulations.
Section 10.02. Prohibited Transactions and Activities. Neither the
Depositor, the Servicer nor the Trustee shall sell, dispose of or substitute
for any of the Mortgage Loans, except in connection with (i) the foreclosure
of a Mortgage Loan, including but not limited to, the acquisition or sale of a
Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the
bankruptcy of the Trust Fund, (iii) the termination of the Trust Fund pursuant
to Article VIII of this Agreement, or (iv) a purchase of Mortgage Loans
pursuant to Article II or III of this Agreement, nor acquire any assets for
the Trust Fund, nor sell or dispose of any investments in the Certificate
Accounts for gain, nor accept any contributions to the Trust Fund after the
Closing Date unless it have received an Opinion of Counsel (at the expense of
the party seeking to cause such sale, disposition, substitution or acquisition
but in no event shall such Opinion of Counsel be an expense of the Trustee)
that such sale, disposition, substitution or acquisition will not (a) affect
adversely the status of the Trust Fund (exclusive of the Basis Risk Reserve
Fund) as a REMIC or (b) cause the Trust Fund to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions
(such opinion, a "REMIC Opinion").
Section 10.03. Trustee and Servicer Indemnification. (a) The Trustee
agrees to indemnify the Trust Fund, the Depositor and the Servicer (such
indemnification to be limited, so long as the Agency Agreement remains in
effect, to recovery by the Trustee from the Agent under Section 7 of the
Agency Agreement) for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Depositor or the Servicer as a result of a breach of the Trustee's covenants
set forth in this Article X.
(b) The Servicer agrees to indemnify the Trust Fund, the Depositor
and the Trustee for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Depositor or the Trustee, as a result of a breach of the Servicer's covenants
set forth in this Article X or in Article V with respect to compliance with
the REMIC Provisions, including without limitation, any penalties arising from
the Trustee's execution of Tax Returns prepared by the Servicer pursuant to
Section 5.25 that contain errors or omissions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Limitation on Liability of the Depositor and the
Servicer. (a) Neither the Depositor, the Servicer nor any of the directors,
officers, employees or agents of the Depositor or 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 in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor or the Servicer against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Servicer or the Depositor pursuant to any other Section hereof;
and provided further that this provision shall not protect the Depositor, the
Servicer or any such person, against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or 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 Depositor, the Servicer
and any director, officer, employee or agent of the Depositor or the Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to the Servicer's servicing obligations with respect to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) or related to the
Servicer's obligations under this Agreement, or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its respective duties under this Agreement and
which in its opinion may involve it in any expense or liability; provided,
however, that the Depositor or the Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable with
respect to this Agreement and the rights and duties of the parties hereto and
the interests of the Certificateholders hereunder. In the event the Depositor
or the Servicer take any action as described in the preceding sentence, the
legal expenses and costs of such action and any liability resulting therefrom
will be expenses, costs and liabilities of the Trust Fund, and the Servicer or
the Depositor, as the case may be, will be entitled to be reimbursed therefor
as provided in Section 5.04.
(b) [Reserved]
(c) The Servicer agrees to indemnify and hold the Trustee, the
Depositor and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor and any Certificateholder may sustain resulting from the failure of
the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee, the Depositor and each Certificateholder if a claim is
made by a third party arising out of or based upon the alleged actions of the
Servicer or alleged failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this Agreement, and the
Servicer shall assume (with the consent of the Trustee) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Depositor and/or
Certificateholder in respect of such claim. Notwithstanding the foregoing, the
Servicer shall not be obligated to indemnify the Trust Fund or assume the
defense for any claim by a third party that does not arise out of and is not
based upon the alleged actions of the Servicer or alleged failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance
with the terms of this Agreement.
(d) The Servicer shall reimburse itself from amounts in the
Collection Account pursuant to Section 5.04 for all amounts advanced by it
pursuant to the preceding sentence, except when a final nonappealable
adjudication determines that the claim relates directly to the failure of the
Servicer to perform its duties in compliance with this Agreement. The
provision of this Section 11.01(d) shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 11.02. Acts of Certificateholders. (a) Except as otherwise
specifically provided herein, whenever Certificateholder action, consent or
approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Certificateholders if the Majority Certificateholders agree to take
such action or give such consent or approval.
(b) 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 heir to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of
the Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
(d) No Certificateholder shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Agreement, or for the
appointment of a receiver or trustee of the Trust Fund, or for any other
remedy with respect to an event of default hereunder, unless: (i) such
Certificateholder has previously given written notice to the Depositor and the
Trustee of such Certificateholder's intention to institute such proceeding;
(ii) the Certificateholders of not less than 51% of the Percentage Interests
represented by the Senior Certificates then outstanding or, if there are no
Senior Certificates then outstanding, by a majority of the Percentage
Interests represented by the outstanding Classes of Certificates, shall have
made written request to the Trustee to institute such proceeding in its own
name as Trustee establishing the Trust Fund; (iii) such Certificateholder or
Certificateholders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be insured in compliance with such
request; (iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such proceeding; and
(v) no direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Certificateholders of a majority of
the Percentage Interests represented by the Senior Certificates or, if there
are no Senior Certificates then outstanding, by a majority of the Percentage
Interests represented by the outstanding Classes of Certificates; it being
understood and intended that no one or more Certificateholders shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Certificateholder of the same Class or to obtain or to seek to obtain
priority or preference over any other Certificateholder of the same Class or
to enforce any right under this Agreement, except in the manner herein
provided and for the equal and ratable benefit of all the Certificateholders
of the same Class.
Section 11.03. Amendment. This Agreement may be amended from time to
time by the Depositor, the Servicer and the Trustee without the consent of any
of the Certificateholders, (i) to cure any ambiguity or mistake, (ii) to
correct, modify or supplement any provisions herein which may be inconsistent
with any other provisions herein or in an Offering Document, (iii) to make any
other provisions with respect to matters or questions arising under this
Agreement that are not materially inconsistent with the provisions hereof
amend this Agreement in any respect subject to the provisions below, or (iv)
if such amendment, as evidenced by an Opinion of Counsel (provided by the
Person requesting such amendment) delivered to the Trustee, is reasonably
necessary to comply with any requirements imposed by the Code or any successor
or amendatory statute or any temporary or final regulation, revenue ruling,
revenue procedure or other written official announcement or interpretation
relating to federal income tax laws or any proposed such action which, if made
effective, would apply retroactively to the Trust Fund at least from the
effective date of such amendment; provided that in the case of clause (iii)
such action shall not adversely affect in any material respect the interests
of any Certificateholder (other than Certificateholders who shall consent to
such amendment), as evidenced either by an Opinion of Counsel (provided by the
Person requesting such amendment) or written notification from each Rating
Agency to the effect that such amendment will not cause such Rating Agency to
lower or withdraw the then current ratings on the Certificates, delivered to
the Trustee.
This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments received on Mortgage Loans which are required
to be distributed on any Certificate without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding. Notwithstanding
any other provision of this Agreement, for purposes of the giving or
withholding of consents pursuant to this Section 11.03, Certificates
registered in the name of the Depositor or the Servicer or any affiliate
thereof shall be entitled to voting rights with respect to matters described
in (i), (ii) and (iii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have
first received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Trust Fund pursuant to the REMIC Provisions or cause the
Trust Fund to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a statement describing the amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.03 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 11.04. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices
for real property records in all of 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 at the
Certificateholders' expense on direction and at the expense of Majority
Certificateholders requesting such recordation, but only when accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders, as applicable,
or is necessary for the administration or servicing of the Mortgage Loans.
Section 11.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, Long Beach Mortgage Company,
1100 Town and Country Road, Orange, California 92868, Attention: General
Counsel, with a copy to James Guerin, Senior Vice President; (ii) in the case
of ACE Securities Corp., c/o Deutsche Bank Securities Inc., 31 West 52nd
Street, New York, New York 10019, Attention: Asset-Backed Securities Group,
ACE 1999-LB2; (iii) in the case of the Trustee, First Union National Bank, c/o
Bankers Trust Company, 3 Park Plaza, 16th Floor, Irvine, California 92614,
Attention: ACE/Long Beach 1999-LB2; (iv) in the case of the
Certificateholders, as set forth in the Certificate Register; (v) in the case
of Moody's, Moody's Investors Service, 99 Church Street, New York, New York
10007, Attention: Residential Mortgage Pass-through Monitoring; (vi) in the
case of S&P, Standard & Poor's Rating Services, 25 Broadway, 12th Floor, New
York, New York 10004; and (vii) in the case of Fitch, Fitch ICBA, Inc., One
State Street Plaza, New York, New York 10004. Any such notices shall be deemed
to be effective with respect to any party hereto upon the receipt of such
notice by such party, except that notices to the Certificateholders shall be
effective upon mailing or personal delivery.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of
this Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.
Section 11.08. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Servicer, the Depositor, the Trustee
and the Certificateholders and their respective successors and permitted
assigns.
Section 11.09. Headings. The headings of the various articles and
sections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be part of this Agreement.
Section 11.10. [Reserved]
Section 11.11. Third Party Beneficiary. The parties agree that the
Seller is intended to have and shall have all rights of a third-party
beneficiary of this Agreement.
Section 11.12. Intent of the Parties. It is the intent of the
Depositor and Certificateholders that, for federal income taxes, state and
local income or franchise taxes and other taxes imposed on or measured by
income, the Certificates will be treated as evidencing beneficial ownership
interests in a REMIC. The parties to this Agreement and the holder of each
Certificate, by acceptance of its Certificate, and each beneficial owner
thereof, agree to treat, and to take no action inconsistent with the treatment
of, the Certificates in accordance with the preceding sentence for purposes of
federal income taxes, state and local income and franchise taxes and other
taxes imposed on or measured by income.
Section 11.13. Notice to Rating Agencies.
The Trustee shall use its best efforts to promptly provide notice to
the Rating Agencies with respect to each of the following of which it has
actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default;
3. The resignation or termination of the Servicer or the Trustee; and
4. The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to the Rating
Agencies copies of the following:
1. Each report to Certificateholders described in Section 6.07; and
2. Each annual independent public accountants' servicing report
described in Section 5.17.
Any such notice pursuant to this Section 11.13 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service.
Section 11.14. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS
OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 11.15. Appointment of Agent. The Depositor hereby appoints
Deutsche Bank Securities Inc. as its agent for the purpose of performing the
duties of the Depositor under this Agreement, other than the duties of the
Depositor under Article II and Section 3.02 hereof.
IN WITNESS WHEREOF, the Servicer, the Trustee and the Depositor have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
ACE SECURITIES CORP.
as Depositor
By: ________________________________
Name:
Title:
LONG BEACH MORTGAGE COMPANY
as Servicer
By: _______________________________
Name: Jeffrey A Sorensen
Title: Vice President
FIRST UNION NATIONAL BANK
as Trustee
By: ________________________________
Name:
Title:
EXHIBIT A
[RESERVED]
EXHIBIT B-1
FORMS OF REGULAR CERTIFICATES
FORM OF SENIOR CERTIFICATE
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF
THIS CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE, CLASS [ ]
Evidencing a beneficial interest in a pool consisting
primarily of certain fixed and adjustable rate, fully amortizing and
balloon, conventional, first lien residential mortgage loans and
other assets in a trust fund established by
ACE SECURITIES CORP.
Initial Class Initial Certificate
Principal Amount of the Class [ ] Principal Amount of this
Certificates: $[ ] Certificate: $[ ]
Certificate Cut-off Date: July 1, 1999
Interest Rate: Variable
Number [ ] CUSIP: [ ]
ISIN: [ ]
Common Code: [ ]
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Amount of this Certificate by the initial Class
Principal Amount of the Class [ ] Certificates, both as specified above) in
(i) certain distributions of principal and interest on certain fixed and
adjustable rate, fully amortizing and balloon, conventional, first lien
residential mortgage loans (the "Mortgage Loans") acquired from ACE Securities
Corp. (the "Depositor"), a Delaware corporation, (ii) such amounts and
investments as from time to time may be held in the Trust Fund established
pursuant to the Pooling and Servicing Agreement (as defined on the reverse
hereof) and (iii) certain other assets, if any, as described in the Pooling
and Servicing Agreement (the foregoing assets hereinafter collectively
referred to as the "Trust Fund").
Distributions on this Certificate will be made on the 25th day of
each month or, if such a day is not a Business Day, then on the next
succeeding Business Day, commencing in August 1999 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
[FIRST UNION NATIONAL BANK,
as Trustee
By:__________________________
AUTHORIZED SIGNATORY
Dated:____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
[FIRST UNION NATIONAL BANK,
as Trustee
By:__________________________
AUTHORIZED SIGNATORY
Dated:____________________
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as ACE Securities Corp. Home Equity Loan Trust 1999-LB2
Pass-Through Certificates (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a
Pooling and Servicing Agreement dated as of July 1, 1999 (the "Pooling and
Servicing Agreement"), among ACE Securities Corp., as Depositor, First Union
National Bank, as Trustee, and Long Beach Mortgage Company, as Servicer, to
which terms, provisions and conditions thereof the Holder of this Certificate
by virtue of the acceptance hereof assents, and by which such Holder is bound.
The Certificates consist of the following Classes: the Class A Certificates
(the "Senior Certificates"), the Class M1, Class M2 and Class B Certificates
(the "Subordinate Certificates") and the Class R Certificate (the "Residual
Certificate").
On each Distribution Date, the Total Distribution Amount for such
date will be distributed from the Certificate Account to Holders of the
Certificates according to the terms of the Pooling and Servicing Agreement.
All distributions or allocations made with respect to each Class of
Certificates on each Distribution Date shall be allocated among the
outstanding Certificates of such Class based on the Percentage Interest of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register
(except that with respect to a Certificate registered in the name of a
Clearing Agency or its nominee, distributions will be made by wire transfer of
immediately available funds) or by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at 230 South Tryon Street, Ninth Floor,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Structured
Finance Trust Services. The Trustee may designate another address from time to
time by notice to the Holders of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits the amendment thereof
from time to time by the Depositor, the Servicer and the Trustee for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder; provided, however, that (i) no such amendment may be made unless
the Trustee receives an opinion of counsel as to certain tax matters specified
in the Pooling and Servicing Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Percentage Interest of each
Class the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding. Any
consent by the Holder of this Certificate will 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 Pooling and Servicing Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or 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 Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $25,000 in initial
Certificate Principal Amount and in integral multiples of $1 in excess thereof
registered in the name of the nominee of the Clearing Agency, which shall
maintain such Certificates through its book-entry facilities. The Class R
Certificate will be issued as a single Certificate and maintained in physical
form. The Class R Certificate shall remain outstanding until the latest final
Distribution Date for the Certificates.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Distribution Date
on which the Total Loan Balance is less than 10% of the Cut-off Date Loan
Balance thereof for an amount as specified in the Pooling and Servicing
Agreement. In no event will the trust created by the Pooling and Servicing
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Pooling and
Servicing Agreement of a certain person named in the Pooling and Servicing
Agreement.
The Depositor, the Trustee and the Certificate Registrar and any
agent of any of them may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without regard to the
conflict of laws principles applied in the State of New York. In the event of
any conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the Certifi-
cate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate of
the same Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
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Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer __________________________________________
Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this
assignment must correspond with the name(s)
on the face of this Certificate without
alteration or any change whatsoever. The
signature must be guaranteed by a
participant in the Securities Transfer
Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program
or the Stock Exchanges Medallion Program.
Notarized or witnessed signatures are
not acceptable as guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
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for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
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Applicable reports and statements should be mailed to ________________________
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This information is provided by ______________________________________________
the assignee named above, or ___________________________________ as its agent.
FORM OF CLASS M1 CERTIFICATE
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF
THIS CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE
PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A
CERTIFICATION TO THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY
SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE
ASSETS OF ANY SUCH PLAN OR (2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY,
SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT
THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR
(B) AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND
UPON WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE
PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
THE CODE AND WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION
IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND,
THE TRUSTEE OR THE DEPOSITOR.
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE, CLASS M1
Evidencing a beneficial interest in a pool consisting
primarily of certain fixed and adjustable rate, fully amortizing and
balloon, conventional, first lien residential mortgage loans and
other assets in a trust fund established by
ACE SECURITIES CORP.
Initial Class Initial Certificate
Principal Amount of the Class M1 Principal Amount of this
Certificates: $[ ] Certificate: $[ ]
Certificate Cut-off Date: July 1, 1999
Interest Rate: Variable
Number [ ] CUSIP: [ ]
ISIN: [ ]
Common Code: [ ]
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Amount of this Certificate by the initial Class
Principal Amount of the Class M1 Certificates, both as specified above) in (i)
certain distributions of principal and interest on certain fixed and
adjustable rate, fully amortizing and balloon, conventional, first lien
residential mortgage loans (the "Mortgage Loans") acquired from ACE Securities
Corp. (the "Depositor"), a Delaware corporation, (ii) such amounts and
investments as from time to time may be held in the Trust Fund established
pursuant to the Pooling and Servicing Agreement (as defined on the reverse
hereof) and (iii) certain other assets, if any, as described in the Pooling
and Servicing Agreement (the foregoing assets hereinafter collectively
referred to as the "Trust Fund").
Distributions on this Certificate will be made on the 25th day of
each month or, if such a day is not a Business Day, then on the next
succeeding Business Day, commencing in August 1999 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
FIRST UNION NATIONAL BANK,
as [Trustee]
By:_____________________________
AUTHORIZED SIGNATORY
Dated: _______________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
[FIRST UNION NATIONAL BANK,]
as [Trustee]
By:_____________________________
AUTHORIZED SIGNATORY
Dated: _______________________
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as ACE Securities Corp. Home Equity Loan Trust 1999-LB2
Pass-Through Certificates (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a
Pooling and Servicing Agreement dated as of July 1, 1999 (the "Pooling and
Servicing Agreement"), among ACE Securities Corp., as Depositor, First Union
National Bank, as Trustee, and Long Beach Mortgage Company, as Servicer, to
which terms, provisions and conditions thereof the Holder of this Certificate
by virtue of the acceptance hereof assents, and by which such Holder is bound.
The Certificates consist of the following Classes: the Class A Certificates
(the "Senior Certificates"), the Class M1, Class M2 and Class B Certificates
(the "Subordinate Certificates") and the Class R Certificate (the "Residual
Certificate").
On each Distribution Date, the Total Distribution Amount for such
date will be distributed from the Certificate Account to Holders of the
Certificates according to the terms of the Pooling and Servicing Agreement.
All distributions or allocations made with respect to each Class of
Certificates on each Distribution Date shall be allocated among the
outstanding Certificates of such Class based on the Percentage Interest of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register
(except that with respect to a Certificate registered in the name of a
Clearing Agency or its nominee, distributions will be made by wire transfer of
immediately available funds) or by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at 230 South Tryon Street, Ninth Floor,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Structured
Finance Trust Services. The Trustee may designate another address from time to
time by notice to the Holders of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits the amendment thereof
from time to time by the Depositor, the Servicer and the Trustee for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder; provided, however, that (i) no such amendment may be made unless
the Trustee receives an opinion of counsel as to certain tax matters specified
in the Pooling and Servicing Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Percentage Interest of each
Class the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding. Any
consent by the Holder of this Certificate will 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 Pooling and Servicing Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or 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 Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $25,000 in initial
Certificate Principal Amount and in integral multiples of $1 in excess thereof
registered in the name of the nominee of the Clearing Agency, which shall
maintain such Certificates through its book-entry facilities. The Class R
Certificate will be issued as a single Certificate and maintained in physical
form. The Class R Certificate shall remain outstanding until the latest final
Distribution Date for the Certificates.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Distribution Date
on which the Total Loan Balance is less than 10% of the Cut-off Date Loan
Balance thereof for an amount as specified in the Pooling and Servicing
Agreement. In no event will the trust created by the Pooling and Servicing
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Pooling and
Servicing Agreement of a certain person named in the Pooling and Servicing
Agreement.
The Depositor, the Trustee and the Certificate Registrar and any
agent of any of them may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without regard to the
conflict of laws principles applied in the State of New York. In the event of
any conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate of
the same Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer __________________________________________
Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this
assignment must correspond with the name(s)
on the face of this Certificate without
alteration or any change whatsoever. The
signature must be guaranteed by a partici-
pant in the Securities Transfer Agents
Medallion Program, the New York Stock
Exchange Medallion Signature Program or the
Stock Exchanges Medallion Program.
Notarized or witnessed signatures are
not acceptable as guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- ------------------------------------------------------------------------------
Applicable reports and statements should be mailed to ________________________
- ------------------------------------------------------------------------------
This information is provided by ______________________________________________
the assignee named above, or ____________________________________ as
its agent.
FORM OF CLASS M2 CERTIFICATE
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF
THIS CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE
PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A
CERTIFICATION TO THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY
SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE
ASSETS OF ANY SUCH PLAN OR (2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY,
SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT
THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR
(B) AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND
UPON WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE
PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
THE CODE AND WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION
IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND,
THE TRUSTEE OR THE DEPOSITOR.
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE, CLASS M2
Evidencing a beneficial interest in a pool consisting
primarily of certain fixed and adjustable rate, fully amortizing and
balloon, conventional, first lien residential mortgage loans and
other assets in a trust fund established by
ACE SECURITIES CORP.
Initial Class Initial Certificate
Principal Amount of the Class M2 Principal Amount of this
Certificates: $[ ] Certificate: $[ ]
Certificate Cut-off Date: July 1, 1999
Interest Rate: Variable
Number [ ] CUSIP: [ ]
ISIN: [ ]
Common Code: [ ]
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Amount of this Certificate by the initial Class
Principal Amount of the Class M1 Certificates, both as specified above) in (i)
certain distributions of principal and interest on certain fixed and
adjustable rate, fully amortizing and balloon, conventional, first lien
residential mortgage loans (the "Mortgage Loans") acquired from ACE Securities
Corp. (the "Depositor"), a Delaware corporation, (ii) such amounts and
investments as from time to time may be held in the Trust Fund established
pursuant to the Pooling and Servicing Agreement (as defined on the reverse
hereof) and (iii) certain other assets, if any, as described in the Pooling
and Servicing Agreement (the foregoing assets hereinafter collectively
referred to as the "Trust Fund").
Distributions on this Certificate will be made on the 25th day of
each month or, if such a day is not a Business Day, then on the next
succeeding Business Day, commencing in August 1999 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:_____________________________
AUTHORIZED SIGNATORY
Dated: _________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
[FIRST UNION NATIONAL BANK,]
as [Trustee]
By:_____________________________
AUTHORIZED SIGNATORY
Dated: _________________________
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as ACE Securities Corp. Home Equity Loan Trust 1999-LB2
Pass-Through Certificates (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a
Pooling and Servicing Agreement dated as of July 1, 1999 (the "Pooling and
Servicing Agreement"), among ACE Securities Corp., as Depositor, First Union
National Bank, as Trustee, and Long Beach Mortgage Company, as Servicer, to
which terms, provisions and conditions thereof the Holder of this Certificate
by virtue of the acceptance hereof assents, and by which such Holder is bound.
The Certificates consist of the following Classes: the Class A Certificates
(the "Senior Certificates"), the Class M1, Class M2 and Class B Certificates
(the "Subordinate Certificates") and the Class R Certificate (the "Residual
Certificate").
On each Distribution Date, the Total Distribution Amount for such
date will be distributed from the Certificate Account to Holders of the
Certificates according to the terms of the Pooling and Servicing Agreement.
All distributions or allocations made with respect to each Class of
Certificates on each Distribution Date shall be allocated among the
outstanding Certificates of such Class based on the Percentage Interest of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register
(except that with respect to a Certificate registered in the name of a
Clearing Agency or its nominee, distributions will be made by wire transfer of
immediately available funds) or by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at 230 South Tryon Street, Ninth Floor,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Structured
Finance Trust Services. The Trustee may designate another address from time to
time by notice to the Holders of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits the amendment thereof
from time to time by the Depositor, the Servicer and the Trustee for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder; provided, however, that (i) no such amendment may be made unless
the Trustee receives an opinion of counsel as to certain tax matters specified
in the Pooling and Servicing Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Percentage Interest of each
Class the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding. Any
consent by the Holder of this Certificate will 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 Pooling and Servicing Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or 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 Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $25,000 in initial
Certificate Principal Amount and in integral multiples of $1 in excess thereof
registered in the name of the nominee of the Clearing Agency, which shall
maintain such Certificates through its book-entry facilities. The Class R
Certificate will be issued as a single Certificate and maintained in physical
form. The Class R Certificate shall remain outstanding until the latest final
Distribution Date for the Certificates.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Distribution Date
on which the Total Loan Balance is less than 10% of the Cut-off Date Loan
Balance thereof for an amount as specified in the Pooling and Servicing
Agreement. In no event will the trust created by the Pooling and Servicing
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Pooling and
Servicing Agreement of a certain person named in the Pooling and Servicing
Agreement.
The Depositor, the Trustee and the Certificate Registrar and any
agent of any of them may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without regard to the
conflict of laws principles applied in the State of New York. In the event of
any conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably
constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate of
the same Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer __________________________________________
Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this
assignment must correspond with the name(s)
on the face of this Certificate without
alteration or any change whatsoever. The
signature must be guaranteed by a
participant in the Securities Transfer
Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program
or the Stock Exchanges Medallion Program.
Notarized or witnessed signatures are not
acceptable as guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the
information of the Certificate Registrar. Distributions shall be made by wire
transfer in immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- ------------------------------------------------------------------------------
Applicable reports and statements should be mailed to ________________________
- ------------------------------------------------------------------------------
This information is provided by ______________________________________________
the assignee named above, or ___________________________________ as its agent.
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF
THIS CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE
PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A
CERTIFICATION TO THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY
SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE
ASSETS OF ANY SUCH PLAN OR (2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY,
SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT
THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR
(B) AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND
UPON WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE
PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
THE CODE AND WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION
IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND,
THE TRUSTEE OR THE DEPOSITOR.
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE, CLASS B
Evidencing a beneficial interest in a pool consisting
primarily of certain fixed and adjustable rate, fully amortizing and
balloon, conventional, first lien residential mortgage loans and
other assets in a trust fund established by
ACE SECURITIES CORP.
Initial Class Initial Certificate
Principal Amount of the Class B Principal Amount of this
Certificates: $[ ] Certificate: $[ ]
Certificate Cut-off Date: July 1, 1999
Interest Rate: Variable
Number [ ] CUSIP: [ ]
ISIN: [ ]
Common Code: [ ]
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Amount of this Certificate by the initial Class
Principal Amount of the Class B Certificates, both as specified above) in (i)
certain distributions of principal and interest on certain fixed and
adjustable rate, fully amortizing and balloon, conventional, first lien
residential mortgage loans (the "Mortgage Loans") acquired from ACE Securities
Corp. (the "Depositor"), a Delaware corporation, (ii) such amounts and
investments as from time to time may be held in the Trust Fund established
pursuant to the Pooling and Servicing Agreement (as defined on the reverse
hereof) and (iii) certain other assets, if any, as described in the Pooling
and Servicing Agreement (the foregoing assets hereinafter collectively
referred to as the "Trust Fund").
Distributions on this Certificate will be made on the 25th day of
each month or, if such a day is not a Business Day, then on the next
succeeding Business Day, commencing in August 1999 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:_____________________________
AUTHORIZED SIGNATORY
Dated: ______________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
[FIRST UNION NATIONAL BANK],
as [Trustee]
By:_____________________________
AUTHORIZED SIGNATORY
Dated: ______________________
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as ACE Securities Corp. Home Equity Loan Trust 1999-LB2
Pass-Through Certificates (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a
Pooling and Servicing Agreement dated as of July 1, 1999 (the "Pooling and
Servicing Agreement"), among ACE Securities Corp., as Depositor, First Union
National Bank, as Trustee, and Long Beach Mortgage Company, as Servicer, to
which terms, provisions and conditions thereof the Holder of this Certificate
by virtue of the acceptance hereof assents, and by which such Holder is bound.
The Certificates consist of the following Classes: the Class A Certificates
(the "Senior Certificates"), the Class M1, Class M2 and Class B Certificates
(the "Subordinate Certificates") and the Class R Certificate (the "Residual
Certificate").
On each Distribution Date, the Total Distribution Amount for such
date will be distributed from the Certificate Account to Holders of the
Certificates according to the terms of the Pooling and Servicing Agreement.
All distributions or allocations made with respect to each Class of
Certificates on each Distribution Date shall be allocated among the
outstanding Certificates of such Class based on the Percentage Interest of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register
(except that with respect to a Certificate registered in the name of a
Clearing Agency or its nominee, distributions will be made by wire transfer of
immediately available funds) or by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at 230 South Tryon Street, Ninth Floor,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Structured
Finance Trust Services. The Trustee may designate another address from time to
time by notice to the Holders of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits the amendment thereof
from time to time by the Depositor, the Servicer and the Trustee for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder; provided, however, that (i) no such amendment may be made unless
the Trustee receives an opinion of counsel as to certain tax matters specified
in the Pooling and Servicing Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Percentage Interest of each
Class the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding. Any
consent by the Holder of this Certificate will 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 Pooling and Servicing Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or 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 Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $25,000 in initial
Certificate Principal Amount and in integral multiples of $1 in excess thereof
registered in the name of the nominee of the Clearing Agency, which shall
maintain such Certificates through its book-entry facilities. The Class R
Certificate will be issued as a single Certificate and maintained in physical
form. The Class R Certificate shall remain outstanding until the latest final
Distribution Date for the Certificates.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Distribution Date
on which the Total Loan Balance is less than 10% of the Cut-off Date Loan
Balance thereof for an amount as specified in the Pooling and Servicing
Agreement. In no event will the trust created by the Pooling and Servicing
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Pooling and
Servicing Agreement of a certain person named in the Pooling and Servicing
Agreement.
The Depositor, the Trustee and the Certificate Registrar and any
agent of any of them may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without regard to the
conflict of laws principles applied in the State of New York. In the event of
any conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate of
the same Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer __________________________________________
Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this
assignment must correspond with the name(s)
on the face of this Certificate without
alteration or any change whatsoever. The
signature must be guaranteed by a
participant in the Securities Transfer
Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program
or the Stock Exchanges Medallion Program.
Notarized or witnessed signatures are not
acceptable as guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the
information of the Certificate Registrar. Distributions shall be made by wire
transfer in immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- -----------------------------------------------------------------------------
Applicable reports and statements should be mailed to ________________________
- -----------------------------------------------------------------------------
This information is provided by _____________________________________________
the assignee named above, or ___________________________________ as its agent.
EXHIBIT B-2
FORM OF RESIDUAL CERTIFICATE
THIS CERTIFICATE IS A REMIC RESIDUAL INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND
WILL NOT ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED ONLY
TO CERTAIN LIMITED DISTRIBUTIONS AS PROVIDED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT,
(B) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE 1933 ACT,
(C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE 1933 ACT THAT IS
ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING AND SERVICING
AGREEMENT.
NEITHER THIS CERTIFICATE, NOR ANY BENEFICIAL INTEREST IN THIS
CERTIFICATE, MAY BE TRANSFERRED, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF
UNLESS PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE
TRUSTEE AN AFFIDAVIT STATING (A) THAT THE PROPOSED TRANSFEREE IS NOT A
"DISQUALIFIED ORGANIZATION" WITHIN THE MEANING OF SECTION 860E(E)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND IS NOT PURCHASING
THE CERTIFICATE ON BEHALF OF A DISQUALIFIED ORGANIZATION, (B) THAT THE
PROPOSED TRANSFEREE (1) IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), (2) IS
NOT INVESTING THE ASSETS OF ANY SUCH PLAN, (3) IS NOT A PLAN SUBJECT TO CODE
SECTION 4975 OR (4) A PERSON OR ENTITY THAT IS USING THE ASSETS OF ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO ACQUIRE THIS CERTIFICATE, (C) THAT NO
PURPOSE OF SUCH TRANSFER IS TO AVOID OR IMPEDE THE ASSESSMENT OR COLLECTION OF
TAX, AND (D) IN THE CASE OF A NON-U.S. PERSON, IS A NON-U.S. PERSON THAT HOLDS
A RESIDUAL CERTIFICATE IN CONNECTION WITH THE CONDUCT OF A TRADE OR BUSINESS
WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR AND THE TRUSTEE WITH
AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR SUCCESSOR FORM AT THE TIME
AND IN THE MANNER REQUIRED BY THE CODE. IN ADDITION, THIS CERTIFICATE MAY NOT
BE HELD BY A NOMINEE.
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE, CLASS R
Evidencing a beneficial interest in a pool consisting
primarily of certain fixed and adjustable rate, fully amortizing and
balloon, conventional, first lien residential mortgage loans and
other assets in a trust fund established by
ACE SECURITIES CORP.
Percentage Interest: 100% Cut-off Date: July 1, 1999
Number [ ]
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage
Interest evidenced by this Certificate in (i) certain distributions of amounts
in respect of certain fixed and adjustable rate, fully amortizing and balloon,
conventional, first lien residential mortgage loans (the "Mortgage Loans")
acquired from ACE Securities Corp. (the "Depositor"), a Delaware corporation,
(ii) such amounts and investments as from time to time may be held in the
Trust Fund established pursuant to the Pooling and Servicing Agreement (as
defined on the reverse hereof) and (iii) certain other assets, if any, as
described in the Pooling and Servicing Agreement (the foregoing assets
hereinafter collectively referred to as the "Trust Fund").
Distributions on this Certificate will be made on the 25th day of
each month or, if such a day is not a Business Day, then on the next
succeeding Business Day, commencing in August 1999 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.
Solely for federal income tax purposes, and for no other purpose, the
Class R Certificate shall evidence ownership of the Basis Risk Reserve Fund.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:_____________________________
AUTHORIZED SIGNATORY
Dated: ______________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
[FIRST UNION NATIONAL BANK],
as [Trustee]
By:_____________________________
AUTHORIZED SIGNATORY
Dated: ______________________
ACE SECURITIES CORP.
HOME EQUITY LOAN TRUST 1999-LB2
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as ACE Securities Corp. Home Equity Loan Trust 1999-LB2
Pass-Through Certificates (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a
Pooling and Servicing Agreement dated as of July 1, 1999 (the "Pooling and
Servicing Agreement"), among ACE Securities Corp., as Depositor, First Union
National Bank, as Trustee, and Long Beach Mortgage Company, as Servicer, to
which terms, provisions and conditions thereof the Holder of this Certificate
by virtue of the acceptance hereof assents, and by which such Holder is bound.
The Certificates consist of the following Classes: the Class A Certificates
(the "Senior Certificates"), the Class M1, Class M2 and Class B Certificates
(the "Subordinate Certificates") and the Class R Certificate (the "Residual
Certificate").
On each Distribution Date, the Total Distribution Amount for such
date will be distributed from the Certificate Account to Holders of the
Certificates according to the terms of the Pooling and Servicing Agreement.
All distributions or allocations made with respect to each Class of
Certificates on each Distribution Date shall be allocated among the
outstanding Certificates of such Class based on the Percentage Interest of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register
(except that with respect to a Certificate registered in the name of a
Clearing Agency or its nominee, distributions will be made by wire transfer of
immediately available funds) or by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at 230 South Tryon Street, Ninth Floor,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Structured
Finance Trust Services. The Trustee may designate another address from time to
time by notice to the Holders of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits the amendment thereof
from time to time by the Depositor, the Servicer and the Trustee for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder; provided, however, that (i) no such amendment may be made unless
the Trustee receives an opinion of counsel as to certain tax matters specified
in the Pooling and Servicing Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Percentage Interest of each
Class the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding. Any
consent by the Holder of this Certificate will 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 Pooling and Servicing Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or 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 Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $25,000 in initial
Certificate Principal Amount and in integral multiples of $1 in excess thereof
registered in the name of the nominee of the Clearing Agency, which shall
maintain such Certificates through its book-entry facilities. The Class R
Certificate will be issued as a single Certificate and maintained in physical
form. The Class R Certificate shall remain outstanding until the latest final
Distribution Date for the Certificates.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Distribution Date
on which the Total Loan Balance is less than 10% of the Cut-off Date Loan
Balance thereof for an amount as specified in the Pooling and Servicing
Agreement. In no event will the trust created by the Pooling and Servicing
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Pooling and
Servicing Agreement of a certain person named in the Pooling and Servicing
Agreement.
The Depositor, the Trustee and the Certificate Registrar and any
agent of any of them may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without regard to the
conflict of laws principles applied in the State of New York. In the event of
any conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocable constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate of
the same Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer __________________________________________
Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this
assignment must correspond with the name(s)
on the face of this Certificate without
alteration or any change whatsoever. The
signature must be guaranteed by a
participant in the Securities Transfer
Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program
or the Stock Exchanges Medallion Program.
Notarized or witnessed signatures are
not acceptable as guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the
information of the Certificate Registrar. Distributions shall be made by wire
transfer in immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- ------------------------------------------------------------------------------
Applicable reports and statements should be mailed to ________________________
- ------------------------------------------------------------------------------
This information is provided by ______________________________________________
the assignee named above, or ____________________________________ as its agent.
EXHIBIT C
MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items (copies to the extent the originals have been
delivered to the Trustee or the Custodian on behalf of the Trustee pursuant to
Section 2.03 of the Agreement), all of which shall be available for inspection
by the Certificateholders, to the extent required by applicable laws:
(i) The original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsements from the originator of such
Mortgage Loan to the Originator, endorsed by the Originator without
recourse in the following form: "Pay to the order of __________________,
without recourse" and signed manually or by facsimile in the name of the
Originator by an authorized officer;
(ii) The original Mortgage with evidence of recording indicated
thereon;
(iii) An original assignment of the Mortgage, in form acceptable for
recordation in the jurisdiction in which the related Mortgaged Property
is located (except for the assignee's name and recordation information
not yet received), such assignment to be in blank and signed in the name
of the Originator by an authorized officer;
(iv) The originals of all intervening assignments of the Mortgage
(with evidence of recording thereon) showing a complete chain of
assignments from the originator of such Mortgage Loan to the Originator;
(v) Any assumption, modification, consolidation or extension
agreements (with evidence of recording thereon);
(vi) The original policy of title insurance (or the original
commitment for title insurance, if the policy is being held by the title
insurance company pending recordation of the Mortgage); and
(vii) The certificate of primary mortgage guaranty insurance, if any,
issued with respect to such Mortgage Loan.
EXHIBIT D
MORTGAGE LOAN SCHEDULE
EXHIBIT E
ACKNOWLEDGMENT OF RECEIPT
___________, 1999
ACE Securities Corp.
[address]
[Servicer]
[address]
Re: Pooling and Servicing Agreement, dated as of ______________
among ACE Securities Corp., as Depositor,
_____________________, as Servicer, and _______________________,
as Trustee, Certificates, Series _____________
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as [Custodian], hereby certifies: except
as noted on the attachment hereto, if any (the "Loan Exception Report"), it
has received the original Mortgage Note (item (i) in Section 2.03(a)) with
respect to each Mortgage Loan listed in the Mortgage Loan Schedule and ,
subject to the review provided in Section 2.04 of the Pooling and Servicing
Agreement, the other documents in the Mortgage File, and the documents
contained therein appear to bear original or facsimile signatures or copies of
originals if the originals have not yet been delivered.
The [Custodian] has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The [Custodian] makes no representations as
to: (i) the validity, legality, sufficiency, enforceability or genuineness of
any such documents or any of the Mortgage Loans identified on the Mortgage
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
__________________________
as [Custodian]
By: _______________________
Name:
Title:
EXHIBIT F
INITIAL CERTIFICATION
_____________, 1999
ACE Securities Corp.
[address]
[Servicer]
[address]
Re: Pooling and Servicing Agreement, dated as of ______________
among ACE Securities Corp., as Depositor,
_____________________, as Servicer, and ____________________,
as Trustee, Certificates, Series _______________
Ladies and Gentlemen:
In accordance with the provisions of Section 2.04 of the above-
referenced Pooling and Servicing Agreement, the undersigned, as [Custodian],
hereby certifies that, except as noted on the attached exception report, as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan listed on the attachment
hereto), it has reviewed the documents delivered to it pursuant to Section
2.03 of the Pooling and Servicing Agreement and has determined that (i) all
documents required to be delivered to it pursuant to the above-referenced
Pooling and Servicing Agreement are in its possession, (ii) such documents
have been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, (iii) based on its examination and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule (described
in items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the definition of
Mortgage Loan Schedule) respecting such Mortgage Loan accurately reflects the
information set forth in the Mortgage File with respect to the Servicer's loan
number, maturity date, original principal balance, first payment date and
original term to maturity and (iv) each Mortgage Note has been endorsed as
provided in Section 2.03 of the Pooling and Servicing Agreement. The
[Custodian] has made no independent examination of such documents beyond the
review specifically required in the above-referenced Pooling and Servicing
Agreement. The [Custodian] makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any such documents contained in
each or any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
________________________________
as [Custodian]
By:______________________________
Name:
Title:
EXHIBIT G
FINAL CERTIFICATION
_____________, 19__
ACE Securities Corp.
[address]
[Servicer]
[address]
Re: Pooling and Servicing Agreement, dated as of ______________
among ACE Securities Corp., as Depositor,
__________________, as Servicer, and _______________________,
as Trustee, Certificates, Series _______________
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as [Custodian], hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attachment hereto) it has reviewed the documents delivered to it
pursuant to Section 2.03 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to
the above-referenced Pooling and Servicing Agreement are in its possession,
(ii) such documents have been reviewed by it and appear regular on their face
and have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, and (iii) based on its examination, and only as
to the foregoing documents, the information set forth in the Mortgage Loan
Schedule (described in items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the
definition of Mortgage Loan Schedule) respecting such Mortgage Loan accurately
reflects the information set forth in the Mortgage File with respect to the
Servicer's loan number, maturity date, original principal balance, first
payment date and original term to maturity. The [Custodian] has made no
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The
[Custodian] makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any
of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
________________________________
as [Custodian]
By:______________________________
Name:
Title:
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
_____________, 19__
To: [Custodian]
Re: ACE Securities Corp., Certificates, Series ___________
In connection with the administration of the pool of Mortgage Loans
held by you as [Custodian], we request the release, and acknowledge receipt,
of the (Mortgage File/[specify document]) for the Mortgage Loan described
below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
_____ 1. Mortgage Loan Paid in Full (Servicer hereby certifies that all
amounts received in connection therewith have been credited to the Collection
Account.)
_____ 2. Mortgage Loan Liquidated (Servicer hereby certifies that all proceeds
of foreclosure, insurance or other liquidation have been finally received and
credited to the Collection Account.)
_____ 3. Mortgage Loan in foreclosure _____
_____ 4. Mortgage Loan purchased pursuant to Section 5.18, 5.30 or 8.01 of the
Pooling and Servicing Agreement, and the Servicer hereby certifies that the
applicable Loan Purchase Price or Termination Price has been credited to the
Collection Account.
_____ 5. Mortgage Loan purchased or substituted pursuant to Article II or III
of the Pooling and Servicing Agreement (Servicer hereby certifies that the
repurchase price or Substitution Adjustment has been credited to the
Collection Account and that the substituted mortgage loan is a Qualified
Substitute Mortgage Loan.)
_____ 6. Other (explain)
If box 1, 2, 4 or 5 above is checked, and if all or part of the
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
If item 3 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
By:______________________________
Name:
Title:
Documents returned to [Custodian]:
Trustee
By: ______________________
Date:
EXHIBIT I
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
State of _______________ )
)ss.:
County of ______________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Purchaser] (record or
beneficial owner of the Asset Backed Certificates, Series 199__-__, Class R
(the "Purchaser")), a [savings institution] [corporation] duly organized and
existing under the laws of [the State of __________________] [the United
States], on behalf of which he makes this affidavit and agreement.
2. That the Purchaser (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section
860E(e)(5) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii)
will endeavor to remain other than a disqualified organization for so long as
it retains its ownership interest in the Class R Certificates, and (iii) is
acquiring the Class R Certificates for its own account or for the account of
another Purchaser from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Purchaser is aware (i) of the tax that would be imposed
on transfers of Class R Certificates to disqualified organizations under the
Code, that applies to all transfers of Class R Certificates after March 31,
1988; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise
liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is not a
disqualified organization and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that the Class [R]
Certificates may be "noneconomic residual interests" within the meaning of
Treasury regulations promulgated pursuant to the Code and that the transferor
of a noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax.
4. That the Purchaser is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Purchaser expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
5. That the Purchaser has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 4.02(i) of the
Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clause (g) and (h) of Section 4.02(i) which authorize
the Trustee to deliver payments to a person other than the Purchaser in the
event the Purchaser holds such Certificates in violation of Section 4.02(i)).
The Purchaser expressly agrees to be bound by and to comply with such
restrictions and provisions.
6. That the Purchaser consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class R Certificates
will only be owned, directly or indirectly, by an Purchaser that is not a
disqualified organization.
7. The Purchaser's Taxpayer Identification Number is ___________.
8. This affidavit and agreement relates only to the Class R
Certificates held by the Purchaser and not to any other holder of the Class R
Certificates. The Purchaser understands that the liabilities described herein
relate only to the Class R Certificates.
9. That no purpose of the Purchaser relating to the transfer of any
of the Class R Certificates by the Purchaser is or will be to impede the
assessment or collection of any tax.
10. That the Purchaser has no present knowledge or expectation that
it will be unable to pay any United States taxes owed by it so long as any of
the Certificates remain outstanding. In this regard, the Purchaser hereby
represents to and for the benefit of the person from whom it acquired the
Class R Certificate that the Purchaser intends to pay taxes associated with
holding such Class R Certificate as they become due, fully understanding that
it may incur tax liabilities in excess of any cash flows generated by the
Class R Certificate.
11. That the Purchaser has no present knowledge or expectation that
it will become insolvent or subject to a bankruptcy proceeding for so long as
any of the Class R Certificates remain outstanding.
12. The Purchaser is (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia; (iii) a partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia (unless provided otherwise by future Treasury regulations); (iv) an
estate whose income is includible in gross income for United States income tax
purposes regardless of its source; or (v) a trust, if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more persons described in this Paragraph 12 have
authority to control all substantial decisions of the trust.
13. The Purchaser is not an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
nor a Person acting directly on behalf of any such plan.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its [Title of Officer] and its corporate seal to be hereunto attached,
attested by its [Assistant] Secretary, this ____ day of _______________,
199__.
[NAME OF PURCHASER]
By: ________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer],
known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Purchaser, and acknowledged
to me that he executed the same as his free act and deed and the free act and
deed of the Purchaser.
Subscribed and sworn before me this ____ day of ________________, 199__.
NOTARY PUBLIC
COUNTY OF STATE OF ______________
My Commission expires the ____ day of _______________, 19__.
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
______________, 19__
ACE Securities Corp.
[Address]
[Trustee]
Re: ACE Securities Corp. Certificates, Series 1999-LB2
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_______________________________ (the "Seller") to ________________________
(the "Purchaser") of a ____% Percentage Interests of Asset Backed
Certificates, Series 199__-__, Class R Certificates (the "Certificates"),
pursuant to Section 4.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of __________, 199__, among ACE Securities
Corp., as seller (the "Depositor"), ______________________, as Servicer, and
______________________, as trustee (the "Trustee"). All terms used herein and
not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Seller hereby certifies, represents and warrants to,
and covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit I. The Seller does
not know or believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they become due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Seller understands that the transfer of a Class R
Certificate may not be respected for United States income tax purposes (and
the Seller may continue to be liable for United States income taxes associated
therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Purchaser is
not both a United States Person and a Permitted Transferee.
Very truly yours,
(Seller)
By: __________________________
Name:
Title:
EXHIBIT K
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"),
a [corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or
(2) if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account"
(as such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Depositor, and upon which the Trustee and
the Depositor shall be entitled to rely, to the effect that the purchase or
holding of such Certificate by the Investor will not result in the assets of
the Trust Fund being deemed to be plan assets and subject to the prohibited
transaction provisions of ERISA or the Code and will not subject the Trustee,
the Servicer or the Depositor to any obligation in addition to those
undertaken by such entities in the Trust Agreement, which opinion of counsel
shall not be an expense of the Trustee, the Servicer or the Depositor.
3. The Investor hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among ACE Securities Corp.,
as Depositor, and The Bank of New York, as Trustee, dated as of June 1, 1999,
no transfer of the ERISA-Restricted Certificates shall be permitted to be made
to any person unless the Trustee has received a certificate from such
transferee in the form hereof.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________, 199 .
_______________________________________
[Investor]
By:_______________________________________
Name:
Title:
ATTEST:
- -----------------------------
STATE OF )
) ss:
COUNTY OF )
Personally appeared before me the above-named
________________, known or proved to me to be the same person who
executed the foregoing instrument and to be the ____________________
of the Investor, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this _____ day of _________
199_.
________________________________
NOTARY PUBLIC
My commission expires the
_____ day of __________, 19__.
EXHIBIT L
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Loan Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of Foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value at Disposition
2. Liquidation Proceeds
Any Principal Prepayment $____________
Proceeds from the Sale of the Property ____________
Net Insurance Proceeds ____________
Other (itemize) ____________
Total Proceeds $____________
3. Liquidation Expenses
Servicing Advances $____________
Periodic Advances ____________
Servicing Fees ____________
Total Advances $____________
4. Net Liquidation Proceeds $____________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $____________
6. Loss, if any (Item 5 minus Item 4) $____________
EXHIBIT M
CERTIFICATE RE: PREPAID LOANS
I, ______________, ________________ of ACE Securities Corp., as
Depositor, hereby certify that between the "Cut-Off Date" (as defined in the
Pooling and Servicing Agreement dated as of ___________, 199__ among ACE
Securities Corp., as depositor, ___________________________, as servicer and
__________________________, as trustee) and the "Startup Day" the following
schedule of "Mortgage Loans" (each as defined in the Pooling and Servicing
Agreement) have been prepaid in full.
Dated:
By:
EXHIBIT N
SUBSEQUENT TRANSFER INSTRUMENT
[RESERVED]
EXHIBIT O
FORM OF INVESTOR REPRESENTATION LETTER
____________, 1996
[Trustee]
Re: ACE Securities Corp. Certificates, Series 1999-LB2
Ladies and Gentlemen:
_______________________(the "Purchaser") intends to purchase from
____________________ (the "Seller"), a ____% Percentage Interest of
Certificates, Series 199__-__, Class _____ (the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of ____________, 199__ among ACE Securities Corp., as
depositor (the "Depositor"), ______________________________, as servicer, and
_________________________, as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Purchaser hereby certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
and will not be registered or qualified under the Securities Act of 1933, as
amended (the "Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the Certificates may
be resold only if registered and qualified pursuant to the provisions of the
Act or any state securities law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates and (e) the
Certificates will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own account
for investment only and not with a view to or for sale in connection with any
distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters, and, in particular, in such matters related to securities similar to
the Certificates, such that it is capable of evaluating the merits and risks
of investment in the Certificates, (b) able to bear the economic risks of such
an investment and (c) an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity
to review a copy of the Pooling and Servicing Agreement and such other
information concerning the Certificates, the Mortgage Loans and the Depositor
as has been requested by the Purchaser from the Depositor or the Seller and is
relevant to the Purchaser's decision to purchase the Certificates. The
Purchaser has had any questions arising from such review answered by the
Depositor or the Seller to the satisfaction of the Purchaser. If the Purchaser
did not purchase the Certificates from the Seller in connection with the
initial distribution of the Certificates and was provided with a copy of the
Private Placement Memorandum (the "Memorandum") relating to the original sale
(the "Original Sale") of the Certificates by the Depositor, the Purchaser
acknowledges that such Memorandum was provided to it by the Seller, that the
Memorandum was prepared by the Depositor solely for use in connection with the
Original Sale and the Depositor did not participate in or facilitate in any
way the purchase of the Certificates by the Purchaser from the Seller, and the
Purchaser agrees that it will look solely to the Seller and not to the
Depositor with respect to any damage, liability, claim or expense arising out
of, resulting from or in connection with (a) error or omission, or alleged
error or omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has it authorized or will
it authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other similar
security to any person in any manner, (b) solicit any offer to buy or to
accept a pledge, disposition of other transfer of any Certificate, any
interest in any Certificate or any other similar security from any person in
any manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar security
with any person in any manner, (d) make any general solicitation by means of
general advertising or in any other manner or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law,
or that would require registration or qualification pursuant thereto. The
Purchaser will not sell or otherwise transfer any of the Certificates, except
in compliance with the provisions of the Pooling and Servicing Agreement.
6. The Purchaser either (x) is not an employee benefit plan subject
to Section 406 or Section 407 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or
(2) if the Purchaser is an insurance company, such Purchaser is purchasing
such Certificates with funds contained in an "Insurance Company General
Account" (as such term is defined in Section v(e) of the Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60; or (y) shall
deliver to the Trustee and the Depositor an opinion of counsel (a "Benefit
Plan Opinion") satisfactory to the Trustee and the Depositor, and upon which
the Trustee and the Depositor shall be entitled to rely, to the effect that
the purchase or holding of such Certificate by the Purchaser will not result
in the assets of the Trust Fund being deemed to be plan assets and subject to
the prohibited transaction provisions of ERISA or the Code and will not
subject the Trustee, the Servicer or the Depositor to any obligation in
addition to those undertaken by such entities in the Pooling and Servicing
Agreement, which opinion of counsel shall not be an expense of the Trustee,
the Servicer or the Depositor.
Very truly yours,
By:________________________
Name:
Title:
EXHIBIT P
FORM OF TRANSFEROR REPRESENTATION LETTER
___________, 199__
[Trustee]
Re: ACE Securities Corp., Asset Backed Certificates,
Series 199__-__
Ladies and Gentlemen:
In connection with the sale by _____________ (the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Certificates, Series 199__-__, Class ___ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of __________, 199__ among ACE
Securities Corp., as company (the "Depositor"), _________________________, as
servicer, and ______________________________, as trustee (the "Trustee"). The
Seller hereby certifies, represents and warrants to, and covenants with, the
Depositor and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition
or other transfer of any Certificate, any interest in any Certificate or any
other similar security from any person in any manner, (c) has otherwise
approached or negotiated with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any manner, (d)
has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a)
through (e) above) would constitute a distribution of the Certificates under
the Securities Act of 1933 (the "Act"), that would render the disposition of
any Certificate a violation of Section 5 of the Act or any state securities
law, or that would require registration or qualification pursuant thereto. The
Seller will not act in any manner set forth in the foregoing sentence with
respect to any Certificate. The Seller has not and will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions of
the Pooling and Servicing Agreement.
Very truly yours,
(Seller)
By: ________________________
Name:
Title:
EXHIBIT Q
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including numbers:
ACE Securities Corp. Asset Backed Certificates
Series 1999-LB2, Class ___, No. ___
The undersigned seller, as registered holder (the "Transferor"),
intends to transfer the Rule 144A Securities described above to the
undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or
otherwise disposed of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Rule 144A Securities, or
otherwise approached or negotiated with respect to the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar security with,
any person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, which would
constitute a distribution of the Rule 144A Securities under the Securities Act
of 1933, as amended (the "1933 Act"), or which would render the disposition of
the Rule 144A Securities a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, and that the Transferor has not offered the
Rule 144A Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Transferor, the Trustee and the Servicer pursuant to Section 5.02 of the
Pooling and Servicing Agreement as follows:
a. The Buyer understands that the Rule 144A Securities have not
been registered under the 1933 Act or the securities laws of any
state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding
the Rule 144A Securities that it has requested from the Transferor,
the Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar
security from, or otherwise approached or negotiated with respect to
the Rule 144A Securities, any interest in the Rule 144A Securities or
any other similar security with, any person in any manner, or made
any general solicitation by means of general advertising or in any
other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the 1933 Act or that
would render the disposition of the Rule 144A Securities a violation
of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Rule 144A
Securities.
e. The Buyer is a "qualified institutional buyer" as that term
is defined in Rule 144A under the 1933 Act. The Buyer is aware that
the sale to it is being made in reliance on Rule 144A. The Buyer is
acquiring the Rule 144A Securities for its own account or the account
of other qualified institutional buyers, understands that such Rule
144A Securities may be resold, pledged or transferred only (i) to a
person reasonably believed to be a qualified institutional buyer that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge
or transfer is being made in reliance on Rule 144A, or (ii) pursuant
to another exemption from registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with, the
Transferor, the Servicer and the Depositor that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a
plan within the meaning of Section 4975(e)(1) of the Internal Revenue Code of
1986 (the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the
Buyer's purchase of the Rule 144A Securities will not result in a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code.
4. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
Print Name of Transferor Print Name of Buyer
___________________________ _______________________________
By:________________________ By:____________________________
Name: Name:
Title Title
Taxpayer Identification No: Taxpayer Identification No:
Date: Date: