EXHIBIT 4.1
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Exhibit 4.1
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ICIFC SECURED ASSETS CORP.
Company,
[ICI FUNDING CORPORATION]
[NAME OF MASTER SERVICER]
Master Servicer,
and
[NAME OF TRUSTEE],
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of_____________1, 199_
Mortgage Pass-Through Certificates
Series 199_-__
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms......................................................... 2
Accrued Certificate Interest.................................................... 2
Advance......................................................................... 2
Agreement....................................................................... 2
Anniversary..................................................................... 2
Assignment...................................................................... 2
Assignment Agreement............................................................ 3
Available Distribution Amount................................................... 3
Bankruptcy Amount............................................................... 3
Bankruptcy Code................................................................. 3
Bankruptcy Loss................................................................. 3
Business Day.................................................................... 3
Cash Liquidation................................................................ 3
Certificate..................................................................... 4
Certificate Account............................................................. 4
Certificate Account Deposit Date................................................ 4
Certificateholder............................................................... 4
Holder.......................................................................... 4
Certificate Owner............................................................... 4
Certificate Principal Balance................................................... 4
Certificate Register............................................................ 4
Class........................................................................... 4
Class A Certificate............................................................. 4
Class B Certificate............................................................. 5
Class B Percentage.............................................................. 5
Class R Certificate............................................................. 5
Closing Date.................................................................... 5
Code............................................................................ 5
Collateral Value................................................................ 5
Company......................................................................... 5
Corporate Trust Office.......................................................... 5
Credit Support Depletion Date................................................... 5
Custodial Account............................................................... 5
Cut-off Date.................................................................... 5
Debt Service Reduction.......................................................... 5
Default Loss.................................................................... 5
Deficient Valuation............................................................. 6
Definitive Certificate.......................................................... 6
Deleted Mortgage Loan........................................................... 6
Determination Date.............................................................. 6
Disqualified Organization....................................................... 6
Distribution Date............................................................... 6
Due Date........................................................................ 6
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Due Period...................................................................... 6
Duff & Phelps................................................................... 6
Eligible Account................................................................ 6
Event of Default................................................................ 7
Excess Bankruptcy Loss.......................................................... 7
Excess Fraud Loss............................................................... 7
Excess Special Hazard Loss...................................................... 7
Extraordinary Events............................................................ 7
Special Hazard Loss............................................................. 7
Extraordinary Losses............................................................ 8
FDIC............................................................................ 8
FHLMC........................................................................... 8
Fitch........................................................................... 8
FNMA............................................................................ 8
Fraud Losses.................................................................... 8
Fraud Loss Amount............................................................... 8
Funding Date.................................................................... 8
Initial Certificate Principal Balance........................................... 8
Insurance Policy................................................................ 9
Insurance Proceeds.............................................................. 9
Late Collections................................................................ 9
Liquidation Proceeds............................................................ 9
Loan-to-Value Ratio............................................................. 9
Master Servicer................................................................. 9
Monthly Payment................................................................. 9
Moody's......................................................................... 9
Mortgage........................................................................ 9
Mortgage File................................................................... 9
Mortgage Loan................................................................... 9
Mortgage Loan Schedule.......................................................... 10
Mortgage Note................................................................... 11
Mortgage Rate................................................................... 11
Mortgaged Property.............................................................. 11
Mortgagor....................................................................... 11
Net Mortgage Rate............................................................... 11
Nonrecoverable Advance.......................................................... 11
Non-United States Person........................................................ 11
Notional Amount................................................................. 11
Officers' Certificate........................................................... 11
Opinion of Counsel.............................................................. 11
Optimal Percentage.............................................................. 11
Optimal Principal Distribution Amount........................................... 12
Original Senior Percentage...................................................... 12
OTS............................................................................. 12
Outstanding Mortgage Loan....................................................... 12
Ownership Interest.............................................................. 12
Pass-Through Rate............................................................... 12
Percentage Interest............................................................. 12
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Permitted Instruments........................................................... 12
Permitted Transferee............................................................ 13
Person.......................................................................... 13
Pool Strip Rate................................................................. 13
Prepayment Assumption........................................................... 13
Prepayment Interest Shortfall................................................... 13
Prepayment Period............................................................... 14
Primary Hazard Insurance Policy................................................. 14
Primary Mortgage Insurance Policy............................................... 14
Principal Prepayment............................................................ 14
Purchase Price.................................................................. 14
Qualified Insurer............................................................... 14
Qualified Substitute Mortgage Loan.............................................. 14
Rating Agency................................................................... 15
Realized Loss................................................................... 15
Record Date..................................................................... 15
Regular Certificate............................................................. 15
Relief Act Interest Shortfall................................................... 16
REMIC........................................................................... 16
REMIC Provisions................................................................ 16
Remittance Report............................................................... 16
REO Acquisition................................................................. 16
REO Disposition................................................................. 16
REO Imputed Interest............................................................ 16
REO Proceeds.................................................................... 16
REO Property.................................................................... 16
Request for Release............................................................. 16
Required Insurance Policy....................................................... 16
Residual Certificate............................................................ 16
Responsible Officer............................................................. 16
Seller.......................................................................... 17
Seller's Warranty Certificate................................................... 17
Senior Accelerated Distribution Percentage...................................... 17
Senior Percentage............................................................... 17
Senior Principal Distribution Amount............................................ 18
Servicing Account............................................................... 18
Servicing Advances.............................................................. 18
Servicing Fee................................................................... 18
Servicing Fee Rate.............................................................. 18
Servicing Officer............................................................... 18
Single Certificate.............................................................. 18
Southern Pacific Funding........................................................ 18
Special Hazard Amount........................................................... 18
Special Hazard Percentage....................................................... 18
[Standard & Poor's]............................................................. 19
Startup Day..................................................................... 19
Stated Principal Balance........................................................ 19
Subordinate Principal Distribution Amount....................................... 19
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Sub-Servicer.................................................................... 19
Sub-Servicer Remittance Date.................................................... 19
Sub-Servicing Account........................................................... 19
Sub-Servicing Agreement......................................................... 19
Tax Returns..................................................................... 19
Transfer........................................................................ 20
Transferor...................................................................... 20
Trust Fund...................................................................... 20
Trustee......................................................................... 20
Trustee's Fee................................................................... 20
Uninsured Cause................................................................. 20
United States Person............................................................ 20
Voting Rights................................................................... 20
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans....................................... 21
SECTION 2.02. Acceptance of the Trust Fund by the Trustee........................ 23
SECTION 2.03. Representations, Warranties and Covenants of the Master Servicer
and the Company.................................................... 24
SECTION 2.04. Representations and Warranties of the Seller; Repurchase and
Substitution....................................................... 26
SECTION 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund.... 28
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.......................... 29
SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and Sub-
Servicers.......................................................... 30
SECTION 3.03. Successor Sub-Servicers............................................ 30
SECTION 3.04. Liability of the Master Servicer................................... 31
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and Trustee or
Certificateholders................................................. 31
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee............................................................ 31
SECTION 3.07. Collection of Certain Mortgage Loan Payments....................... 31
SECTION 3.08. Sub-Servicing Accounts............................................. 32
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts........................................................... 32
SECTION 3.10. Custodial Account.................................................. 32
SECTION 3.11. Permitted Withdrawals From the Custodial Account................... 33
SECTION 3.12. Permitted Instruments.............................................. 35
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SECTION 3.13. Maintenance of Primary Mortgage Insurance and Primary Hazard
Insurance.......................................................... 35
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.......... 36
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.......................... 37
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.................... 38
SECTION 3.17. Servicing Compensation............................................. 39
SECTION 3.18. Maintenance of Certain Servicing Policies.......................... 39
SECTION 3.19. Annual Statement as to Compliance.................................. 39
SECTION 3.20. Annual Independent Public Accountants' Servicing Statement......... 40
SECTION 3.21. Access to Certain Documentation.................................... 40
SECTION 3.22. Title, Conservation and Disposition of REO Property................ 41
SECTION 3.23. Additional Obligations of the Master Servicer...................... 42
SECTION 3.24. Additional Obligations of the Company.............................. 42
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Certificate Account; Distributions................................. 44
SECTION 4.02. Statements to Certificateholders................................... 47
SECTION 4.03. Remittance Reports; Advances by the Master Servicer................ 48
SECTION 4.04. Allocation of Realized Losses...................................... 50
SECTION 4.05. Information Reports to be Filed by the Master Servicer............. 50
SECTION 4.06. Compliance with Withholding Requirements........................... 51
ARTICLE V
THE CERTIFICATE
SECTION 5.01. The Certificates................................................... 52
SECTION 5.02. Registration of Transfer and Exchange of Certificates.............. 52
ERISA.............................................................. 53
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.................. 56
SECTION 5.04. Persons Deemed Owners.............................................. 56
ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
SECTION 6.01. Liability of the Company and the Master Servicer................... 57
SECTION 6.02. Merger, Consolidation or Conversion of the Company or the Master
Servicer........................................................... 57
SECTION 6.03. Limitation on Liability of the Company, the Master Servicer and
Others............................................................. 57
SECTION 6.04. Limitation on Resignation of the Master Servicer................... 58
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.................................................. 59
Imperial........................................................... 60
SECTION 7.02. Trustee to Act; Appointment of Successor........................... 60
SECTION 7.03. Notification to Certificateholders................................. 61
SECTION 7.04. Waiver of Events of Default........................................ 61
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.................................................. 62
SECTION 8.02. Certain Matters Affecting the Trustee.............................. 63
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.............. 64
SECTION 8.04. Trustee May Own Certificates....................................... 64
SECTION 8.05. Payment of Trustee's Fees.......................................... 64
SECTION 8.06. Eligibility Requirements for Trustee............................... 64
SECTION 8.07. Resignation and Removal of the Trustee............................. 65
SECTION 8.08. Successor Trustee.................................................. 65
SECTION 8.09. Merger or Consolidation of Trustee................................. 66
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...................... 66
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.............................................................. 68
SECTION 9.02. Additional Termination Requirements................................ 69
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.............................................. 71
SECTION 10.02. Prohibited Transactions and Activities............................ 73
SECTION 10.03. Master Servicer and Trustee Indemnification....................... 73
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment......................................................... 74
SECTION 11.02. Recordation of Agreement; Counterparts............................ 75
SECTION 11.03. Limitation on Rights of Certificateholders........................ 75
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SECTION 11.04. Governing Law..................................................... 76
SECTION 11.05. Notices........................................................... 76
SECTION 11.06. Severability of Provisions........................................ 76
SECTION 11.07. Successors and Assigns; Third Party Beneficiary................... 76
SECTION 11.08. Article and Section Headings...................................... 77
SECTION 11.09. Notice to Rating Agencies and Certificateholder................... 77
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Signatures
Acknowledgments
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class B Certificate
Exhibit B Form of Class R Certificate
Exhibit C Form of Trustee Initial Certification
Exhibit D Form of Trustee Final Certification
Exhibit E Form of Remittance Report
Exhibit F-1 Request for Release
Exhibit F-2 Request for Release for Mortgage Loans Paid in Full
Exhibit G-1 Form of Investor Representation Letter
Exhibit G-2 Form of Transferor Representation Letter
Exhibit G-3 Transferor Affidavit and Agreement in connection with transfer of
Residual Certificates
Exhibit G-4 Transferee Affidavit and Agreement in connection with transfer of
Residual Certificates
Exhibit G-5 Form of Investor Representation Letter for Insurance Companies
Exhibit H Mortgage Loan Schedule
Exhibit I Seller's Warranty Certificate
Exhibit J Form of Notice Under Section 3.24
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This Pooling and Servicing Agreement, effective as of _______________ 1,
199_, among ICIFC SECURED ASSETS CORP., as the company (together with its
permitted successors and assigns, the "Company"), [NAME OF MASTER SERVICER] [ICI
FUNDING CORPORATION], as master servicer (together with its permitted successors
and assigns, the "Master Servicer"), and [NAME OF TRUSTEE], as trustee (together
with its permitted successors and assigns, the "Trustee"),
PRELIMINARY STATEMENT:
The Company intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes
(each, a "Class"), which in the aggregate will evidence the entire beneficial
ownership interest in the Mortgage Loans (as defined herein). As provided
herein, the Master Servicer will make an election to treat the segregated pool
of assets described in the definition of Trust Fund (as defined herein), and
subject to this Agreement (including the Mortgage Loans but excluding the
Initial Monthly Payment Deposit), as a real estate mortgage investment conduit
(a "REMIC") for federal income tax purposes, and such segregated pool of assets
will be designated as the "Trust Fund." The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 and Class B Certificates will
represent ownership of "regular interests" in the Trust Fund, and the Class R
Certificates will be the sole class of "residual interests" therein, for
purposes of the REMIC Provisions (as defined herein) under federal income tax
law.
The following table sets forth the designation, type, Pass-Through Rate,
aggregate Initial Certificate Principal Balance, initial ratings and certain
features for each Class of Certificates comprising the interests in the Trust
Fund created hereunder.
AGGREGATE
INITIAL
PASS- CERTIFICATE INITIAL RATINGS
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THROUG PRINCIPAL
DESCRIPTION TYPE RATE BALANCE FEATURES [____] [____]
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Class A-1 Senior ______% $_________ Senior ____ ____
Class A-2 Senior ______% $_________ Senior ____ ____
Class A-3 Senior ______% $_________ Senior ____ ____
Class A-4 Senior ______% $_________ Senior ____ ____
Class A-5 Senior/Fixed Strip ______% $_________ Senior/Interest Only ____ ____
Class A-6 Senior ______% $_________ Senior ____ ____
Class A-7 Senior/Variable Variable Rate $_________ Senior/Interest Only ____ ____
Strip
Class R Residual ______% $_________ Residual ____ ____
Class B Subordinate ______% $_________ Subordinate ____ ____
The Mortgage Loans have an aggregate Stated Principal Balance as of the
Cut-off Date equal to $___________. The Mortgage Loans are fixed rate mortgage
loans having terms to maturity at origination or modification of not more than
30 years.
In consideration of the mutual agreements herein contained, the Company,
the Master Servicer and the Trustee agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
"Accrued Certificate Interest": With respect to each Distribution Date, as
to any Class A Certificate (other than the Class A-5 Certificates and Class A-7
Certificates) or any Class B Certificate, one month's interest accrued at the
then applicable Pass-Through Rate on the Certificate Principal Balance thereof
immediately prior to such Distribution Date. With respect to each Distribution
Date, as to the Class A-5 Certificates and Class A-7 Certificates, one month's
interest accrued at the then applicable Pass-Through Rate on the Notional Amount
thereof immediately prior to such Distribution Date. Accrued Certificate
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months. In each case Accrued Certificate Interest on any Class of
Certificates will be reduced by the amount of (i) Prepayment Interest
Shortfalls, if any, which are not covered by payments by the Master Servicer
pursuant to Section 3.23 with respect to such Distribution Date, (ii) the
interest portion (adjusted to the related Net Mortgage Rate) of any of Realized
Losses (including Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses and Extraordinary Losses) not allocated solely to one or more
specific Classes of Certificates pursuant to Section 4.04 (which, with respect
to the pro rata portion thereof allocated to the Class A-1, Class A-5 and Class
A-6 Certificates will be allocated first to the Class A-6 Certificates and
second to the Class A-1 and Class A-5 Certificates on a pro rata basis to the
extent such Realized Losses are Default Losses), (iii) the interest portion of
Advances previously made with respect to a Mortgage Loan or REO Property which
remained unreimbursed following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property that was made with respect to delinquencies that
were ultimately determined to be Excess Special Hazard Losses, Excess Fraud
Losses, Excess Bankruptcy Losses or Extraordinary Losses, and (iv) any other
interest shortfalls not covered by the subordination provided by the Class B
Certificates pursuant to Section 4.04, including interest that is not
collectible from the Mortgagor pursuant to the Relief Act or similar legislation
or regulations as in effect from time to time; with all such reductions
allocated among the Classes of Certificates, in proportion to their respective
amounts of Accrued Certificate Interest which would have resulted absent such
reductions. In addition to that portion of the reductions described in the
preceding sentence, Accrued Certificate Interest on the Class B Certificates
will be reduced by the interest portion (adjusted to the related Net Mortgage
Rate) of Realized Losses that are allocated solely to the Class B Certificates
pursuant to Section 4.04.
"Advance": As to any Mortgage Loan, any advance made by the Master Servicer
on any Distribution Date pursuant to Section 4.03.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof.
"Anniversary": Each anniversary of _____________ 1, 19__.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Assignment Agreement": The Assignment and Assumption Agreement, dated as
of ____________,
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199_, between [ICI Funding Corporation] and the Company relating to the transfer
and assignment of the Mortgage Loans.
"Available Distribution Amount": With respect to each Distribution
Date, the Available Distribution Amount will be an amount equal to (a) the sum
of (i) the balance on deposit in the Custodial Account as of the close of
business on the related Determination Date and (ii) the aggregate amount of any
Advances made, all required amounts pursuant to Section 3.22 and all amounts
required to be paid by the Master Servicer pursuant to Sections 3.13 and 3.23 by
deposits into the Certificate Account on the immediately preceding Certificate
Account Deposit Date, reduced by (b) the sum, as of the close of business on the
related Determination Date of (i) Monthly Payments collected but due during a
Due Period subsequent to the Due Period ending on the first day of the month of
the related Distribution Date, (ii) all interest or other income earned on
deposits in the Custodial Account, (iii) any other amounts reimbursable or
payable to the Master Servicer or any other Person pursuant to Section 3.11,
(iv) Insurance Proceeds, Liquidation Proceeds, Principal Prepayments, REO
Proceeds and the proceeds of Mortgage Loan purchases (or amounts received in
connection with substitutions) made pursuant to Section 2.02 and 2.04, in each
case received or made in the month of such Distribution Date and (v) the
Trustee's Fee.
"Bankruptcy Amount": As of any date of determination, an amount, equal to
the excess, if any, of (A) $_______, over (B) the aggregate amount of Bankruptcy
Losses allocated solely to one or more specific Classes of Certificates in
accordance with Section 4.04.
The Bankruptcy Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from each Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written confirmation to the Trustee.
"Bankruptcy Code": The United States Bankruptcy Code of 1978, as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Deficient Valuation
or Debt Service Reduction; provided, however, that a Deficient Valuation or a
Debt Service Reduction shall not be deemed a Bankruptcy Loss hereunder so long
as the Master Servicer has notified the Trustee in writing that the Master
Servicer is diligently pursuing any remedies that may exist in connection with
the related Mortgage Loan and either (A) the related Mortgage Loan is not in
default with regard to payments due thereunder or (B) delinquent payments of
principal and interest under the related Mortgage Loan and any related escrow
payments in respect of such Mortgage Loan are being advanced on a current basis
by the Master Servicer, in either case without giving effect to any Deficient
Valuation or Debt Service Reduction.
"Business Day": Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the State of ______________ or the State of
______________ (and such other state or states in which the Custodial Account or
the Certificate Account are at the time located) are required or authorized by
law or executive order to be closed.
"Cash Liquidation": As to any defaulted Mortgage Loan other than a Mortgage
Loan as to which an REO Acquisition occurred, the final receipt by or on behalf
of the Master Servicer of all Insurance Proceeds, Liquidation Proceeds and other
payments or cash recoveries which the Master Servicer reasonably and in good
faith expects to be finally recoverable with respect to such Mortgage Loan.
"Certificate": Any Class A, Class B or Class R Certificate.
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"Certificate Account": The account or accounts created and maintained
pursuant to Section 4.01, which shall be entitled
"___________________________________, as trustee, in trust for the registered
holders of ICIFC Secured Assets Corp., Mortgage Pass-Through Certificates,
Series 199_-__" and which must be an Eligible Account.
"Certificate Account Deposit Date": The 20th day (or if such 20th day is
not a Business Day, the Business Day immediately preceding such 20th day) of the
month.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, except that, neither a Disqualified
Organization nor a Non-United States Person shall be a Holder of a Class R
Certificate for any purposes hereof and, solely for the purposes of giving any
consent pursuant to this Agreement, any Certificate registered in the name of
the Company or the Master Servicer or any affiliate thereof shall be deemed not
to be outstanding and the Voting Rights to which it is entitled shall not be
taken into account in determining whether the requisite percentage of Voting
Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee shall be entitled to rely upon
a certification of the Company or the Master Servicer in determining if any
Certificates are registered in the name of a respective affiliate.
"Certificate Owner": With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Company Participant acts as
agent, if any, and otherwise on the books of a Company Participant, if any, and
otherwise on the books of the Company.
"Certificate Principal Balance": With respect to each Class A Certificate
(other than a Class A-5 Certificate or Class A-7 Certificate), on any date of
determination, an amount equal to (i) the Initial Certificate Principal Balance
of such Certificate as specified on the face thereof, minus (ii) the sum of (x)
the aggregate of all amounts previously distributed with respect to such
Certificate (or any predecessor Certificate) and applied to reduce the
Certificate Principal Balance thereof pursuant to Section 4.02(b) and (y) the
aggregate of all reductions in Certificate Principal Balance deemed to have
occurred in connection with Realized Losses which were previously allocated to
such Certificate (or any predecessor Certificate) pursuant to Section 4.04. With
respect to the Class B Certificates, on any date of determination, an amount
equal to the Percentage Interest evidenced by such Certificate times the excess,
if any, of (A) the then aggregate Stated Principal Balance of the Mortgage Loans
over (B) the then aggregate Certificate Principal Balance of all other Classes
of Certificates then outstanding. The Class A-5 Certificates, Class A-7
Certificates and Class R Certificates have no Certificate Principal Balance.
"Certificate Register": The register maintained pursuant to Section 5.02.
"Class": Collectively, all of the Certificates bearing the same
designation.
"Class A Certificate": Any one of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6 or Class A-7 Certificates, executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form
annexed hereto as Exhibit A-1, each such Certificate evidencing an interest
designated as a "regular interest" in the Trust Fund for purposes of the REMIC
Provisions.
"Class B Certificate": The Class B Certificates executed by the Trustee and
authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit A-2 and evidencing an interest designated as a "regular
interest" in the Trust Fund for purposes of the REMIC Provisions.
"Class B Percentage": With respect to any Distribution Date, the lesser of
(i) 100% minus the Senior
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Percentage and (ii) a fraction, expressed as a percentage, the numerator of
which is the aggregate Certificate Principal Balance of the Class B Certificates
immediately prior to such date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date.
"Class R Certificate": Any one of the Class R Certificates executed and
delivered by the Trustee substantially in the form annexed hereto as Exhibit B
and evidencing an interest designated as a "residual interest" in the REMIC for
purposes of the REMIC Provisions.
"Closing Date": _______________ ___, 19__.
"Code": The Internal Revenue Code of 1986.
"Collateral Value": The appraised value of a Mortgaged Property based upon
the lesser of (i) the appraisal made at the time of the origination of the
related Mortgage Loan, or (ii) the sales price of such Mortgaged Property at
such time of origination. With respect to a Mortgage Loan the proceeds of which
were used to refinance an existing mortgage loan, the appraised value of the
Mortgaged Property based upon the appraisal (as reviewed and approved by the
Seller) obtained at the time of refinancing.
"Company": ICIFC Secured Assets Corp., or its successor in interest.
"Corporate Trust Office": The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at ____________________________________________________,
Attention: __________________ Series 199_-__.
"Credit Support Depletion Date": The first Distribution Date on which the
Senior Percentage equals 100%.
"Custodial Account": The custodial account or accounts created and
maintained pursuant to Section 3.10 in a depository institution, as custodian
for the holders of the Certificates, for the holders of certain other interests
in mortgage loans serviced or sold by the Master Servicer and for the Master
Servicer, into which the amounts set forth in Section 3.10 shall be deposited
directly. Any such account or accounts shall be an Eligible Account.
"Cut-off Date": _____________ 1, 199_.
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
"Default Loss": Any Realized Loss that is attributable to the related
Mortgagor's failure to make any payment of principal or interest as required
under the Mortgage Note, excluding Special Hazard Losses (or any other loss
resulting from damage to a Mortgaged Property), Bankruptcy Losses, Fraud Losses,
or other losses of a type not covered by the subordination provided by the Class
B Certificates pursuant to Section 4.04.
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"Deficient Valuation": With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated by the Mortgagor under the Bankruptcy Code.
"Definitive Certificate": Any definitive, fully registered Certificate.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
"Determination Date": The 15th day (or if such 15th day is not a Business
Day, the Business Day immediately preceding such 15th day) of the month of the
related Distribution Date.
"Disqualified Organization": Any of the following: (i) the United States,
any State or any 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 any such governmental unit), (ii) a foreign government,
international organization or any agency or instrumentality of either the
foregoing, (iii) an organization (except certain farmers' cooperatives described
in Section 521 of the Code) which is exempt from tax imposed by Chapter 1 of the
Code (unless such organization is subject to the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code or (v) any other
Person so designated by the Trustee based on an Opinion of Counsel obtained by
the Trustee, at the expense of the Trust Fund, (which opinion shall be sought
only if the Trustee has actual knowledge that the holding of an Ownership
Interest in a Class R Certificate by such Person may cause the Trust Fund or any
Person having an Ownership Interest in any Class of Certificates, other than
such Person, to incur a liability for any federal tax imposed under the Code
that would not otherwise be imposed but for the Transfer of an Ownership
Interest in a 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 or successor provisions.
"Distribution Date": The 25th day of any month, or if such 25th day is not
a Business Day, the Business Day immediately following such 25th day commencing
on _______ 25, 19__.
"Due Date": The first day of the month of the related Distribution Date.
"Due Period": With respect to any Distribution Date, the period commencing
on the second day of the month preceding the month of such Distribution Date
(or, with respect to the first Due Period, the day following the Cut-off Date)
and ending on the related Due Date.
["Duff & Phelps": Duff & Phelps Credit Rating Company or its successor in
interest.]
"Eligible Account": An account maintained with a federal or state chartered
depository institution (i) the short-term obligations of which are rated by each
of the Rating Agencies in its highest rating at the time of any deposit therein,
or (ii) insured by the FDIC (to the limits established by such Corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel (obtained by and at the expense of the Person
requesting that the account be held pursuant to this clause (ii)) delivered to
the Trustee prior to the establishment of such account, the Certificateholders
will have a claim with respect to the funds in such account and a perfected
first priority security interest against any collateral (which shall be limited
to Permitted Instruments, each of which shall mature not later than the Business
Day immediately preceding the Distribution Date next following the date of
investment in such collateral or the
6
Distribution Date if such Permitted Instrument is an obligation of the
institution that maintains the Certificate Account or Custodial Account)
securing such funds that is superior to claims of any other depositors or
general creditors of the depository institution with which such account is
maintained or (iii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers acting
in its fiduciary capacity or (iv) an account or accounts of a depository
institution acceptable to the Rating Agencies (as evidenced in writing by the
Rating Agencies that use of any such account as the Custodial Account or the
Certificate Account will not have an adverse effect on the then-current ratings
assigned to the Classes of the Certificates then rated by the Rating Agencies).
Eligible Accounts may bear interest.
"Event of Default": One or more of the events described in Section 7.01.
"Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion thereof, which
exceeds the then applicable Bankruptcy Amount.
"Excess Fraud Loss": Any Fraud Loss, or portion thereof, which exceeds the
then applicable Fraud Loss Amount.
"Excess Special Hazard Loss": Any Special Hazard Loss, or portion thereof,
that exceeds the then applicable Special Hazard Amount.
"Extraordinary Events": Any of the following conditions with respect to a
Mortgaged Property or Mortgage Loan causing or resulting in a loss which causes
the liquidation of such Mortgage Loan:
(a) losses that are of a type that would be covered by the fidelity
bond and the errors and omissions insurance policy required to be
maintained pursuant to Section 3.18 but are in excess of the coverage
maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in part
caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war, including
action in hindering, combatting or defending against an actual, impending
or expected attack:
1. by any government or sovereign power, de jure or de facto,
or by any authority maintaining or using military, naval or air
forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(d) any weapon of war employing atomic fission or radioactive force
whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combatting or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any government
or public authority; or risks of contraband or illegal transportation or
trade.
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"Extraordinary Losses": Any loss incurred on a Mortgage Loan caused by or
resulting from an Extraordinary Event.
"FDIC": Federal Deposit Insurance Corporation or any successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor.
["Fitch": Fitch Investors Service, Inc., or its successor in interest-]
"FNMA": Federal National Mortgage Association or any successor.
"Fraud Losses": Any Realized Loss sustained by reason of a default arising
from fraud, dishonesty or misrepresentation in connection with the related
Mortgage Loan.
"Fraud Loss Amount": As of any date of determination after the Cut-off
Date, an amount equal to: (X) up to and including the [first] anniversary of the
Cut-off Date an amount equal to ______% of the aggregate outstanding principal
balance of all of the Mortgage Loans as of the Cut-off Date minus the aggregate
amount of Fraud Losses allocated to the Class B Certificates in accordance with
Section 4.04 since the Cut-off Date up to such date of determination, (Y) from
the [first] to the fifth anniversary of the Cut-off Date, an amount equal to (1)
the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of the
Cut-off Date and (b) ______% of the aggregate outstanding principal balance of
all of the Mortgage Loans as of the most recent anniversary of the Cut-off Date
minus (2) the Fraud Losses allocated solely to the Class B Certificates in
accordance with Section 4.04 since the most recent anniversary of the Cut-off
Date up to such date of determination. On and after the fifth anniversary of
the Cutoff Date the Fraud Loss Amount shall be zero.
The Fraud Loss Amount may be further reduced by the Master Servicer
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Master Servicer shall (i) obtain written
confirmation from each Rating Agency that such reduction shall not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency and (ii) provide a copy of such
written confirmation to the Trustee.
"Funding Date": With respect to each Mortgage Loan, the date on which
funds were advanced by or on behalf of the Seller and interest began to accrue
thereunder.
["ICI Funding Corporation": ICI Funding Corporation, a ___________________
corporation, and any successor thereto.]
"Initial Certificate Principal Balance": With respect to each Class of
Certificates, the Certificate Principal Balance of such Class of Certificates as
of the Cut-off Date as set forth in the Preliminary Statement hereto.
"Insurance Policy": With respect to any Mortgage Loan, any insurance
policy which is required to be maintained from time to time under this Agreement
in respect of such Mortgage Loan.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to the Primary
Mortgage Insurance Policy and any other 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 Mortgagor in accordance with the
procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account.
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"Late Collections": With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
"Liquidation Proceeds": Amounts (other than Insurance Proceeds) received
by the Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than amounts received in respect of
REO Property.
"Loan-to-Value Ratio": As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Collateral Value of the related Mortgaged Property.
"Master Servicer": [ICI Funding Corporation] [Name of Master Servicer], or
any successor master servicer appointed as herein provided.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by a Mortgagor from time to time under the related Mortgage Note as originally
executed (after adjustment, if any, for Principal Prepayments and for Deficient
Valuations occurring prior to such Due Date, and after any adjustment by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period).
["Moody's": Moody's Investors Service, Inc. or its successor in interest.]
"Mortgage": The mortgage, deed of trust or any other instrument securing
the Mortgage Loan.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement; provided, that whenever the
term "Mortgage File" is used to refer to documents actually received by the
Trustee, such term shall not be deemed to include such additional documents
required to be added unless they are actually so added.
"Mortgage Loan": Each of the mortgage loans, transferred and assigned to
the Trustee pursuant to Section 2.01 or Section 2.03 and from time to time held
in the Trust Fund, the Mortgage Loans originally so transferred, assigned and
held being identified in the Mortgage Loan Schedule attached hereto as Exhibit H
(and any Qualified Substitute Mortgage Loans). As used herein, the term
"Mortgage Loan" includes the related Mortgage Note and Mortgage.
"Mortgage Loan Schedule": As of any date of determination, the schedule of
Mortgage Loans included in the Trust Fund. The initial schedule of Mortgage
Loans with accompanying information transferred on the Closing Date to the
Trustee as part of the Trust Fund for the Certificates, attached hereto as
Exhibit H (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans) (and, for purposes of the Trustee's review of the
Mortgage Files pursuant to Section 2.02, in computer-readable form as delivered
to the Trustee), which list shall set forth the following information, if
applicable, with respect to each Mortgage Loan:
(i) the loan number and name of the Mortgagor;
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(ii) the street address, city, state and zip code of the Mortgaged
Property;
(iii) the Mortgage Rate;
(iv) the maturity date;
(v) the original principal balance;
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment in effect as of the Cut-off Date;
(ix) the principal balance as of the Cut-off Date;
(x) the occupancy status;
(xi) the purpose of the Mortgage Loan;
(xii) the Collateral Value of the Mortgaged Property;
(xiii) the original term to maturity;
(xiv) the paid-through date of the Mortgage Loan;
(xv) the Loan-to-Value Ratio; and
(xvi) whether or not the Mortgage Loan was underwritten pursuant to a
limited documentation program.
The Mortgage Loan Schedule shall also set forth the total of the amounts
described under (ix) above for all of the Mortgage Loans. The Mortgage Loan
Schedule may be in the form of more than one schedule, collectively setting
forth all of the information required. With respect to any Qualified Substitute
Mortgage Loan, the item described in clauses (viii) shall be set forth as the
date of substitution.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to any Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage Loan.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": As to each Mortgage Loan, a per annum rate of
interest equal to the related Mortgage Rate as in effect from time to time minus
the sum of the Servicing Fee Rate and the rate at which the Trustee's Fee
accrues.
10
"Nonrecoverable Advance": Any Advance previously made or proposed to be
made in respect of a Mortgage Loan which, in the good faith judgment of the
Master Servicer, will not or, in the case of a proposed Advance, would not be
ultimately recoverable from related Late Collections, Insurance Proceeds,
Liquidation Proceeds, REO Proceeds or amounts reimbursable to the Master
Servicer pursuant to Section 4.01(b). The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance would
constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Company and the Trustee.
"Non-United States Person": Any Person other than a United States Person.
"Notional Amount": As of any Distribution Date, with respect to the Class
A-5 Certificates and the Class A-7 Certificates, an amount equal to the
aggregate Certificate Principal Balance of all Classes of Certificates
immediately prior to such date.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president and by
the Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Master Servicer or of the Sub-Servicer and delivered to the
Company and Trustee.
"Opinion of Counsel": A written opinion of counsel, who may be counsel for
the Company or the Master Servicer, reasonably acceptable to the Trustee; except
that any opinion of counsel relating to (a) the qualification of any account
required to be maintained pursuant to this Agreement as an Eligible Account, (b)
qualification of the Trust Fund as a REMIC, (c) compliance with the REMIC
Provisions or (d) resignation of the Master Servicer pursuant to Section 6.04
must be an opinion of counsel who (i) is in fact independent of the Company and
the Master Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Company or the Master Servicer or in
an affiliate of either and (iii) is not connected with the Company or the Master
Servicer as an officer, employee, director or person performing similar
functions.
"Optimal Percentage": A fraction, expressed as a percentage, the numerator
of which is the Certificate Principal Balance of the Class A-1 Certificates
immediately prior to the applicable Distribution Date and the denominator of
which is the aggregate Certificate Principal Balance of all of the Class A
Certificates immediately prior to such Distribution Date.
"Optimal Principal Distribution Amount": An amount equal to the product of
(i) the then applicable Optimal Percentage and (ii) the Senior Principal
Distribution Amount.
"Original Senior Percentage": _______%, which is the fraction, expressed as
a percentage, the numerator of which is the aggregate Initial Certificate
Principal Balance of the Class A Certificates and the denominator of which is
the aggregate Stated Principal Balance of the Mortgage Loans.
"OTS": Office of Thrift Supervision or any successor.
"Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in full, Cash Liquidation or REO Disposition and which was not purchased or
substituted for prior to such Due Date pursuant to Sections 2.02 or 2.04.
"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.
11
"Pass-Through Rate": With respect to the Class A Certificates (other than
the Class A-7 Certificates) and Class B Certificates and any Distribution Date,
the per annum rate set forth in the Preliminary Statement hereto. With respect
to the Class A-7 Certificates and any Distribution Date, a rate equal to the
weighted average, expressed as a percentage, of the Pool Strip Rates of all
Mortgage Loans in the Trust Fund as of the Due Date in the month immediately
preceding the month in which such Distribution Date occurs, weighted on the
basis of the respective Stated Principal Balances of such Mortgage Loans, which
Stated Principal Balances shall be the Stated Principal Balances of such
Mortgage Loans at the close of business on the immediately preceding
Distribution Date after giving effect to the distributions thereon allocable to
principal (or, in the case of the initial Distribution Date, at the close of
business on the Cut-off Date). With respect to the Class A-7 Certificates and
the initial Distribution Date, the Pass-Through Rate is equal to ______% per
annum.
"Percentage Interest": With respect to any Certificate (other than a Class
A-5, Class A-7 or Class R Certificate), the undivided percentage ownership
interest in the related Class evidenced by such Certificate, which percentage
ownership interest shall be equal to the initial Certificate Principal Balance
thereof divided by the aggregate Initial Certificate Principal Balance of all of
the Certificates of the same Class. With respect to a Class A-5 or Class A-7
Certificate, the undivided percentage ownership interest in the related Class
evidenced by such Certificate, which percentage ownership interest shall be
equal to the initial Notional Amount thereof divided by the aggregate initial
Notional Amount of all of the Certificates of the same Class. With respect to a
Class R Certificate, the interest in distributions to be made with respect to
such Class evidenced thereby, expressed as a percentage, as stated on the face
of each such Certificate.
"Permitted Instruments": Any one or more of the following:
(i)(a) direct obligations of, or obligations fully guaranteed as to
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 (b) direct obligations of, and
obligations guaranteed as to timely payment by FHLMC or FNMA if, at the
time of investment, they are assigned the highest credit rating by the
Rating Agencies;
(ii) repurchase obligations (the collateral for which is held by a
third party or the Trustee) with respect to any security described in
clause (i) above, provided that the short-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by each
Rating Agency in one of its two highest long-term rating categories;
(iii) certificates of deposit, time deposits, demand deposits and
bankers' acceptances of any bank or trust company incorporated under the
laws of the United States or any state thereof or the District of Columbia,
provided that the short-term commercial paper of such bank or trust company
(or, in the case of the principal depository institution in a depository
institution holding company, the long-term unsecured debt obligations of
the depository institution holding company) at the date of acquisition
thereof has been rated by each Rating Agency in its highest short-term
rating;
(iv) commercial paper (having original maturities of not more than
nine months) of any corporation incorporated under the laws of the United
States or any state thereof or the District of Columbia which on the date
of acquisition has been rated by each Rating Agency in its highest short-
term rating;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest rating available; and
12
(vi) if previously confirmed in writing to the Trustee, any other
obligation or security acceptable to each Rating Agency in respect of
mortgage pass-through certificates rated in each Rating Agency's highest
rating category;
provided, that no such instrument shall be a Permitted Instrument if such
instrument evidences either (a) the right to receive interest only payments with
respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument where the
principal and interest payments with respect to such instrument provide a yield
to maturity exceeding 120% of the yield to maturity at par of such underlying
obligation.
"Permitted Transferee": Any transferee of a Class R Certificate other than
a Disqualified Organization or a Non-United States Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Strip Rate": With respect to each Mortgage Loan, the rate per annum
equal to the Net Mortgage Rate thereon minus _____% per annum.
"Prepayment Assumption": A prepayment assumption of _____% of the standard
prepayment assumption, used for determining the accrual of original issue
discount and market discount and premium on the Certificates for federal income
tax purposes. The standard prepayment assumption assumes a constant rate of
prepayment of mortgage loans of 0.2% per annum of the then outstanding principal
balance of such mortgage loans in the first month of the life of the mortgage
loans, increasing by an additional 0.2% per annum in each succeeding month until
the thirtieth month, and a constant 6% per annum rate of prepayment thereafter
for the life of such mortgage loans.
"Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment, a
Principal Prepayment in full, or of a Cash Liquidation or an REO Disposition
during the related Prepayment Period, an amount equal to the amount of interest
that would have accrued at the applicable Net Mortgage Rate (i) in the case of a
Principal Prepayment in full, Cash Liquidation or REO Disposition on the
principal balance of such Mortgage Loan immediately prior to such prepayment (or
liquidation), commencing on the date of prepayment (or liquidation) and ending
on the last day of the month of prepayment or liquidation or (ii) in the case of
a partial Principal Prepayment, on the amount of such prepayment, commencing on
the date as of which the prepayment is applied and ending on the last day of the
month of prepayment.
"Prepayment Period": As to any Distribution Date, the calendar month
preceding the month in which such Distribution Date occurs.
"Primary Hazard Insurance Policy": Each primary hazard insurance policy
required to be maintained pursuant to Section 3.13.
"Primary Mortgage Insurance Policy": Each primary mortgage insurance
policy required to be maintained pursuant to Section 3.13.
"Principal Prepayment": Any payment of principal made by the Mortgagor on
a Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing scheduled interest due
on any date or dates in any month or months subsequent to the month of
prepayment.
13
"Purchase Price": With respect to any Mortgage Loan (or REO Property)
required to be purchased pursuant to Section 2.02 or 2.04, an amount equal to
the sum of (i) 100% of the Stated Principal Balance thereof, (ii) unpaid accrued
interest (or REO Imputed Interest) at the sum of the applicable Net Mortgage
Rate, the rate at which the Trustee's Fee accrues on the Stated Principal
Balance thereof outstanding during each Due Period that such interest was not
paid or advanced, from the date through which interest was last paid by the
Mortgagor or advanced and distributed to Certificateholders together with unpaid
related Servicing Fees from the date through which interest was last paid by the
Mortgagor, in each case to the first day of the month in which such Purchase
Price is to be distributed, plus (iii) the aggregate of all Advances made in
respect thereof that were not previously reimbursed.
"Qualified Insurer": An insurance company duly qualified as such under the
laws of the state of its principal place of business and each state having
jurisdiction over such insurer in connection with the insurance policy issued by
such insurer, duly authorized and licensed in such states to transact business
in such states and to write the insurance provided by the insurance policy
issued by it, approved as an insurer by the Master Servicer, as a FNMA approved
mortgage insurer and having a claims paying ability rating of at least "AA" by
________________ and which is acceptable to _______________. Any replacement
insurer with respect to a Mortgage Loan must have at least as high a claims
paying ability rating by ______________ and _______________ as the insurer it
replaces had on the Closing Date.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by the
Company for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the Trustee,
(i) have an outstanding principal balance, after deduction of the principal
portion of the monthly payment due 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 outstanding principal balance, after such deduction), not in excess of
the Stated Principal Balance of the Deleted Mortgage Loan (the amount of any
shortfall to be deposited by the Master Servicer, in the Custodial Account in
the month of substitution); (ii) have a Mortgage Rate and a Net Mortgage Rate no
lower than and not more than 1% per annum higher than the Mortgage Rate and Net
Mortgage Rate, respectively, of the Deleted Mortgage Loan as of the date of
substitution; (iii) have a remaining term to stated maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (iv)
comply with each representation and warranty set forth in Section 2 of the
Seller's Warranty Certificate; (v) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date; and (vi) be covered under a Primary Insurance
Policy if such Qualified Substitute Mortgage Loan has a Loan-to-Value Ratio in
excess of 80%. In the event that one or more mortgage loans are substituted for
one or more Deleted Mortgage Loans, the amounts described in clause (i) hereof
shall be determined on the basis of aggregate principal balances, the Mortgage
Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Rates, the Net Mortgage Rates described in clause (ii)
hereof shall be satisfied as to each such mortgage loan, the terms described in
clause (iii) shall be determined on the basis of weighted average remaining
terms to maturity, the Loan-to-Value Ratios described in clause (v) hereof shall
be satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (iv) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.
"Rating Agency": [Standard & Poor's] [Moody's] [Fitch] [Duff & Phelps].
If either agency or a successor is no longer in existence, "Rating Agency" shall
be such statistical credit rating agency, or other comparable Person, designated
by the Company, notice of which designation shall be given to the Trustee and
the Master Servicer. References herein to the two highest long term debt rating
categories of a Rating Agency shall mean "AA" or better in the case of [Standard
& Poor's] [Fitch] [Duff & Phelps] and "Aa2" or better in the case of Moody's and
references herein to the highest short-term debt rating of a Rating Agency shall
mean "D-1 " or better in the case of [Duff & Phelps] and "A-1" in the case of
[Standard & Poor's,] and in the case
14
of any other Rating Agency such references shall mean such rating categories
without regard to any plus or minus.
"Realized Loss": With respect to any Mortgage Loan or related REO Property
as to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
as of the date of Cash Liquidation or REO Disposition, plus (ii) interest (and
REO Imputed Interest, if any) at the related Net Mortgage Rate from the Due Date
as to which interest was last paid or advanced to Certificateholders up to the
date of the Cash Liquidation or REO Disposition on the Stated Principal Balance
of such Mortgage Loan outstanding during each Due Period that such interest was
not paid or advanced, minus (iii) the proceeds, if any, received during the
month in which such Cash Liquidation or REO Disposition occurred, to the extent
applied as recoveries of interest at the related Net Mortgage Rate and to
principal of the Mortgage Loan, net of the portion thereof reimbursable to the
Master Servicer or any Sub-Servicer with respect to related Advances not
previously reimbursed. With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation. With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the amount of such Debt Service Reduction.
"Record Date": The last Business Day of the month immediately preceding
the month of the related Distribution Date.
"Regular Certificate": Any of the Certificates other than the Class R
Certificates.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date and
any Mortgage Loan, any reduction in the amount of interest collectible on such
Mortgage Loan for the most recently ended calendar month as a result of the
application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
86OG of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.
"Remittance Report": A report prepared by the Master Servicer providing
the information set forth in Exhibit E attached hereto.
"REO Acquisition": The acquisition by the Master Servicer on behalf of the
Trustee for the benefit of the Certificateholders of any REO Property pursuant
to Section 3.15.
"REO Disposition": The receipt by the Master Servicer of Insurance
Proceeds, Liquidation Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
"REO Imputed Interest": As to any REO Property, for any period, an amount
equivalent to interest (at the Mortgage Rate that would have been applicable to
the related Mortgage Loan had it been outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date of acquisition thereof (as such
balance
15
is reduced by any income from the REO Property treated as a recovery of
principal pursuant to Section 3.15).
"REO Proceeds": Proceeds, net of directly related expenses, received in
respect of any REO Property (including, without limitation, proceeds from the
rental of the related Mortgaged Property and of any REO Disposition), which
proceeds are required to be deposited into the Custodial Account as and when
received.
"REO Property": A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibits F-1 or F-2 attached hereto.
"Required Insurance Policy": With respect to any Mortgage Loan, any
Insurance Policy or any other insurance policy that is required to be maintained
from time to time under this Agreement or pursuant to the provisions of a
Mortgage Loan.
"Residual Certificate": Any of the Class R Certificates.
"Responsible Officer": When used with respect to the Trustee, the Chairman
or Vice Chairman of the Board of Directors or Trustees, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors or
Trustees, the President, the Chairman of the Committee on Trust Matters, any
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Cashier, any assistant
cashier, any trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Seller": [ICI Funding Corporation] and its successors and assigns.
"Seller's Warranty Certificate": The Seller's Warranty Certificate of the
Seller, dated ______ __, 19__, in the form of Exhibit I attached hereto.
"Senior Accelerated Distribution Percentage": With respect to any
Distribution Date, the percentage indicated below:
DISTRIBUTION DATE SENIOR ACCELERATED DISTRIBUTION PERCENTAGE
- --------------------------------------------------------- -------------------------------------------------------
_____________ ______ through _____________ ______ ............ 100%
_____________ ______ through _____________ ______ ............ Senior Percentage, plus 70% of the difference
between 100% and the Senior Percentage
_____________ ______ through _____________ ______ ............ Senior Percentage, plus 60% of the difference
between 100% and the Senior Percentage
_____________ ______ through _____________ ______ ............ Senior Percentage, plus 40% of the difference
between 100% and the Senior Percentage
_____________ ______ through _____________ ______ ............ Senior Percentage, plus 20% of the difference
between 100% and the Senior Percentage
_____________ ______ and thereafter ............................ Senior Percentage
16
provided, however, (i) that any scheduled reduction to the Senior Accelerated
Distribution Percentage described above shall not occur as of any Distribution
Date unless either (a)(1) the outstanding principal balance of Mortgage Loans
delinquent [60] days or more averaged over the last six months, as a percentage
of the aggregate outstanding principal balance of all Mortgage Loans averaged
over the last [six] months, does not exceed [2%] and (2) Realized Losses on the
Mortgage Loans to date for such Distribution Date if occurring during the sixth,
seventh, eighth, ninth or tenth year (or any year thereafter) after the Closing
Date are less than [30%, 35%, 40%, 45% or 50%], respectively, of the Initial
Certificate Principal Balance of the Class B Certificates or (b)(1) the
outstanding principal balance of the Mortgage Loans delinquent [60] days or more
averaged over the last six months, as a percentage of the aggregate outstanding
principal balance of all Mortgage Loans averaged over the last [six] months,
does not exceed [4%] and (2) Realized Losses on the Mortgage Loans to date for
such Distribution Date are less than [10%] of the Initial Certificate Principal
Balance of the Class B Certificates and (ii) that for any Distribution Date on
which the Senior Percentage is greater than the Original Senior Percentage, the
Senior Accelerated Distribution Percentage for such Distribution Date shall be
100%. Notwithstanding the foregoing, upon the reduction of the aggregate
Certificate Principal Balance of the Class A Certificates to zero, the Senior
Accelerated Distribution Percentage shall thereafter be 0%.
"Senior Percentage": As of any Distribution Date, the lesser of 100% and a
fraction, expressed as a percentage, the numerator of which is the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans (or related REO Properties)
immediately prior to such Distribution Date.
"Senior Principal Distribution Amount": As to any Distribution Date, the
lesser of (a) the balance of the Available Distribution Amount remaining after
the distribution of all amounts required to be distributed pursuant to Section
4.02(b)(i) and (b) the sum of the amounts required to be distributed to the
Class A Certificateholders on such Distribution Date pursuant to Section
4.02(b)(ii) and (vi).
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under the second paragraph of Section 3.01 and Section 3.09.
"Servicing Fee": As to each Mortgage Loan, an amount, payable out of any
payment of interest on the Mortgage Loan, equal to interest at the related
Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan for the
calendar month preceding the month in which the payment is due (alternatively,
in the event such payment of interest accompanies a Principal Prepayment in full
made by the Mortgagor, interest for the number of days covered by such payment
of interest).
"Servicing Fee Rate": With respect to each Mortgage Loan, the per annum
rate of ______%.
"Servicing Officer": Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans, whose
name appears on a list of servicing officers furnished to the Trustee by the
Master Servicer, as such list may from time to time be amended.
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"Single Certificate": A Certificate of any Class evidencing the minimum
denomination for Certificates of such Class as set forth in Section 5.01.
"Special Hazard Amount": As of any Distribution Date, an amount equal to
$___________ (the initial "Special Hazard Amount") minus the sum of (i) the
aggregate amount of Special Hazard Losses allocated solely to the Class B
Certificates pursuant to Section 4.04 and (ii) the Adjustment Amount (as defined
below) as most recently calculated. For each anniversary of the Cut-off Date,
the Adjustment Amount shall be calculated and shall be equal to the amount, if
any, by which the amount calculated in accordance with the preceding sentence
(without giving effect to the deduction of the Adjustment Amount for such
anniversary) exceeds the greater of (A) the product of the Special Hazard
Percentage for such anniversary multiplied by the outstanding principal balance
of all of the Mortgage Loans on such anniversary and (B) twice the outstanding
principal balance of the Mortgage Loan which has the largest outstanding
principal balance on such Anniversary.
"Special Hazard Percentage": As of each anniversary of the Cut-off Date,
the greater of (i) 1% and (ii) the largest percentage obtained by dividing the
aggregate outstanding principal balance on such anniversary of the Mortgage
Loans secured by Mortgaged Properties located in a single, five-digit zip code
area in the State of California by the outstanding principal balance of all the
Mortgage Loans on such anniversary.
"[Standard & Poor's": Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. or its successor in interest.]
"Startup Day": The day designated as such pursuant to Article X hereof.
"Stated Principal Balance": With respect to any Mortgage Loan or related
REO Property at any given time, (i) the principal balance of the Mortgage Loan
outstanding as of the Cut-off Date, after application of principal payments due
on or before such date, whether or not received, minus (ii) the sum of (a) the
principal portion of the Monthly Payments due with respect to such Mortgage Loan
or REO Property during each Due Period ending prior to the most recent
Distribution Date which were received or with respect to which an Advance was
made, (b) all Principal Prepayments with respect to such Mortgage Loan or REO
Property, and all Insurance Proceeds, Liquidation Proceeds and net income from a
REO Property to the extent applied by the Master Servicer as recoveries of
principal in accordance with Section 3.15 with respect to such Mortgage Loan or
REO Property, which were distributed pursuant to Section 4.01 on any previous
Distribution Date and (c) any Realized Loss with respect thereto allocated
pursuant to Section 4.04 for any previous Distribution Date.
"Subordinate Principal Distribution Amount": With respect to any
Distribution Date and the Class B Certificates, (a) the sum of (i) the product
of (x) the Class B Percentage and (y) the aggregate of the amounts calculated
for such Distribution Date under clauses (1), (2) and (3) of Section 4. 01
(b)(ii)(A); (ii) the principal collections described in Section 4. 01 (b)(ii)(B)
to the extent such collections are not otherwise distributed to the Senior
Certificates; and (iii) the product of (x) 100% minus the Senior Accelerated
Distribution Percentage and (z) the aggregate of all Principal Prepayments in
Full and Curtailments received in the related Prepayment Period; provided,
however, that such amount shall in no event exceed the outstanding Certificate
Principal Balance of the Class B Certificates immediately prior to such date.
"Sub-Servicer": Any Person with which the Master Servicer has entered into
a Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicer Remittance Date": The 18th day of each month, or if such day
is not a Business Day, the immediately preceding Business Day.
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"Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the Master Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer and a Sub-Servicer and any successor Sub-Servicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02.
"Tax Returns": 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 provisions of federal, state or local tax laws.
"Transfer": Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to which a REMIC election is to be made, consisting of: (i) the Mortgage Loans
(exclusive of payments of principal and interest due on or before the Cut-off
Date, if any) as from time to time are subject to this Agreement and all
payments under and proceeds of the Mortgage Loans, together with all documents
included in the related Mortgage File, subject to Section 2.01; (ii) such funds
or assets as from time to time are deposited in the Custodial Account and the
Certificate Account; (iii) any REO Property; (iv) the Primary Mortgage Insurance
Policies, if any, Primary Hazard Insurance Policies and all other Insurance
Policies with respect to the Mortgage Loans; and (v) the Company's interest in
respect of the representations and warranties made by the Seller in the Seller's
Warranty Certificate as assigned to the Trustee pursuant to Section 2.04 hereof.
"Trustee": [Name of Trustee], or its successor in interest, or any
successor trustee appointed as herein provided.
"Trustee's Fee": As to each Mortgage Loan and as the Distribution Date, an
amount, payable out of any payment of interest on the Mortgage Loan, equal to
interest at ______% per annum on the Stated Principal Balance of such Mortgage
Loan as of the Due Date immediately preceding the month in which such
Distribution Date occurs.
"Uninsured Cause": Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies or flood insurance policies required to be
maintained pursuant to Section 3.13.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includable in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
The term "United States" shall have the meaning set forth in Section 7701 of the
Code or successor provisions.
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"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. ______% of all of the Voting
Rights shall be allocated among Holders of the Certificates, respectively, other
than the Class A-5, Class A-7 and Class R Certificates, in proportion to the
outstanding Certificate Principal Balances of their respective Certificates; and
the Holders of the Class A-5, Class A-7 and Class R Certificates shall be
entitled to ___%, ___% and ___% of all of the Voting Rights, respectively,
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
The Company, as of the Closing Date, and concurrently with the execution
and delivery hereof, does hereby assign, transfer, sell, set over and otherwise
convey to the Trustee without recourse all the right, title and interest of the
Company in and to the Mortgage Loans identified on the Mortgage Loan Schedule
and all other assets included or to be included in the Trust Fund for the
benefit of the Certificateholders. Such assignment includes all principal and
interest received by the Master Servicer on or with respect to the Mortgage
Loans (other than payment of principal and interest due on or before the Cut-off
Date).
In connection with such transfer and assignment, the Company has requested
the Seller to deliver to, and deposit with the Trustee, the following documents
or instruments:
(i) the original Mortgage Note, endorsed by the Seller "Pay to
the order of [Name of Trustee], as trustee without recourse" or to "Pay to
the order of [Name of Trustee], as trustee for holders of ICIFC Secured
Assets Corp., Mortgage PassThrough Certificates, Series 199_-_, without
recourse" with all intervening endorsements showing a complete chain of
endorsements from the originator to the Person endorsing it to the Trustee;
(ii) the original recorded Mortgage or, if the original Mortgage
has not been returned from the applicable public recording office, a copy
of the Mortgage certified by the Seller to be a true and complete copy of
the original Mortgage submitted to the title insurance company for
recording;
(iii) a duly executed original Assignment of the Mortgage endorsed
by the Seller, without recourse, to "[Name of Trustee], as trustee" or to
"[Name of Trustee], as trustee for holders of ICIFC Secured Assets Corp.,
Mortgage Pass-Through Certificates, Series 199_-_", with evidence of
recording thereon;
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator thereof
to the Person assigning it to the Trustee or, if any such Assignment has
not been returned from the applicable public recording office, a copy of
such Assignment certified by the Seller to be a true and complete copy of
the original Assignment submitted to the title insurance company for
recording;
(v) the original lender's title insurance policy, or, if such
policy has not been issued, any one of an original or a copy of the
preliminary title report, title binder or title commitment on the Mortgaged
Property with the original policy of the insurance to be delivered promptly
following the receipt thereof;
(vi) the original of any assumption, modification, extension or
guaranty agreement;
(vii) the original or a copy of the private mortgage insurance
policy or original certificate of private mortgage insurance, if
applicable; and
(viii) if any of the documents or instruments referred to above
were executed on behalf of the Mortgagor by another Person, the original
power of attorney or other instrument that
21
authorized and empowered such Person to sign, or a copy thereof certified
by the Seller (or by an officer of the applicable title insurance or escrow
company) to be a true and correct copy of the original.
The Seller is obligated pursuant to the Seller's Warranty Certificate to
deliver to the Trustee: (a) either the original recorded Mortgage, or in the
event such original cannot be delivered by the Seller, a copy of such Mortgage
certified as true and complete by the appropriate recording office, in those
instances where a copy thereof certified by the Seller was delivered to the
Trustee pursuant to clause (ii) above; and (b) either the original Assignment or
Assignments of the Mortgage, with evidence of recording thereon, showing a
complete chain of assignment from the originator to the Seller, or in the event
such original cannot be delivered by the Seller, a copy of such Assignment or
Assignments certified as true and complete by the appropriate recording office,
in those instances where copies thereof certified by the Seller were delivered
to the Trustee pursuant to clause (iv) above. Notwithstanding anything to the
contrary contained in this Section 2.01, in those instances where the public
recording office retains the original Mortgage after it has been recorded, the
Seller shall be deemed to have satisfied its obligations hereunder upon delivery
to the Trustee of a copy of such Mortgage certified by the public recording
office to be a true and complete copy of the recorded original thereof.
If any Assignment is lost or returned unrecorded to the Trustee because of
any defect therein, the Seller is required to prepare a substitute Assignment or
cure such defect, as the case may be, and the Trustee shall cause such
Assignment to be recorded in accordance with this paragraph.
The Seller is required, as described in the Seller's Warranty Certificate,
to deliver to the Trustee the original of any documents assigned to the Trustee
pursuant to this Section 2.01 not later than 120 days after the Closing Date.
All original documents relating to the Mortgage Loans which are not
delivered to the Trustee, to the extent delivered by the Seller to the Master
Servicer, are and shall be held by the Master Servicer in trust for the benefit
of the Trustee on behalf of the Certificateholders.
Except as may otherwise expressly be provided herein, neither the Company,
the Master Servicer nor the Trustee shall (and the Master Servicer shall ensure
that no Sub-Servicer shall) assign, sell, dispose of or transfer any interest in
the Trust Fund or any portion thereof, or permit the Trust Fund or any portion
thereof to be subject to any lien, claim, mortgage, security interest, pledge or
other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage Loans by the Company to
the Trustee as provided in this Section be, and be construed as, a sale of the
Mortgage Loans by the Company 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 by the Company to the Trustee to secure a debt or
other obligation of the Company. However, in the event that the Mortgage Loans
are held to be property of the Company, or if for any reason this Agreement is
held or deemed to create a security interest in the Mortgage Loans, 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 Uniform
Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to
be (1) a grant by the Company to the Trustee of a security interest in all of
the Company'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 amounts from time to time held or
22
invested in the Certificate Account or the Custodial Account, whether in the
form of cash, instruments, securities or other property and (2) an assignment by
the Company 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) through (C) granted by [ICI Funding
Corporation] to the Company pursuant to the Assignment 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 Uniform Commercial
Code and the Uniform Commercial Code 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 Company and the
Trustee shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Mortgage Loans, 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. Acceptance of the Trust Fund by the Trustee.
The Trustee acknowledges receipt (subject to any exceptions noted in the
Initial Certification described below) of the documents referred to in Section
2.01 above and all other assets included in the Trust Fund and declares that it
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets included in the Trust Fund (to the extent delivered or assigned to the
Trustee), in trust for the exclusive use and benefit of all present and future
Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to review
each Mortgage File on or before the Closing Date to ascertain that all documents
required to be delivered to it are in its possession, and the Trustee agrees to
execute and deliver to the Company and the Master Servicer on the Closing Date
an Initial Certification in the form annexed hereto as Exhibit C 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 this Agreement with respect to such
Mortgage Loan are in its possession, (ii) such documents have been reviewed by
it and appear regular on their face and relate to such Mortgage Loan and (iii)
based on its examination and only as to the foregoing documents, the information
set forth in items (i) - (vi) and (xiii) of the definition of the "Mortgage Loan
Schedule" accurately reflects information set forth in the Mortgage File.
Neither the Trustee nor the Master Servicer shall be under any duty to determine
whether any Mortgage File should include any of the documents specified in
clause (vi) of Section 2.01. Neither the Trustee nor the Master Servicer shall
be under any duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face.
Within 90 days of the Closing Date the Trustee shall deliver to the Company
and the Master Servicer a Final Certification in the form annexed hereto as
Exhibit D evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
23
If in the process of reviewing the Mortgage Files and preparing the
certifications referred to above the Trustee finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, the Trustee shall promptly notify the Seller, the Master
Servicer and the Company. The Trustee shall promptly notify the Seller of such
defect and request that the Seller cure any such defect within 60 days from the
date on which the Seller was notified of such defect, and if the Seller does not
cure such defect in all material respects during such period, request that the
Seller purchase such Mortgage Loan from the Trust Fund on behalf of the
Certificateholders at the Purchase Price within 90 days after the date on which
the Seller was notified of such defect. It is understood and agreed that the
obligation of the Seller to cure a material defect in, or purchase any Mortgage
Loan as to which a material defect in a constituent document exists shall
constitute the sole remedy respecting such defect available to
Certificateholders or the Trustee on behalf of Certificateholders. The Purchase
Price for the purchased Mortgage Loan shall be deposited or caused to be
deposited upon receipt by the Master Servicer in the Custodial Account and, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall release or cause to be released to the
Seller the related Mortgage File and shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, as the Seller shall
require as necessary to vest in the Seller ownership of any Mortgage Loan
released pursuant hereto and at such time the Trustee shall have no further
responsibility with respect to the related Mortgage File.
SECTION 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Company.
(a) The Master Servicer hereby represents and warrants to and covenants
with the Company and the Trustee for the benefit of Certificateholders that:
(i) The Master Servicer is, and throughout the term hereof shall
remain, a duly organized, validly existing and in good standing under the
laws of the State of (except as otherwise permitted pursuant to Section
6.02), the Master Servicer is, and shall remain, in compliance with the
laws of each state in which any Mortgaged Property is located to the extent
necessary to perform its obligations under this Agreement, and the Master
Servicer is, and shall remain, approved to sell mortgage loans to and
service mortgage loans for FNMA and FHLMC;
(ii) The execution and delivery of this Agreement by the Master
Servicer, and the performance and compliance with the terms of this
Agreement by the Master Servicer, will not violate the Master Servicer's
articles of incorporation or bylaws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material agreement or other
instrument to which it is a party or which is applicable to it or any of
its assets;
(iii) The Master Servicer has the full power and authority to
enter into and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement;
(iv) This Agreement, assuming due authorization, execution and
delivery by the Company and the Trustee, constitutes a valid, legal and
binding obligation of the Master Servicer, enforceable against the Master
Servicer in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(v) The Master Servicer is not in violation of, and its
execution and delivery of this
24
Agreement and its performance and compliance with the terms of this
Agreement will not constitute a violation of, any law, any order or decree
of any court or arbiter, or any order, regulation or demand of any federal,
state or local governmental or regulatory authority, which violation is
likely to affect materially and adversely either the ability of the Master
Servicer to perform its obligations under this Agreement or the financial
condition of the Master Servicer;
(vi) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement or is likely to affect materially and adversely either
the ability of the Master Servicer to perform its obligations under this
Agreement or the financial condition of the Master Servicer;
(vii) The Master Servicer will comply in all material respects in
the performance of this Agreement and with all reasonable rules and
requirements of each insurer under each Insurance Instrument;
(viii) The execution of this Agreement and the performance of the
Master Servicer's obligations hereunder do not require any license, consent
or approval of any state or federal court, agency, regulatory authority or
other governmental body having jurisdiction over the Master Servicer, other
than such as have been obtained; and
(ix) No information, certificate of an officer, statement
furnished in writing or report delivered to the Company, any affiliate of
the Company or the Trustee by the Master Servicer will, to the knowledge of
the Master Servicer, contain any untrue statement of a material fact or
omit a material fact necessary to make the information, certificate,
statement or report not misleading; and
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Company, the
Trustee and the Certificateholders. Upon discovery by the Company, the Trustee
or the Master Servicer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the interests of
the Company or the Trustee, the party discovering such breach shall give prompt
written notice to the other parties.
(b) The Company hereby represents and warrants to the Master Servicer and
the Trustee for the benefit of Certificateholders that as of the Closing Date
(or, if otherwise specified below, as of the date so specified):
(i) Immediately prior to the assignment of the Mortgage Loans to
the Trustee, the Company had good title to, and was the sole owner of, each
Mortgage Loan free and clear of any pledge, lien, encumbrance or security
interest (other than rights to servicing and related compensation) and such
assignment validly transfers ownership of the Mortgage Loans to the Trustee
free and clear of any pledge, lien, encumbrance or security interest;
(ii) No Mortgage Loan is one month or more delinquent in payment
of principal and interest as of the Cut-off Date and no Mortgage Loan has
been so delinquent more than once in the 12-month period prior to the Cut-
off Date;
(iii) The information set forth in the Mortgage Loan Schedule with
respect to each Mortgage Loan or the Mortgage Loans, as the case may be, is
true and correct in all material respects at the date or dates respecting
which such information is furnished;
25
(iv) The Mortgage Loans are fully-amortizing, fixed-rate mortgage
loans with level Monthly Payments due on the first day of each month and
terms to maturity at origination or modification of not more than 30 years;
(v) Each Mortgage Loan secured by a Mortgaged Property with a
Loan-to-Value Ratio at origination in excess of 80% is the subject of a
Primary Mortgage Insurance Policy that insures that portion of the
principal balance thereof that exceeds the amount equal to 75% of the
appraised value of the related Mortgaged Property. Each such Primary
Mortgage Insurance Policy is in full force and effect and the Trustee is
entitled to the benefits thereunder; and
(vi) The representations and warranties of the Seller with
respect to the Mortgage Loans and the remedies therefor are as set forth in
the Seller's Warranty Certificate.
[Other representations and warranties as applicable.]
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(b) shall survive delivery of the respective Mortgage Files to
the Trustee.
Upon discovery by either the Company, the Master Servicer or the Trustee of
a breach of any representation or warranty set forth in this Section 2.03 which
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties.
SECTION 2.04. Representations and Warranties of the Seller; Repurchase
and Substitution.
The Company hereby assigns to the Trustee for the benefit of
Certificateholders its interest in respect of the representations and warranties
made by the Seller in the Seller's Warranty Certificate or the exhibits thereto.
Insofar as the Seller's Warranty Certificate relates to such representations and
warranties and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced
by the Trustee on behalf of the Certificateholders. Upon the discovery by the
Company, the Master Servicer or the Trustee of a breach of any of the
representations and warranties made in the Seller's Warranty Certificate in
respect of any Mortgage Loan which materially and adversely affects the
interests of the Certificateholders in such Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties. The Trustee
shall promptly notify the Seller of such breach and request that such Seller
shall, within 90 days from the date that the Company, the Seller or the Trustee
was notified of such breach, either (i) cure such breach in all material
respects or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02; provided that in the case of
such breach, the Seller shall have the option to substitute a Qualified
Substitute Mortgage Loan or Loans for such Mortgage Loan if such substitution
occurs within two years following the Closing Date. Any such substitution must
occur within 90 days from the date the Seller was notified of the breach if such
90 day period expires before two years following the Closing Date. In the event
that the Seller elects to substitute a Qualified Substitute Mortgage Loan or
Loans for a Deleted Mortgage Loan pursuant to this Section 2.04, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders with
respect to such Qualified Substitute Mortgage Loan or Loans, the original
Mortgage Note, the Mortgage, an Assignment of the Mortgage in recordable form,
and such other documents and agreements as are required by Section 2.01, with
the Mortgage Note endorsed as required by Section 2.01. No substitution will be
made in any calendar month after the Determination Date for such month. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution shall not be part of the Trust Fund and will be retained by the
Master Servicer and remitted by the Master Servicer to the Seller on the next
succeeding Distribution Date.
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For the month of substitution, distributions to Certificateholders will include
the Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter
the Seller shall be entitled to retain all amounts received in respect of such
Deleted Mortgage Loan. The Company shall amend or cause to be amended the
Mortgage Loan Schedule for the benefit of the Certificateholders to reflect the
removal of such Deleted Mortgage Loan and the substitution of the Qualified
Substitute Mortgage Loan or Loans and the Company shall deliver the amended
Mortgage Loan Schedule, to the Trustee. Upon such substitution, the Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, the Seller shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute Mortgage
Loan contained in the Seller's Warranty Certificate as of the date of
substitution, and the Company shall be deemed to have made with respect to any
Qualified Substitute Mortgage Loan or Loans, as of the date of substitution, the
representations and warranties set forth in Section 2.03 hereof, and the Seller
shall be obligated to repurchase or substitute for any Qualified Substitute
Mortgage Loan as to which a repurchase or substitution obligation has occurred
pursuant to Section 3 of the Seller's Warranty Certificate.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Qualified Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Stated Principal Balance of all such Deleted Mortgage Loans
(in each case after application of the principal portion of the Monthly Payments
due in the month of substitution that are to be distributed to
Certificateholders in the month of substitution). The Seller shall provide the
Master Servicer on the day of substitution for immediate deposit in to the
Custodial Account the amount of such shortfall, without any reimbursement
therefor. The Seller shall give notice in writing to the Trustee of such event,
which notice shall be accompanied by an Officers' Certificate as to the
calculation of such shortfall and by an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 86OF(a)(1) of the Code or on "contributions after
the startup date" under Section 86OG(d)(1) of the Code or (b) any portion of the
Trust Fund to fail to qualify as a REMIC at any time that any Certificate is
outstanding. The costs of any substitution as described above, including any
related assignments, opinions or other documentation in connection therewith
shall be borne by the Seller.
Except as expressly set forth herein neither the Trustee nor the Master
Servicer is under any obligation to discover any breach of the above mentioned
representations and warranties. It is understood and agreed that the obligation
of the Seller to cure such breach or to so purchase or substitute for any
Mortgage Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholders. In addition,
if the first scheduled Monthly Payment is due during the first month after its
closing date (as such term is used in the Seller's Warranties Certificate) and
such Monthly Payment is not received by the Master Servicer within 30 days of
the due date in accordance with the terms of the related Mortgage Note, the
Master Servicer shall promptly notify the Seller and the Trustee and the Seller
shall purchase such Mortgage Loan from the Trust Fund at the Purchase Price or
substitute a Qualified Substitute Mortgage Loan therefor within 15 days from the
date that the Seller was notified.
SECTION 2.05. Issuance of Certificates Evidencing Interests in the Trust
Fund.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery of the Mortgage Files to it together with the assignment to it of all
other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such delivery and in exchange therefor, the
Trustee,
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pursuant to the written request of the Company executed by an officer of the
Company, has executed and caused to be authenticated, and delivered to or upon
the order of the Company, the Certificates in authorized denominations which
evidence ownership of the entire Trust Fund.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans for the
benefit of the Certificateholders, in accordance with this Agreement and the
customary and usual standards of practice of prudent institutional mortgage
lenders servicing comparable mortgage loans for their own account in the
respective states in which the Mortgaged Properties are located. Subject to the
foregoing, the Master Servicer shall have full power and authority, acting alone
and/or through Sub-Servicers as provided in Section 3.02, to do or cause to be
done any and all things in connection with such servicing and administration
that it may deem necessary or desirable. Without limiting the generality of the
foregoing, the Master Servicer in its own name or in the name of a Sub-Servicer
is hereby authorized and empowered by the Trustee when the Master Servicer
believes it appropriate in its best judgment, to (i) execute and deliver, on
behalf of the Certificateholders and the Trustee or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Mortgage
Loans and the Mortgaged Properties, (ii) institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and (iii) hold or cause to be held title to such properties, on
behalf of the Trustee and Certificateholders. The Master Servicer shall service
and administer the Mortgage Loans in accordance with applicable state and
federal law and shall provide to the Mortgagors any reports required to be
provided to them thereby. Subject to Section 3.16, the Trustee shall furnish to
the Master Servicer and any Sub-Servicer any powers of attorney and other
documents necessary or appropriate to enable the Master Servicer and any Sub-
Servicer to carry out their servicing and administrative duties hereunder. The
Trustee shall not be responsible for any action taken by the Master Servicer or
any Sub-Servicer pursuant to the application of such powers of attorney.
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. No costs incurred by the Master Servicer or by Sub-
Servicers in effecting the payment of taxes and assessments on the Mortgaged
Properties shall, for the purpose of calculating distributions to
Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
The Master Servicer shall not (unless the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the Master
Servicer, reasonably foreseeable) make or permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both (i) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
final, temporary or proposed Treasury regulations promulgated thereunder) and
(ii) cause the Trust Fund 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.
The Master Servicer may approve a request for a partial release of the
Mortgaged Property, easement, consent to alteration or demolition and other
similar matters if it has determined, exercising its good faith business
judgement in the same manner as it would if it were the owner of the related
Mortgage Loan, that
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such approval will not adversely affect the security for, or the timely and full
collectability of, the related Mortgage Loan. Any fee collected by the Master
Servicer for processing such request will be retained by the Master Servicer as
additional servicing compensation.
The relationship of the Master Servicer (and of any successor to the Master
Servicer under this Agreement) to the Trustee under this Agreement is intended
by the parties to be that of an independent contractor and not that of a joint
venturer, partner or agent.
SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and Sub-
Servicers.
(a) The Master Servicer may enter into Sub-Servicing Agreements with Sub-
Servicers for the servicing and administration of the Mortgage Loans and for the
performance of any and all other activities of the Master Servicer hereunder.
Each Sub-Servicer shall be either (i) an institution the accounts of which are
insured by the FDIC or (ii) another entity that engages in the business of
originating or servicing mortgage loans, and in either case shall be authorized
to transact business in the state or states in which the related Mortgaged
Properties it is to service are situated, if and to the extent required by
applicable law to enable the SubServicer to perform its obligations hereunder
and under the Sub-Servicing Agreement, and in either case shall be a FHLMC or
FNMA approved mortgage servicer. Each Sub-Servicing Agreement must impose on
the Sub-Servicer requirements conforming to the provisions set forth in Section
3.08 and provide for servicing of the Mortgage Loans consistent with the terms
of this Agreement. With the consent of the Trustee, which consent shall not be
unreasonably withheld, the Master Servicer and the Sub-Servicers may enter into
Sub-Servicing Agreements and make amendments to the Sub-Servicing Agreements or
enter into different forms of Sub-Servicing Agreements; provided, however, that
any such amendments or different forms shall be consistent with and not violate
the provisions of this Agreement.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each SubServicer under the related Sub-Servicing Agreement,
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Sub-Servicing Agreement, or to purchase a
Mortgage Loan on account of defective documentation or on account of a breach of
a representation or warranty, as described in Section 2.02. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Sub-Servicing Agreements and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, but shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement only to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loans or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such Sub-
Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02.
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SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a SubServicer or reference to actions taken through a Sub-Servicer or otherwise,
the Master Servicer shall remain obligated and primarily liable to the Trustee
and Certificateholders for the servicing and administering of the Mortgage Loans
in accordance with the provisions of Section 3.01 without diminution of such
obligation or liability by virtue of such Sub-Servicing Agreements or
arrangements or by virtue of indemnification from the Sub-Servicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on
Mortgage Loans when the Sub-Servicer has received such payments. The Master
Servicer shall be entitled to enter into any agreement with a Sub Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Sub-Servicer in its
capacity as such and not as an originator shall be deemed to be between the Sub-
Servicer and the Master Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06.
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of an Event of Default), the Trustee or its
designee shall thereupon assume all of the rights and obligations of the Master
Servicer under each Sub-Servicing Agreement that the Master Servicer may have
entered into, unless the Trustee is then permitted and elects to terminate any
Sub-Servicing Agreement in accordance with its terms. The Trustee, its designee
or the successor servicer for the Trustee shall be deemed to have assumed all of
the Master Servicer's interest therein and to have replaced the Master Servicer
as a party to each Sub-Servicing Agreement to the same extent as if the Sub-
Servicing Agreements had been assigned to the assuming party, except that the
Master Servicer shall not thereby be relieved of any liability or obligations
under the Sub-Servicing Agreements, and the Master Servicer shall continue to be
entitled to any rights or benefits which arose prior to its termination as
master servicer.
The Master Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each Sub-
Servicing Agreement and the Mortgage Loans then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Master 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 related Insurance Policy, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. The Master Servicer shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Hazard Insurance
Policy, Primary
31
Mortgage Insurance Policy or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that it is prohibited by applicable law from enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required.
Consistent with the foregoing, the Master Servicer may in its discretion waive
any prepayment fees, late payment charge or other charge, except as otherwise
required under applicable law. The Master Servicer shall be responsible for
preparing and distributing all information statements relating to payments on
the Mortgage Loans, in accordance with all applicable federal and state tax laws
and regulations.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant
to a Sub-Servicing Agreement, the Sub-Servicer will be required to establish and
maintain one or more accounts (collectively, the "Sub-Servicing Account"). The
Sub-Servicing Account shall be an Eligible Account and shall otherwise be
acceptable to the Master Servicer. All amounts held in a Sub-Servicing Account
shall be held in trust for the Trustee for the benefit of the
Certificateholders. The Sub-Servicer will be required to deposit into the Sub-
Servicing Account no later than the first Business Day after receipt all
proceeds of Mortgage Loans received by the Sub-Servicer, less its servicing
compensation and any unreimbursed expenses and advances, to the extent permitted
by the Sub-Servicing Agreement. On each Sub-Servicer Remittance Date the Sub-
Servicer will be required to remit to the Master Servicer for deposit into the
Custodial Account all funds held in the Sub-Servicing Account with respect to
any Mortgage Loan as of the Sub-Servicer Remittance Date, after deducting from
such remittance an amount equal to the servicing compensation and unreimbursed
expenses and advances to which it is then entitled pursuant to the related Sub-
Servicing Agreement, to the extent not previously paid to or retained by it. In
addition, on each Sub-Servicer Remittance Date the Sub-Servicer will be required
to remit to the Master Servicer any amounts required to be advanced pursuant to
the related SubServicing Agreement. The Sub-Servicer will also be required to
remit to the Master Servicer, within one Business Day of receipt, the proceeds
of any Principal Prepayment made by the Mortgagor and any Insurance Proceeds or
Liquidation Proceeds.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Master Servicer and the Sub-Servicers shall establish and maintain one
or more accounts (the "Servicing Accounts"), and shall deposit and retain
therein all collections from the Mortgagors (or related advances from Sub-
Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy premiums, and comparable items for the account of the Mortgagors, to the
extent that the Master Servicer customarily escrows for such amounts.
Withdrawals of amounts so collected from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, Primary Hazard Insurance Policy
premiums and comparable items; (ii) reimburse the Master Servicer (or a Sub-
Servicer to the extent provided in the related Sub-Servicing Agreement) out of
related collections for any payments made pursuant to Sections 3.01 (with
respect to taxes and assessments) and 3.13 (with respect to Primary Hazard
Insurance Policies); (iii) refund to Mortgagors any sums as may be determined to
be overages; or (iv) clear and terminate the Servicing Account at the
termination of this Agreement pursuant to Section 9.01. As part of its servicing
duties, the Master Servicer or Sub-Servicers shall, if and to the extent
required by law, pay to the Mortgagors interest on funds in Servicing Accounts
from its or their own funds, without any reimbursement therefor.
SECTION 3.10. Custodial Account.
(a) The Master Servicer shall establish and maintain one or more accounts
(collectively, the "Custodial Account") in which the Master Servicer shall
deposit or cause to be deposited no later than the first Business Day after
receipt or as and when received from the Sub-Servicers, the following payments
and collections received or made by or on behalf of it subsequent to the Cut-off
Date, or received by it prior to
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the Cut-off Date but allocable to a period subsequent thereto (other than in
respect of principal and interest on the Mortgage Loans due on or before the
Cut-off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
not including any portion thereof representing interest on account of the
related Servicing Fee Rate;
(iii) all Insurance Proceeds, other than proceeds that represent
reimbursement of costs and expenses incurred by the Master Servicer in
connection with presenting claims under the related Insurance Policies,
Liquidation Proceeds and REO Proceeds;
(iv) all proceeds of any Mortgage Loan or REO Property
repurchased or purchased in accordance with Sections 2.02, 2.04 or 9.01 and
all amounts required to be deposited in connection with the substitution of
a Qualified Substitute Mortgage Loan pursuant to Section 2.04;
(v) any amounts required to be deposited in the Custodial
Account pursuant to Section 3.12, 3.13 or 3.22; and
(vi) all amounts transferred from the Certificate Account to the
Custodial Account in accordance with Sections 4.01(b).
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive. In the event the Master Servicer shall deposit in the Custodial
Account any amount not required to be deposited therein, it may withdraw such
amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account shall be maintained as a segregated
account, separate and apart from trust funds created for mortgage pass-through
certificates of other series, and the other accounts of the Master Servicer.
(b) Funds in the Custodial Account may be invested in Permitted
Instruments in accordance with the provisions set forth in Section 3.12. The
Master Servicer shall give notice to the Trustee and the Company of the location
of the Custodial Account after any change thereof.
(c) Payments in the nature of late payment charges, prepayment fees,
assumption fees and reconveyance fees received on the Mortgage Loans shall not
be deposited in the Custodial Account, but rather shall be received and held by
the Master Servicer as additional servicing compensation.
SECTION 3.11. Permitted Withdrawals From the Custodial Account.
The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section 3. 10 that are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the Certificate Account in the amounts and
in the manner provided for in Section 4.01, such deposit to include interest
collections on the Mortgage Loans at the Net Mortgage Rate [and net of amounts
reimbursed therefrom];
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(ii) to pay to itself, the Company, the Seller or any other appropriate
person, as the case may be, with respect to each Mortgage Loan that has
previously been purchased, repurchased or replaced pursuant to Sections 2.02,
2.04 or 9.01 all amounts received thereon and not yet distributed as of the date
of purchase, repurchase or substitution;
(iii) to reimburse itself or any Sub-Servicer for Advances not previously
reimbursed, the Master Servicer's or any Sub-Servicer's right to reimbursement
pursuant to this clause (iii) being limited to amounts received which represent
Late Collections (net of the related Servicing Fees) of Monthly Payments on
Mortgage Loans with respect to which such Advances were made and as further
provided in Section 3.15;
(iv) to reimburse or pay itself, the Trustee or the Company for expenses
incurred by or reimbursable to the Master Servicer, the Trustee or the Company
pursuant to Sections 3.22, 6.03, 8.05, 10.01(c) or 10.01(g), except as otherwise
provided in such Sections;
(v) to reimburse itself or any Sub-Servicer for costs and expenses
incurred by or reimbursable to it relating to the prosecution of any claims
pursuant to Section 3.13 that are in excess of the amounts so recovered;
(vi) to reimburse itself or any Sub-Servicer for unpaid Servicing Fees
and unreimbursed Servicing Advances, the Master Servicer's or any Sub-Servicer's
right to reimbursement pursuant to this clause (vi) with respect to any Mortgage
Loan being limited to late recoveries of the payments for which such advances
were made pursuant to Section 3.01 or Section 3.09 and any other related Late
Collections;
(vii) to pay itself as servicing compensation (in addition to the
Servicing Fee), on or after each Distribution Date, any interest or investment
income earned on funds deposited in the Custodial Account for the period ending
on such Distribution Date, subject to Section 8.05;
(viii) to reimburse itself or any Sub-Servicer for any Advance previously
made which itself has determined to be a Nonrecoverable Advance, provided that
either (a) such Advance was made with respect to a delinquency that ultimately
constituted an Excess Special Hazard Loss, Excess Fraud Loss, Excess Bankruptcy
Loss or Extraordinary Loss, or (b) the Certificate Principal Balances of the
Class B Certificates have been reduced to zero; and
(ix) to clear and terminate the Custodial Account at the termination of
this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting records on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to such clauses (ii), (iii),
(iv), (v), (vi), (vii) and (viii).
In connection with clause (viii) above, the Trustee shall notify the Master
Servicer if and when the Certificate Principal Balances of the Class B
Certificates have been reduced to zero.
SECTION 3.12. Permitted Instruments.
Any institution maintaining the Custodial Account shall at the direction of
the Master Servicer invest the funds in such account in Permitted Instruments,
each of which shall mature not later than the Business Day immediately preceding
the Distribution Date next following the date of such investment (except that if
such Permitted Instrument is an obligation of the institution that maintains
such account, then such Permitted Instrument shall mature not later than such
Distribution Date) and shall not be sold or disposed of prior to
its maturity. All income and gain realized from any such investment as well as
any interest earned on deposits in the Custodial Account shall be for the
benefit of the Master Servicer. The Master Servicer shall deposit in the
Custodial Account (with respect to investments made hereunder of funds held
therein) an amount equal to the amount of any loss incurred in respect of any
such investment immediately upon realization of such loss without right of
reimbursement.
SECTION 3.13. Maintenance of Primary Mortgage Insurance and Primary Hazard
Insurance.
(a) The Master Servicer shall not take, or permit any Sub-servicer to
take, any action which would result in non-coverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the Master
Servicer or Sub-servicer, would have been covered thereunder. To the extent
coverage is available, the Master Servicer shall keep or cause to be kept in
full force and effect each such Primary Mortgage Insurance Policy until the
principal balance of the related Mortgage Loan secured by a Mortgaged Property
is reduced to 75% or less of the Collateral Value in the case of such a Mortgage
Loan having a Loan-to- Value Ratio at origination in excess of 80%. The Master
Servicer shall not cancel or refuse to renew any such Primary Mortgage Insurance
Policy, or consent to any Sub-servicer canceling or refusing to renew any such
Primary Mortgage Insurance Policy applicable to a Mortgage Loan subserviced by
it, that is in effect at the date of the initial issuance of the Certificates
and is required to be kept in force hereunder unless the replacement Primary
Mortgage Insurance Policy for such canceled or non-renewed policy is maintained
with a Qualified Insurer.
(b) In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present or to cause the related
Sub-servicer to present, on behalf of the Master Servicer, the Sub-servicer, if
any, the Trustee and Certificateholders, claims to the insurer under any Primary
Mortgage Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken such reasonable
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.
10, any Insurance Proceeds collected by or remitted to the Master Servicer under
any Primary Mortgage Insurance Policies shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.11.
(c) The Master Servicer shall cause to be maintained for each Mortgage
Loan primary hazard insurance with extended coverage on the related Mortgaged
Property in an amount equal to the lesser of 100% of the replacement value of
the improvements, as determined by the insurance company, on such Mortgaged
Property or the unpaid principal balance of the Mortgage Loan. The Master
Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Pursuant to Section 3.10, any amounts collected by the
Master Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.11. Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the purpose
of calculating monthly distributions to Certificateholders, be added to the
amount owing under the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage Loan other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. When the improvements securing a Mortgage
Loan are located at the time of origination of such Mortgage Loan in a federally
designated special flood hazard area, the Master Servicer shall cause flood
insurance (to the extent available) to be maintained in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the replacement
value of the improvements, which are part of such Mortgaged Property on a
replacement cost basis 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).
In the event that the Master Servicer shall obtain and maintain a blanket
fire insurance policy with extended coverage 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 this Section 3.13, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged Property a policy complying with the
first two sentences of this Section 3.13 and there shall have been a loss which
would have been covered by such policy, deposit in the Certificate Account the
amount not otherwise payable under the blanket policy because of such deductible
clause. Any such deposit by the Master Servicer shall be made on the
Certificate Account Deposit Date next preceding the Distribution Date which
occurs in the month following the month in which payments under any such policy
would have been deposited in the Custodial Account. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Master
Servicer agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy.
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
The Master Servicer will, to the extent it has knowledge of any conveyance
or prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note or the Mortgage),
exercise or cause to be exercised its rights to accelerate the maturity of such
Mortgage Loan under any "due-on-sale" clause applicable thereto; provided,
however, that the Master Servicer shall not exercise any such rights if it
reasonably believes that it is prohibited by law from doing so or if such
enforcement will adversely affect or jeopardize required coverage under the
Insurance Instruments. If the Master Servicer is unable to enforce such "due-
on-sale" clause (as provided in the previous sentence) or if no "due-on-sale"
clause is applicable, the Master Servicer or the Sub-Servicer will enter into an
assumption and modification agreement with the Person to whom such property has
been conveyed or is proposed to be conveyed, pursuant to which such Person
becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon; provided, however,
that the Master Servicer shall not enter into any assumption and modification
agreement if the coverage provided under the Primary Insurance Policy, if any,
would be impaired by doing so. The Master Servicer is also 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 the Mortgagor and becomes liable under the Mortgage Note, if the Master
Servicer shall have determined in good faith that such substitution will not
adversely affect the collectability of the Mortgage Loan. Any fee collected by
or on behalf of the Master Servicer for entering into an assumption or
substitution of liability agreement will be retained by or on behalf of the
Master Servicer as additional servicing compensation. In connection with any
such assumption, no material term of the Mortgage Note (including but not
limited to the Mortgage Rate, the amount of the Monthly Payment and any other
term affecting the amount or timing of payment on the Mortgage Loan) may be
changed. The Master Servicer shall not enter into any substitution or
assumption if such substitution or assumption would constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or final, temporary or proposed Treasury regulations promulgated
thereunder) and cause the Trust Fund to fail to qualify as a REMIC under the
Code or the imposition of any tax on "prohibited transactions" or
"contributions" after the Startup Day under the REMIC Provisions. The Master
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original copy of
such substitution or assumption agreement, which copy shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption that the Master Servicer
may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 3.14, the term "assumption" is deemed to also include a
sale of a Mortgaged Property that is not accompanied by an assumption or
substitution of liability agreement.
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall exercise reasonable efforts, consistent with the
procedures that the Master Servicer would use in servicing loans for its own
account, to foreclose upon or otherwise comparably convert (which may include an
REO Acquisition) the ownership of properties securing such of the Mortgage Loans
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07, and which are not released from the Trust Fund pursuant to any
other provision hereof. The Master Servicer shall use reasonable efforts to
realize upon such defaulted Mortgage Loans in such manner as will maximize the
receipt of principal and interest by Certificateholders, taking into account,
among other things, the timing of foreclosure proceedings. The foregoing is
subject to the provisions that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in (i) that such restoration will increase the net proceeds
of liquidation of the related Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable by the Master Servicer through Insurance Proceeds or Liquidation
Proceeds from the related Mortgaged Property, as contemplated in Section 3.11.
The Master Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the related Mortgaged Property, as
contemplated in Section 3.11.
The proceeds of any Cash Liquidation or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Master Servicer or any Sub-
Servicer for any related unreimbursed Servicing Advances, pursuant to Section
3.11 (vi) or 3.22; second, to accrued and unpaid interest on the Mortgage Loan
or REO Imputed Interest, at the Mortgage Rate, to the date of the Cash
Liquidation or REO Disposition, or to the Due Date prior to the Distribution
Date on which such amounts are to be distributed if not in connection with a
Cash Liquidation or REO Disposition; and third, as a recovery of principal of
the Mortgage Loan. If the amount of the recovery so allocated to interest is
less than a full recovery thereof, that amount will be allocated as follows:
first, on a pro rata basis, to unpaid Servicing Fees; and second, to interest at
the related Net Mortgage Rate. The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Master Servicer or any Sub-
Servicer pursuant to Section 3.11(vi). The portions of the recovery so allocated
to interest at the related Net Mortgage Rate and to principal of the Mortgage
Loan shall be applied as follows: first, to reimburse the Trustee for any unpaid
Trustee's Fees, second, to reimburse the Master Servicer or any Sub-Servicer for
any related unreimbursed Advances in accordance with Section 3. 1 31 (iii) or
3.22, and third, for distribution in accordance with the provisions of Section
4.01(b) and 4.01(c).
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Master
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Master Servicer will immediately notify the
Trustee by a certification (which certification shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to
be deposited in the Custodial Account pursuant to Section 3.10 have been or will
be so deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File in the form of the Request for Release attached hereto as Exhibit
F-2. Upon receipt of such certification and request, the Trustee shall promptly
release the related Mortgage File to the Master Servicer. Subject to the receipt
by the Master Servicer of the proceeds of such payment in full and the payment
of all related fees and expenses, the Master Servicer shall arrange for the
release to the Mortgagor of the original cancelled Mortgage Note. The Master
Servicer shall provide for preparation of the appropriate instrument of
satisfaction covering any Mortgage Loan which pays in full and the Trustee shall
cooperate in the execution and return of such instrument to provide for its
delivery or recording as may be required. All other documents in the Mortgage
File shall be retained by the Master Servicer to the extent required by
applicable law. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Certificate Account.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under the Insurance
Instruments or any other insurance policy relating to the Mortgage Loan, the
Trustee shall, upon request of the Master Servicer and delivery to the Trustee
of a Request for Release in the form attached hereto as Exhibit F-1, release the
related Mortgage File to the Master Servicer, and the Trustee shall execute such
documents as the Master Servicer shall prepare and request as being necessary to
the prosecution of any such proceedings. Such Request for Release shall
obligate the Master Servicer to return each document previously requested from
the Mortgage File to the Trustee when the need therefor by the Master Servicer
no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation which are required to be deposited
into the Custodial Account have been or will be so deposited, or that such
Mortgage Loan has become an REO Property, the servicing receipt shall be
released by the Trustee to the Master Servicer.
Upon written request of a Servicing Officer, the Trustee shall execute and
deliver to the Master Servicer any court pleadings, requests for trustee's sale
or other documents prepared by the Master Servicer that are 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 request that such pleadings or documents be executed by
the Trustee shall include a certification as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
SECTION 3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall be
entitled to retain, from deposits to the Custodial Account of amounts
representing payments or recoveries of interest, the Servicing Fees with respect
to each Mortgage Loan (less any portion of such amounts retained by any Sub-
Servicer). In addition, the Master Servicer shall be entitled to recover unpaid
Servicing Fees out of related Late Collections to the extent permitted in
Section 3.11.
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The Master Servicer also shall be entitled pursuant to Section 3.11 to
receive from the Custodial Account, as additional servicing compensation
interest or other income earned on deposits therein, as well as any prepayment
fees, assumption fees, late payment fees and reconveyance fees. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including payment of the premiums for any
Primary Mortgage Insurance Policy or blanket policy insuring against hazard
losses pursuant to Section 3.13, payment of the servicing compensation of the
Sub-Servicer to the extent not retained by it), and shall not be entitled to
reimbursement therefor except as specifically pro vided in Section 3.11. The
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Master Servicer's responsibilities and
obligations under this Agreement.
SECTION 3.18. Maintenance of Certain Servicing Policies.
During the term of its service as Master Servicer, the Master Servicer
shall maintain in force (i) a policy or policies of insurance covering errors
and omissions in the performance of its obligations as servicer hereunder and
(ii) a fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and bond shall, together, comply with the requirements from
time to time of FNMA or FHLMC for persons performing servicing for mortgage
loans purchased by such corporation. The Master Servicer shall prepare and
present, on behalf of itself, the Trustee and Certificateholders, claims under
any such errors and omissions policy or policies or fidelity bond in a timely
fashion in accordance with the terms of such policy or bond, and upon the filing
of any claim on any policy or bond described in this Section, the Master
Servicer shall promptly notify the Trustee of any such claims and the Trustee
shall notify the Rating Agency of such claim.
SECTION 3.19. Annual Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the Company on or
before ________ ___ of each year, beginning with _______ ___, 199_, an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year and of its
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
Master Servicer has fulfilled in all material respects its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. Copies of such certificate shall be
provided by the Trustee to any Certificateholder upon request at the Master
Servicer's expense, provided such statement is delivered by the Master Servicer
to the Trustee.
SECTION 3.20. Annual Independent Public Accountants' Servicing
Statement.
On or before March 31 of each year, beginning with March 31, 19__, the
Master Servicer at its expense shall furnish to the Company and the Trustee a
statement from a firm of independent certified public accountants (which is a
member of the American Institute of Certified Public Accountants) to the effect
that, based on an examination by such firm conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FHLMC, the servicing of mortgage loans under
agreements (including this Agreement) substantially similar to each other was
conducted in compliance with such agreements except for such significant
exceptions or errors in record that, in the opinion of the firm, the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC requires it to report. In rendering its statement
such firm may rely, as to the matters relating to the direct servicing of
mortgage loans by Sub-servicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC (rendered within one year of such statement) of firms of independent
public accountants with respect to those Sub-servicers which also have been the
subject of such an examination. Copies of such statement shall be provided by
the
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Trustee to any Certificateholder upon request at the Master Servicer's expense,
provided such statement is delivered by the Master Servicer to the Trustee.
SECTION 3.21. Access to Certain Documentation.
(a) The Master Servicer shall provide to the OTS, the FDIC and other
federal banking regulatory agencies, and their respective examiners, access to
the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS, the FDIC and such other agencies. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices of the Master Servicer designated by
it. Nothing in this Section shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Master Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this section.
(b) The Master Servicer shall afford the Company and the Trustee, upon
reasonable notice, during normal business hours access to all records maintained
by the Master Servicer in respect of its rights and obligations hereunder and
access to officers of the Master Servicer responsible for such obligations.
Upon request, the Master Servicer shall furnish the Company and the Trustee with
its most recent financial statements and such other information as the Master
Servicer possesses regarding its business, affairs, property and condition,
financial or otherwise to the extent related to the servicing of the Mortgage
Loans. The Company may, but is not obligated to, enforce the obligations of the
Master Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
or exercise the rights of the Master Servicer hereunder; provided that the
Master Servicer shall not be relieved of any of its obligations hereunder by
virtue of such performance by the Company or its designee. The Company shall
not have any responsibility or liability for any action or failure to act by the
Master Servicer and is not obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
SECTION 3.22. Title, Conservation and Disposition of REO Property.
This Section shall apply only to REO Properties acquired for the account of
the Trust Fund, and shall not apply to any REO Property relating to a Mortgage
Loan which was purchased or repurchased from the Trust Fund pursuant to any
provision hereof. In the event that title to any such REO Property is acquired,
the deed or certificate of sale shall be issued to the Trustee, or to its
nominee, on behalf of the Certificateholders. The Master Servicer, on behalf of
the Trust Fund, shall either sell any REO Property within two years after the
Trust Fund acquires ownership of such REO Property for purposes of Section
86OG(a)(8) of the Code or, at the expense of the Trust Fund, request an
extension of the two-year grace period, more than 60 days before the day on
which the two-year grace period would otherwise expire, unless the Master
Servicer has delivered to the Trustee an Opinion of Counsel, addressed to the
Trustee and the Master Servicer, to the effect that the holding by the Trust
Fund of such REO Property subsequent to two years after its acquisition will not
result in the imposition on the Trust Fund of taxes on "prohibited transactions"
thereof, as defined in Section 86OF of the Code, or cause the Trust Fund to fail
to qualify as a REMIC under federal law at any time that any Certificates are
outstanding. The Master 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
86OG(a)(8) or result in the receipt by the Trust Fund of any "income from non-
permitted assets" within the meaning of Section 86OF(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 Master
Servicer shall either itself or through an agent selected by the Master Servicer
protect and conserve such REO Property in the same manner and to such extent as
40
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 Master Servicer
deems to be in the best interest of the Certificateholders for the period prior
to the sale of such REO Property.
The Master Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets. The Master Servicer shall deposit, or
cause to be deposited, on a daily basis in the Custodial Account all revenues
received with respect to the REO Properties, net of any directly related
expenses incurred or withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property.
If as of the date of acquisition of title to any REO Property there remain
outstanding unreimbursed Servicing Advances with respect to such REO Property or
any outstanding Advances allocated thereto the Master Servicer, upon an REO
Disposition, shall be entitled to reimbursement for any related unreimbursed
Servicing Advances and any unreimbursed related Advances as well as any unpaid
Servicing Fees from proceeds received in connection with the REO Disposition, as
further provided in Section 3.15.
Subject to the first paragraph of this Section 3.22, the REO Disposition
shall be carried out by the Master Servicer at such price and upon such terms
and conditions as the Master Servicer shall determine to be in the best economic
interest of the Trust Fund.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).
The Master Servicer shall deposit the proceeds from the REO Disposition,
net of any payment to the Master Servicer as provided above, in the Custodial
Account upon receipt thereof for distribution in accordance with Section 4.01,
including any such net proceeds which are in excess of the applicable Stated
Principal Balance plus all unpaid REO Imputed Interest thereon through the date
of the REO Disposition.
Notwithstanding the foregoing provisions of this Section 3.22, with respect
to any Mortgage Loan as to which the Master Servicer has received notice of, or
has actual knowledge of, the presence of any toxic or hazardous substance on the
Mortgaged Property, the Master Servicer shall promptly request the Trustee and
the Company to provide directions and instructions with respect to such Mortgage
Loan and shall act in accordance with any such directions and instructions
jointly provided by the Trustee and the Company. Notwithstanding the preceding
sentence of this Section 3.22, with respect to any Mortgage Loan described by
such sentence, the Master Servicer shall not, on behalf of the Trustee, either
(i) obtain title to the related Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, the related
Mortgaged Property, unless (i) the Company and the Trustee jointly direct the
Master Servicer to take such action and (ii) either (A) the Master Servicer has,
at least 30 days prior to taking such action, obtained and delivered to the
Company an environmental audit report prepared by a Person who regularly
conducts environmental audits using customary industry standards or (B) the
Company has directed the Master Servicer not to obtain an environmental audit
report. If the Trustee and the Company have not jointly provided directions and
instructions to the Master Servicer in connection with any such Mortgage Loan
within 30 days of a request by the Master Servicer for such directions and
instructions, then the Master Servicer shall take such action as it deems to be
in the best economic interest of the Trust Fund (other than proceeding against
the Mortgaged Property) and is hereby authorized at such time as it deems
appropriate to release such Mortgaged Property from the lien of the related
Mortgage.
The cost of the environmental audit report contemplated by this Section
3.22 shall be advanced by the Master Servicer as an expense of the Trust Fund,
and the Master Servicer shall be reimbursed therefor
41
from the Custodial Account as provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Custodial Account.
If the Master Servicer determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property in compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the Master
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund. The cost of any such compliance, containment, clean-up or
remediation shall be advanced by the Master Servicer as an expense of the Trust
Fund, and the Master Servicer shall be entitled to be reimbursed therefor from
the Custodial Account as provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Custodial Account.
SECTION 3.23. Additional Obligations of the Master Servicer.
On each Certificate Account Deposit Date, the Master Servicer shall deliver
to the Trustee for deposit in the Certificate Account from its own funds and
without any right of reimbursement therefor, a total amount equal to the
aggregate of the Prepayment Interest Shortfalls for such Distribution Date;
provided that the Master Servicer's obligations under this subsection on any
Distribution Date shall not be more than the total amount of its master
servicing compensation payable in such month.
SECTION 3.24. Additional Obligations of the Company.
The Company agrees that on or prior to the tenth day after the Closing
Date, the Company shall provide the Trustee with a written notification,
substantially in the form of Exhibit J attached hereto, relating to each Class
of Certificates, setting forth (i) in the case of each Class of such
Certificates, (a) if less than 10% of the aggregate Certificate Principal
Balance of such Class of Certificates has been sold as of such date, the value
calculated pursuant to clause (b)(iii) of Exhibit J hereto, or, (b) if 10% or
more of such Class of Certificates has been sold as of such date but no single
price is paid for at least 10% of the aggregate Certificate Principal Balance of
such Class of Certificates, then the weighted average price at which the
Certificates of such Class were sold and the aggregate percentage of
Certificates of such Class sold, (c) the first single price at which at least
10% of the aggregate Certificate Principal Balance of such class of Certificates
was sold or, (d) if any Certificates of each Class of Certificates are retained
by the Company or an affiliated corporation, or are delivered to the Seller, the
fair market value of such Certificates as of the Closing Date, (ii) the
prepayment assumption used in pricing the Certificates, and (iii) such other
information as to matters of fact as the Trustee may reasonably request to
enable it to comply with its reporting requirements with respect to each Class
of such Certificates to the extent such information can in the good faith
judgment of the Company be determined by it.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Certificate Account; Distributions.
(a) The Trustee shall establish and maintain a Certificate Account, in
which the Master Servicer shall cause to be deposited on behalf of the Trustee
on or before 3:00 P.M. New York time on each Certificate Account Deposit Date by
wire transfer of immediately available funds an amount equal to the sum of (i)
any Advance for the immediately succeeding Distribution Date, (ii) any amount
required to be deposited in the Certificate Account pursuant to Sections 3.11,
3.13, 3.23 or 4.03(b) and (iii) all other amounts constituting or, if not
otherwise applicable to the payment of the Trustee's Fee, that would constitute
the Available Distribution Amount for the immediately succeeding Distribution
Date. The Trustee shall transfer from the Certificate Account to itself, the
Trustee's Fee on each Certificate Account Deposit Date. Such amounts do not
constitute part of the Available Distribution Amount.
(b) On each Distribution Date the Trustee shall, distribute to the Master
Servicer, in the case of a distribution pursuant to Section 4.01(b)(iii), and to
each Certificateholder of record on the next preceding Record Date (other than
as provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee at least 5
Business Days prior to the related Record Date and such Certificateholder is the
registered owner of Certificates the aggregate Initial Certificate Principal
Balance of which is not less than $2,500,000 (or, with respect to the Class A-5
and Class A-7 Certificates, is the registered owner of an initial Notional
Amount of not less than $10,000,000 of each such class), or otherwise by check
mailed to such Certificateholder at the address of such Holder appearing in the
Certificate Register, such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the following amounts, in the following order of
priority, in each case to the extent of the Available Distribution Amount:
(i) to the Class A Certificateholders on a pro rata basis based
on Accrued Certificate Interest payable thereon, Accrued Certificate
Interest on such Classes of Certificates for such Distribution Date and to
the extent not previously paid, for all prior Distribution Dates;
(ii) to the Class A Certificateholders (other than the Class A-5
Certificateholders and the Class A-7 Certificateholders), in the priorities
and amounts set forth in Sections 4.01(c) and (d), the sum of the following
(applied to reduce the Certificate Principal Balances of such Class A
Certificates, as applicable):
(A) the Senior Percentage for such Distribution Date times
the sum of the following:
(1) the principal portion of each Monthly Payment due
during the related Due Period on each Outstanding Mortgage Loan,
whether or not received on or prior to the related Determination Date,
minus the principal portion of any Debt Service Reduction which
together with other Bankruptcy Losses exceeds the Bankruptcy Amount;
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(2) the Stated Principal Balance of any Mortgage Loan
purchased during the related Prepayment Period and the amount of any
shortfall deposited in the Custodial Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to Section 2.04
during the related Prepayment Period; and
(3) the principal portion of all other unscheduled
collections (other than Principal Prepayments and amounts received in
connection with a Cash Liquidation or REO Disposition) received during
the related Prepayment Period, including, without limitation,
Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the
extent applied by the Master Servicer as recoveries of principal of
the related Mortgage Loan pursuant to Section 3.15;
(B) with respect to each Mortgage Loan for which a Cash
Liquidation or a REO Disposition occurred during the related Prepayment
Period and did not result in any Excess Special Hazard Losses, Excess Fraud
Losses, Excess Bankruptcy Losses or Extraordinary Losses, an amount equal
to the lesser of (a) the Senior Percentage for such Distribution Date times
the Stated Principal Balance of such Mortgage Loan and (b) the Senior
Accelerated Distribution Percentage for such Distribution Date times the
related unscheduled collections (including without limitation Insurance
Proceeds, Liquidation Proceeds and REO Proceeds) to the extent applied by
the Master Servicer as recoveries of principal of the related Mortgage Loan
pursuant to Section 3.15;
(C) the Senior Accelerated Distribution Percentage for such
Distribution Date times the aggregate of all Principal Prepayments in Full
and Curtailments received in the related Prepayment Period; and
(D) any amounts described in clauses (A), (B) and (C) of
this Section 4.01 (b)(ii), as determined for any previous Distribution
Date, which remain unpaid after application of amounts previously
distributed pursuant to this clause (D) to the extent that such amounts are
not attributable to Realized Losses which have been allocated to the Class
B Certificates;
(iii) if the Certificate Principal Balances of the Class B
Certificates have not been reduced to zero, to the Master Servicer or a
Subservicer, to the extent of and in reimbursement for any Advances
previously made with respect to any Mortgage Loan or REO Property which
remain unreimbursed in whole or in part following the Cash Liquidation or
REO Disposition of such Mortgage Loan or REO Property, minus any such
Advances that were made with respect to delinquencies that ultimately
constituted Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses or Extraordinary Losses;
(iv) to the Holders of the Class B Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any Accrued
Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(v) to the Holders of the Class B Certificates, an amount equal
to the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date, applied in reduction of the
Certificate Principal Balance of the Class B Certificates;
(vi) to the Class A Certificateholders (other than the Class A-5
and Class A-7 Certificateholders) in the priority set forth in Section
4.01(c), the portion, if any, of the Available Distribution Amount
remaining after the foregoing distributions, applied to reduce the
Certificate Principal Balances of such Class A Certificates, but in no
event more than the sum of the outstanding
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Certificate Principal Balances of the Class A Certificates (other than the
Class A-5 and Class A-7 Certificates) and thereafter applied to reduce the
Certificate Principal Balance of the Class B Certificates, but in no event
more than the outstanding Certificate Principal Balance of the Class B
Certificates; and
(vii) to the Class R Certificateholders, the balance, if any, of the
Available Distribution Amount.
(c) Distributions of principal on the Class A Certificates (other
than the Class A-5 and Class A-7 Certificates) on each Distribution Date
occurring prior to the occurrence of the Credit Support Depletion Date will be
made as follows:
(i) first, to the Class A-1 Certificates and Class A-6
Certificates, with the amount to be distributed allocated as between such
classes on a pro rata basis, until the Certificate Principal Balance of
each such Class has been reduced to zero;
(ii) second, to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(iii) third, to the Class A-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
(iv) fourth, to the Class A-4 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.
(d) On each Distribution Date occurring on or after the Credit
Support Depletion Date, all priorities relating to sequential distributions in
respect of principal among the various classes of Senior Certificates will be
disregarded, and the Senior Principal Distribution Amount will be distributed to
all classes of Senior Certificates pro rata in accordance with their respective
outstanding Certificate Principal Balances; provided, that the aggregate amount
distributable to the Class A-1, Class A-5 and Class A-6 Certificates (the
"Tiered Certificates") in respect of Accrued Certificate Interest thereon and in
respect of their pro rata portion of the Senior Principal Distribution Amount
shall be distributed among the Tiered Certificates in the amounts and priority
as follows: first, to the Class A-1 Certificates and the Class A-5 Certificates,
up to an amount equal to, and pro rata based on, the Accrued Certificate
Interest thereon; second to the Class A-1 Certificates, up to an amount equal to
the Optimal Principal Distribution Amount thereof, in reduction of the
Certificate Principal Balances thereof; third to the Class A-6 Certificates, up
to an amount equal to the Accrued Certificate Interest thereon; and fourth to
the Class A-6 Certificates the remainder of the amount so distributable among
the Tiered Certificates.
(e) The Trustee shall, upon written request from the Master
Servicer, invest or cause the institution maintaining the Certificate Account to
invest the funds in the Certificate Account in Permitted Instruments designated
in the name of the Trustee for the benefit of the Certificateholders, which
shall mature not later than the Business Day next preceding the Distribution
Date next following the date of such investment (except that (i) any investment
in obligations of the institution with which the Certificate Account is
maintained may mature on such Distribution Date and (ii) any other investment
may mature on such Distribution Date if the Trustee shall agree to advance funds
on such Distribution Date to the Certificate Account in the amount payable on
such investment on such Distribution Date, pending receipt thereof to the extent
necessary to make distributions on the Certificates) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
45
in respect of any such investments shall be deposited in the Certificate Account
by the Master Servicer out of its own funds immediately as realized without
right of reimbursement.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Certificate and to the Company and the
Master Servicer a statement as to such distribution setting forth the following
information as to each Class of Certificates to the extent applicable:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included therein
representing Principal Prepayments;
(ii) the amount of such distribution to the Certificateholders of
such Class allocable to interest;
(iii) if the distribution to the Certificateholders of such Class
is less than the full amount that would be distributable to such
Certificateholders if there were sufficient funds available therefor, the
amount of the shortfall;
(iv) the amount of any Advance by the Master Servicer pursuant to
Section 4.04;
(v) the number and aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to the distribution of principal on such
Distribution Date;
(vi) the aggregate Certificate Principal Balance of each Class of
Certificates, after giving effect to the amounts distributed on such
Distribution Date, separately identifying any reduction thereof due to
Realized Losses other than pursuant to an actual distribution of principal;
(vii) the related Subordinate Principal Distribution Amount;
(viii) the amount of Servicing Fees paid to the Master Servicer;
(ix) on the basis of the most recent reports furnished to it by
Subservicers, the number and aggregate principal balances of Mortgage Loans
that are delinquent (A) one month, (B) two months and (C) three months, and
the number and aggregate principal balance of Mortgage Loans that are in
foreclosure;
(x) the number, aggregate principal balance and book value of
any REO Properties;
(xi) the aggregate Accrued Certificate Interest remaining unpaid,
if any, for each Class of Certificates, after giving effect to the
distribution made on such Distribution Date;
(xii) the Special Hazard Amount, Fraud Loss Amount and Bankruptcy
Amount as of the close of business on such Distribution Date and a
description of any change in the calculation of such amounts;
(xiii) the Pass-Through Rate on the Class A-7 Certificates for such
Distribution Date;
(xiv) the occurrence of the Credit Support Depletion Date;
46
(xv) the Senior Accelerated Distribution Percentage applicable to
such distribution;
(xvi) the Senior and Class B Percentages for such Distribution
Date;
(xvii) the aggregate amount of Realized Losses allocated to the
Certificates on such Distribution Date;
(xviii) the aggregate amount of any recoveries on previously
foreclosed loans from the Seller due to a breach of representation or
warranty;
(xix) the weighted average remaining term to maturity of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date; and
(xx) the weighted average Mortgage Rates of the Mortgage Loans
after giving effect to the amounts distributed on such Distribution Date.
In the case of information furnished pursuant to subclauses (i) and (ii)
above, the amounts shall also be expressed as a dollar amount per Single
Certificate.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall prepare and forward to each Person who at any time during the
calendar year was a Holder of a Certificate, a statement containing the
information set forth in subclauses (i) and (ii) above, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code and regulations
thereunder as from time to time are in force.
SECTION 4.03. Remittance Reports; Advances by the Master Servicer.
(a) By 11:00 A.M. New York time the Business Day following each
Determination Date, the Master Servicer shall deliver to the Trustee a report,
prepared as of the close of business on the Determination Date (the
"Determination Date Report"), by telecopy or in a mutually agreeable electronic
format. The Determination Date Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans that
is reasonably available to the Master Servicer and that is required by the
Trustee for purposes of making the calculations referred to in the following
paragraph, as set forth in written specifications or guidelines issued by the
Trustee from time to time. Not later than 2:00 P.M. New York time on the
Certificate Account Deposit Date, the Trustee shall furnish by telecopy to the
Master Servicer a statement (the information in such statement to be made
available to Certificateholders or the Company by the Master Servicer on
request) setting forth (i) the Available Distribution Amount, (ii) the amounts
required to be withdrawn from the Custodial Account and deposited into the
Certificate Account on the immediately succeeding Certificate Account Deposit
Date pursuant to clause (iii) of Section 4.01 (a); and (iii) such other
information with respect to the Mortgage Loans as the Trustee may reasonably
require to perform the calculations necessary to make the distributions
contemplated by Section 4.01 and to prepare the statements to Certificateholders
contemplated by Section 4.02. The determination by the Trustee of such amounts
shall, in the absence of obvious error, be presumptively deemed to be correct
for all purposes hereunder.
(b) Not later than 2:00 P.M. New York time on the Certificate Account
Deposit Date, the Trustee shall notify the Master Servicer of the aggregate
amount of Advances required to be made for the related Distribution Date, which
shall be the aggregate amount of Monthly Payments (with each interest
47
portion thereof adjusted to be net of the related Servicing Fee Rate), less the
amount of any related Debt Service Reductions or reductions in the amount of
interest collectable from the Mortgagor pursuant to the Relief Act, on the
Outstanding Mortgage Loans as of the related Due Date, which Monthly Payments
were delinquent as of the close of business as of the related Determination
Date, provided that following the reduction of the Certificate Principal
Balances of the Class B Certificates to zero no Advance shall be made if it
would be a Nonrecoverable Advance. On or before 3:00 P.M. New York time on each
Certificate Account Deposit Date, the Master Servicer shall either (i) deposit
in the Certificate Account from its own funds, or funds received therefor from
the Sub-Servicers, an amount equal to the Advances to be made by the Master
Servicer in respect of the related Distribution Date, (ii) withdraw from amounts
on deposit in the Custodial Account and deposit in the Certificate Account all
or a portion of the amounts held for future distribution in discharge of any
such Advance, or (iii) make advances in the form of any combination of (i) and
(ii) aggregating the amount of such Advance. Any portion of the amounts held for
future distribution so used shall be replaced by the Master Servicer by deposit
in the Custodial Account on or before 12: 00 P.M. New York time on any future
Certificate Account Deposit Date to the extent that funds attributable to the
Mortgage Loans that are available in the Custodial Account for deposit in the
Certificate Account on such Certificate Account Deposit Date shall be less than
payments to Certificateholders required to be made on the following Distribution
Date. The amount of any reimbursement pursuant to Section 4.01(b)(iii) in
respect of outstanding Advances on any Distribution Date shall be allocated to
specific Monthly Payments due but delinquent for previous Due Periods, which
allocation shall be made, to the extent practicable, to Monthly Payments which
have been delinquent for the longest period of time. Such allocations shall be
conclusive for purposes of reimbursement to the Master Servicer from recoveries
on the Mortgage Loans pursuant to Section 3.11. The determination by the Master
Servicer that it has made a Nonrecoverable Advance or that any proposed Advance,
if made, would constitute a Nonrecoverable Advance, shall be evidenced by a
certificate of a Servicing Officer delivered to the Seller and the Trustee. The
Trustee shall deposit all funds it receives pursuant to this Section 4.03 into
the Certificate Account.
(c) In the event that the Master Servicer determines on the Certificate
Account Deposit Date that it will be unable to deposit in the Certificate
Account an amount equal to the Advance required to be made for the immediately
succeeding Distribution Date in the amount determined by the Trustee pursuant to
paragraph (b) above, it shall give notice to the Trustee of its inability to
advance (such notice may be given by telecopy), not later than 3:00 P.M., New
York time, on such Business Day, specifying the portion of such amount that it
will be unable to deposit. If the Master Servicer shall have determined that it
is not obligated to make the entire Advance because all or a lesser portion of
such Advance would not be recoverable from Insurance Proceeds, Liquidation
Proceeds or otherwise, the Master Servicer shall promptly deliver to the Trustee
for the benefit of the Certificateholders an Officer's Certificate setting forth
the reasons for the Master Servicer's determination. Not later than 5:00 P.M.,
New York time, on the Certificate Account Deposit Date, unless by such time the
Master Servicer shall have directly or indirectly deposited in the Certificate
Account the entire amount of the Advances required to be made for the related
Distribution Date, pursuant to Section 7.01, the Trustee shall (a) terminate all
of the rights and obligations of the Master Servicer under this Agreement in
accordance with Section 7.01 and (b) assume the rights and obligations of the
Master Servicer hereunder, including the obligation to deposit in the
Certificate Account an amount equal to the Advance for the immediately
succeeding Distribution Date.
SECTION 4.04. Allocation of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall determine the
total amount of Realized Losses, if any, that resulted from any Cash
Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition that
occurred during the related Prepayment Period. The amount of each Realized Loss
shall be evidenced by an Officers' Certificate by the Master Servicer. Realized
Losses shall be allocated among the various Classes of Certificates as
determined by the Trustee in accordance with the following provisions. All
48
Realized Losses, other than Excess Special Hazard Losses, Excess Bankruptcy
Losses, Excess Fraud Losses or Extraordinary Losses shall be allocated as
follows: first, to the Class B Certificates until the Certificate Principal
Balance thereof has been reduced to zero; and second, among all the Class A
Certificates as described below. Any Excess Special Hazard Losses, Excess
Bankruptcy Losses, Excess Fraud Losses and Extraordinary Losses on Mortgage
Loans will be allocated among the Class A and Class B Certificates on a pro rata
basis, as described below. As used herein, an allocation of a Realized Loss on
a "pro rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, without priority among the various Classes so
specified, to each such Class of Certificates on the basis of the then
outstanding Certificate Principal Balances thereof in the case of the principal
portion of a Realized Loss or based on the Accrued Certificate Interest thereon
in the case of an interest portion of a Realized Loss. Allocations of Realized
Losses which are Default Losses to the Class A Certificates will be made on a
pro rata basis, based on their then outstanding Certificate Principal Balances,
or the Accrued Certificate Interest thereon, as applicable, between the Class A-
1, Class A-5 and Class A-6 Certificates, on the one hand, and the Class A-2,
Class A-3, Class A-4 and Variable Strip Certificates, on the other. Any such
Realized Losses so allocated to the Class A-1, Class A-5 and Class A-6
Certificates will be allocated first to the Class A-6 Certificates until the
Certificate Principal Balance thereof or the Accrued Certificate Interest
thereon, as appropriate, is reduced to zero and then to the Class A-1 and Class
A-5 Certificates on a pro rata basis. Any allocation of the principal portion
of Realized Losses (other than Debt Service Reductions) to a Class A Certificate
shall be made by reducing the Certificate Principal Balance thereof by the
amount so allocated, which allocation shall be deemed to have occurred at the
close of business on such Distribution Date. Any allocation of the principal
portion of Realized Losses (other than Debt Service Reductions) to the Class B
Certificates, shall be made by operation of the definition of "Certificate
Principal Balance" and by operation of the provisions of Section 4.01(b).
Allocations of the interest portions of Realized Losses shall be made by
operation of the definition of "Accrued Certificate Interest" and by operation
of the provisions of Section 4.01(b) or 4.01(d), as applicable. Allocations of
the principal portion of Debt Service Reductions shall be made by operation of
the provisions of Section 4.01(b) or 4.01(d), as applicable. All Realized
Losses and all other losses allocated to a Class of Certificates under this
Section 4.04 will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.
SECTION 4.05. Information Reports to be Filed by the Master Servicer.
The Master Servicer or the Sub-Servicers shall file the 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
the information returns relating to cancellation of indebtedness income with
respect to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of
the Code, respectively, and deliver to the Trustee an Officers' Certificate
stating that such reports have been filed. Such reports shall be in form and
substance sufficient to meet the reporting requirements imposed by such Sections
6050H, 6050J and 6050P of the Code.
SECTION 4.06. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee shall
comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount on the Mortgage Loans,
and payments of interest or discount on amounts invested by the Trustee as agent
for Certificateholders pursuant to an election made under Section 4.01 hereof,
that the Trustee reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for such withholding. In the event
the Trustee withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall, together with its monthly report to
such Certificateholders pursuant to Section 4.02 hereof, indicate such amount
withheld.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates will be substantially in the respective forms annexed
hereto as Exhibits A-1, A-2 and B. The Certificates will be issuable in
registered form only. The Class A Certificates, other than the Class A-5 and
Class A-7 Certificates, shall be issuable in minimum dollar denominations of
$1,000 and integral multiples of $1 in excess thereof, except that one
Certificate of each Class of Class A Certificates may be issued in an amount
such that the denomination of such Certificate and the aggregate denomination of
all other outstanding Certificates of such Class together equal the aggregate
Certificate Principal Balance of such Class. The Class B Certificates shall be
issuable in minimum dollar denominations of $25,000 and integral multiples of $1
in excess thereof, except that one Certificate of such Class may be issued in an
amount such that the denomination of such Certificate and the aggregate
denomination of all other outstanding Certificates of such Class together equal
the aggregate Certificate Principal Balance of such Class. The Class A-5 and
Class A-7 Certificates shall be issuable in minimum Notional Amounts of $1,000
and integral multiples of $1 in excess thereof, except that one Certificate of
each such Class may be issued in an amount such that the denomination of such
Certificate and the aggregate denomination of all other outstanding Certificates
of such Class together equal the aggregate Notional Amount of such Class. The
Class R Certificates will each be issuable in minimum denominations of any
Percentage Interest representing 20% and integral multiples of 0.01% in excess
thereof, provided, however, that one Class R Certificate may be issued to the
"tax matters person" pursuant to Article X, in a minimum denomination
representing a Percentage Interest of not less than 0.01%.
Upon original issue, the Certificates shall, upon the written request of
the Company executed by an officer of the Company, be executed and delivered by
the Trustee, authenticated by the Trustee and delivered to or upon the order of
the Company upon receipt by the Trustee of the documents specified in Section
2.01. The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee in its capacity as trustee hereunder by a Responsible
Officer. Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper 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 authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates issued on the Closing
Date shall be dated the Closing Date and any Certificates delivered thereafter
shall be dated the date of their authentication.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
The Trustee shall maintain a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided.
No transfer, sale, pledge or other disposition of a Class B or a Class R
Certificate shall be made unless such transfer, sale, pledge or other
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Act"), and any applicable state securities laws or is
made in accordance with said Act and laws. In the event that a transfer of a
Class B or Class R Certificate is to be made (i) the Depositor may direct the
Trustee to require a written Opinion of Counsel acceptable to and in
50
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 Master 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 G-1 hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit G-2 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 Master Servicer. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor and the
Master Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such applicable federal and state laws.
The Trustee shall require a written Opinion of Counsel from a prospective
transferee prior to the transfer of any Class B or Class R Certificate to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and Keogh plans, that is subject to Section 406 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Code (any of the foregoing, a "Plan"), to a trustee or other Person
acting on behalf of any Plan, or to any other person who is using "plan assets"
of any Plan to effect such acquisition (including any insurance company using
funds in its general or separate accounts that may constitute "plan assets").
Such Opinion of Counsel must establish to the satisfaction of the Depositor and
the Trustee or the Certificate Registrar that such disposition will not violate
the prohibited transaction provisions of Section 406 of ERISA and Section 4975
of the Code. Neither the Depositor, the Master Servicer nor the Trustee will be
required to obtain such Opinion of Counsel on behalf of any prospective
transferee. In the case of any transfer of the foregoing Certificates to an
insurance company, in lieu of such Opinion of Counsel, the Trustee shall require
a certification in the form of Exhibit G-5 hereto substantially to the effect
that 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 (as defined above). The permission of any
transfer in violation of the restriction on transfer set forth in this paragraph
shall not constitute a default or an Event of Default.
(i) Each Person who has or who acquires any Ownership Interest in a Class
R 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 authorized the Trustee or its designee under clause (iii)(A) below
to deliver payments to a Person other than such Person and to negotiate the
terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Class R Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Class R 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.
(B) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to
it, and shall not register the transfer of any Class R Certificate until
its receipt of (1) an affidavit and agreement (a "Transfer Affidavit and
Agreement" in the form attached hereto as Exhibit G-3) from the proposed
Transferee, in form and substance satisfactory to the Master Servicer and
the Trustee representing and warranting, among other things, that it is a
Permitted Transferee, that it is not acquiring its Ownership Interest in
the Class R Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person
51
who is not a Permitted Transferee, that for so long as it retains its
Ownership Interest in a Class R Certificate, it will endeavor to remain a
Permitted Transferee, and that it has reviewed the provisions of this
Section 5.02 and agrees to be bound by them, and (11) a certificate, in the
form attached hereto as Exhibit G-4, from the Holder wishing to transfer
the Class R Certificate, in form and substance satisfactory to the Master
Servicer and the Trustee representing and warranting, among other things,
that no purpose of the proposed Transfer is to impede the assessment or
collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a Responsible
Officer of the Trustee assigned to this transaction has actual knowledge
that the proposed Transferee is not a Permitted Transferee, no Transfer of
an Ownership Interest in a Class R Certificate to such proposed Transferee
shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Class R 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 Class R Certificate and (y) not to transfer its
Ownership Interest unless it provides a certificate to the Trustee in the
form attached hereto as Exhibit G-4.
(E) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a "pass-
through interest holder" within the meaning of Temporary Treasury
Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Class R Certificate, if it is "a pass-through
interest holder", or is holding an Ownership Interest in a Class R
Certificate on behalf of a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Class R Certificate
only if it shall have received the Transfer Affidavit and Agreement in the form
attached hereto as Exhibit G-3, a certificate of the holder requesting such
transfer in the form attached hereto as Exhibit G-4 and all of such other
documents as shall have been reasonably required by the Trustee as a condition
to such registration. Transfers of the Class R Certificates to Non-United States
Persons and Disqualified Organizations are prohibited.
(iii) (a) If any Disqualified Organization shall become a holder of a
Class R Certificate, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
holder thereof retroactive to the date of registration of such Transfer of such
Class R Certificate. If a Non-United States Person shall become a holder of a
Class R Certificate, then the last preceding United States Person shall be
restored, to the extent permitted by law, to all rights and obligations as
holder thereof retroactive to the date of registration of such Transfer of such
Class R Certificate. If a transfer of a Class R Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or Section
1.86OG-3, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as holder thereof
retroactive to the date of registration of such Transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class R Certificate that is in fact not permitted
by this Section 5.02 or for making any payments due on such Certificate to the
holder thereof or for taking any other action with respect to such holder under
the provisions of this Agreement.
(b) If any purported Transferee shall become a holder of a Class R
Certificate in violation of the restrictions in this Section 5.02 and to the
extent that the retroactive restoration of the rights of the holder of such
Class R Certificate as described in clause (iii)(a) above shall be invalid,
illegal or unenforceable, then the Trustee shall have the right, without notice
to the holder or any prior holder of such Class R Certificate, to sell such
Class R Certificate to a purchaser selected by the Trustee on such terms as
52
the Trustee may choose. Such purported Transferee shall promptly endorse and
deliver each Class R Certificate in accordance with the instructions of the
Trustee. Such purchaser may be the Trustee itself. The proceeds of such sale,
net of the commissions (which may include commissions payable to the Trustee),
expenses and taxes due, if any, will be remitted by the Trustee to such
purported Transferee. The terms and conditions of any sale under this clause
(iii)(b) shall be determined in the sole discretion of the Trustee, and the
Trustee shall not be liable to any Person having an Ownership Interest in a
Class R Certificate as a result of its exercise of such discretion.
(iv) 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 Class R Certificate to any Person who is a Disqualified Organization,
including the information regarding "excess inclusions" of such Class R
Certificates required to be provided to the Internal Revenue Service and certain
Persons as described in Treasury Regulations Sections 1.86OD-l(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
Class R 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.
Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at the office of the Trustee maintained for such
purpose, the Trustee shall execute and the Trustee or the Authenticating Agent
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class of a like aggregate
initial Certificate Principal Balance. Every Certificate surrendered for
transfer shall be accompanied by notification of the account of the designated
transferee or transferees for the purpose of receiving distributions pursuant to
Section 4.01 by wire transfer, if any such transferee desires and is eligible
for distribution by wire transfer.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of authorized denominations of the same Class of a like
aggregate initial Certificate Principal Balance, upon surrender of the
Certificates to be exchanged at the office of the Certificate Registrar.
Whenever any Certificates are so surrendered for exchange the Trustee shall
execute, authenticate and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trustee or the
Certificate Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee or the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made to the Certificateholders 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 canceled
and retained by the Trustee in accordance with the Trustee's standard
procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and
53
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of the same Class and initial Certificate
Principal Balance. Upon the issuance of any new Certificate under this Section,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any replacement Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Company, the Master Servicer, the Trustee and any agent of any of them
may treat the person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
4.01 and for all other purposes whatsoever, and neither the Company, the Master
Servicer, the Trustee nor any agent of any of them shall be affected by notice
to the contrary.
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ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
SECTION 6.01. Liability of the Company and the Master Servicer.
The Company and the Master Servicer each shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Company and the Master Servicer herein.
SECTION 6.02. Merger, Consolidation or Conversion of the Company or the
Master Servicer.
The Company and the Master Servicer each will keep in full effect its
existence, rights and franchises as a corporation under the laws of the state of
its incorporation, and each will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement; and provided further
that the Rating Agencies' ratings of the Class A Certificates immediately prior
to such merger or consolidation will not be qualified, reduced or withdrawn as a
result thereof (as evidenced by a letter to such effect from the Rating
Agencies).
Any Person into which the Company or the Master Servicer may be merged,
consolidated or converted, or any corporation resulting from any merger or
consolidation to which the Company or the Master Servicer shall be a party, or
any Person succeeding to the business of the Company or the Master Servicer,
shall be the successor of the Company or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to and service
mortgage loans for FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Company, the Master Servicer
and Others.
Neither the Company, the Master Servicer nor any of the directors,
officers, employees or agents of the Company or the Master Servicer shall be
under any liability to the 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 Company or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer pursuant to Section 3.01 or any other Section
hereof; and provided further that this provision shall not protect the Company,
the Master Servicer or any such person, against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Company, the Master Servicer and any
director, officer, employee or agent of the Company or the Master Servicer may
rely in good faith on any document of any kind prima facie properly executed and
----- -----
submitted by any Person respecting any matters arising hereunder. The Company,
the Master Servicer and any director, officer, employee or agent of the Company
or the Master 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 Master 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 Master Servicer's obligations under Section 3.01,
or any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder.
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Neither the Company nor the Master Servicer shall be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
respective duties under this Agreement and which in its opinion may involve it
in any expense or liability; provided, however, that the Company or the Master
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
such event, the legal expenses and costs of such action and any liability
resulting therefrom (except any action or liability related to the Master
Servicer's obligations under Section 3.01) shall be expenses, costs and
liabilities of the Trust Fund, and the Company and the Master Servicer shall be
entitled to be reimbursed therefor from the Certificate Account as provided in
Section 3.11, any such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Certificate Account.
SECTION 6.04. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor servicer reasonably
acceptable to the Trustee and upon receipt by the Trustee of a letter from each
Rating Agency that such a resignation and appointment will not, in and of
itself, result in a downgrading of the Certificates or (b) upon determination
that its duties hereunder are no longer permissible under applicable law (any
such determination permitting the resignation of the Master Servicer to be
evidenced by an Opinion of Counsel (at the expense of the resigning Master
Servicer) to such effect delivered to the Trustee). No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default", wherever used herein, means any one of the following
events:
(i) any failure by the Master Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than an Advance)
required to be made under the terms of the Certificates or this Agreement
which continues unremedied for a period of one day after the date upon
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Company (with a copy to
the Trustee) or the Trustee, or to the Master Servicer, the Company and the
Trustee by the Holders of Certificates entitled to at least 25% of the
Voting Rights; or
(ii) any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or agreements
on the part of the Master Servicer contained in the Certificates or in this
Agreement (including any breach of the Master Servicer's representations
and warranties pursuant to Section 2.03(a) which materially and adversely
affects the interests of the Certificateholders) which continues unremedied
for a period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Company (with a copy to the Trustee) or the Trustee,
or to the Master Servicer, the Company and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(iii) 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 the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or substantially
all of its property; or
(v) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of or otherwise voluntarily commence a case or proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) the Master Servicer shall fail to deposit in the Certificate
Account on any Certificate Account Deposit Date an amount equal to any
required Advance.
If the Master Servicer shall fail to make any deposit in the Certificate Account
as required by Section 4.01, the Trustee shall give the Master Servicer notice
pursuant to clause (i) not later than the Business Day following the Certificate
Account Deposit Date. If an Event of Default described in clauses (i) - (v) of
this Section shall occur, then, and in each and every such case, so long as such
Event of Default shall not have
57
been remedied, the Company or the Trustee may, and at the direction of the
Holders of Certificates entitled to at least 51% of the Voting Rights, the
Trustee shall, by notice to the Master Servicer (and to the Company if given by
the Trustee or to the Trustee if given by the Company) terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to
the Trust Fund, other than its rights as a Certificateholder hereunder and the
Company, terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder. If an Event of Default described in clause (vi)
hereof shall occur, the Trustee shall, by notice to the Master Servicer and the
Company, terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder. On or after the receipt by the Master Servicer of
such notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Certificates (other than as a holder
thereof) or the Mortgage Loans or other wise, shall pass to and be vested in the
Trustee pursuant to and under this Section, and, without limitation, the Trustee
is hereby authorized and empowered to execute and deliver, on behalf of the
Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instru ments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee or its appointed agent for administration by it of all
cash amounts which shall at the time be deposited by the Master Servicer or
should have been deposited to the Custodial or the Certificate Account or
thereafter be received with respect to the Mortgage Loans. The Trustee shall not
be deemed to have breached any obligation hereunder as a result of a failure to
make or delay in making any distribution as and when required hereunder caused
by the failure of the Master Servicer to remit any amounts received on it or to
deliver any documents held by it with respect to the Mortgage Loans. For
purposes of this Section 7.01, the Trustee shall not be deemed to have knowledge
of an Event of Default unless a Responsible Officer of the Trustee assigned to
and working in the Trustee's Corporate Trust Division has actual knowledge
thereof or unless notice of any event which is in fact such an Event of Default
is received by the Trustee and such notice references the Certificates, the
Trust Fund or this Agreement.
[Notwithstanding any termination of the activities of ICI Funding
Corporation ("ICIFC") in its capacity as Master Servicer hereunder, ICIFC shall
be entitled to receive, out of any Late Collection of a Monthly Payment on a
Mortgage Loan which was due prior to the notice terminating ICIFC rights and
obligations as Master Servicer hereunder and received after such notice, that
portion to which ICIFC would have been entitled pursuant to Sections 3.11 (ii),
(iii), (iv), (v) and (viii) and Section 4. 01 (b)(iii) as well as the portion of
its related Servicing Fee in respect thereof, and any other amounts payable to
ICIFC hereunder the entitlement to which arose prior to the termination of its
activities hereunder.]
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.01, the Trustee or its appointed agent shall be the
successor in all respects to the Master Servicer in its capacity as Master
Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject thereafter to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer including the
obligation to make Advances which have been or will be required to be made
(except for the responsibilities, duties and liabilities contained in Section
2.03 and its obligations to deposit amounts in respect of losses incurred prior
to the date of succession pursuant to Section 3.12 and 4.01(e)) by the terms and
provisions hereof; and provided further, that any failure to perform such duties
or responsibilities caused by the Master Servicer's failure to provide
information required by Section 4.03 shall not be considered a default by the
Trustee hereunder. As compensation therefor, the Trustee shall be entitled to
all funds relating to the Mortgage Loans which the Master Servicer would have
been entitled to charge to the Custodial Account and
58
the Certificate Account if the Master Servicer had continued to act hereunder.
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 Holders of Certificates entitled
to at least 51% of the Voting Rights so request in writing to the Trustee,
appoint, or petition a court of competent jurisdiction to appoint, any FNMA- or
FHLMC approved mortgage servicing institution having a net worth of not less
than $10,000,000 as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder. Pending appointment of a successor to the Master
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 Master Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession;
provided, however, that such succession shall not reduce the ratings of the
Certificates below the original ratings thereof.
Any successor, including the Trustee, to the Master Servicer shall maintain
in force during its term as master servicer hereunder the Insurance Policies and
fidelity bonds to the same extent as the Master Servicer is so required pursuant
to Sections 3.13 and 3.18.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the Master
Servicer, the Trustee shall give prompt notice thereof to Certificateholders.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights of Certificates
affected by a default or Event of Default hereunder, may waive such default or
Event of Default (other than an Event of Default set forth in Section 7.01(vi);
provided, however, that (a) a default or Event of Default under clause (i) of
- -------- -------
Section 7.01 may be waived only by all of the Holders of Certificates affected
by such default or Event of Default and (b) no waiver pursuant to this Section
7.04 shall affect the Holders of Certificates in the manner set forth in the
second paragraph of Section 11.01 or materially adversely affect any non-
consenting Certificateholder. Upon any such waiver of a default or Event of
Default by the Holders representing the requisite percentage of Voting Rights of
Certificates affected by such default or Event of Default, such default or Event
of Default shall cease to exist and shall be deemed to have been remedied for
every purpose hereunder. No such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon except to the
extent expressly so waived.
59
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. 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 their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his 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 to the requirements of this Agreement. 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 misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to at
least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement.
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SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably 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
trusts 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), to exercise
such of the rights and powers vested in it by this Agreement, and to use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
(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 Holders of
Certificates entitled to at least 25% of the Voting Rights; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such action. The
reasonable expense of every such reasonable examination shall be paid by
the Master Servicer or, if paid by the Trustee, shall be repaid by the
Master Servicer upon demand; and
(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.
SECTION 8.03. 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 state ments of the Company or the Master
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The
Trustee makes no representations or warranties as to the validity or sufficiency
of this Agreement or of the Certificates 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 Company or the Master Servicer of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller in respect of the Mortgage Loans or deposited in or
withdrawn from the Custodial Account or the Certificate Account or any other
account by or on behalf of the Company or the Master Servicer, other than any
funds held by or on behalf of the Trustee in accordance with Section 4.01.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee.
SECTION 8.05. Payment of Trustee's Fees.
The Trustee shall withdraw from the Certificate Account on each
Distribution Date and pay to itself the Trustee's Fee. 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 all such amounts shall be
payable from funds in the Custodial Account as provided in Section 3.11. The
provisions of this Section 8.05 shall survive the termination of this Agreement.
The Master Servicer shall indemnify the Trustee and any director, officer,
employee or agent of the Trustee against any loss, liability or expense that may
be sustained in connection with this Agreement related to the willful
misfeasance, bad faith or negligence in the performance of its duties hereunder.
SECTION 8.06. 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. In addition, the Trustee shall at all times be acceptable to
the Rating Agency 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
8.07. The corporation or national banking association serving as Trustee may
have normal banking and trust relationships with the Seller and its affiliates
or the Master Servicer and its affiliates; provided, however, that such
corporation cannot be an affiliate of the Master Servicer other than the Trustee
in its role as successor to the Master Servicer.
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SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving notice thereof to the Company, the Master 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 Company
shall promptly appoint a successor trustee who meets the eligibility
requirements of Section 8.06 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 Master Servicer by the Company. 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 the Rating Agency rating the
Certificates approves the successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Company or the Master 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 Agency in respect of mortgage pass-through certificates having a
rating equal to the then current rating on the Certificates, then the Company
may remove the Trustee and appoint a successor trustee who meets the eligibility
requirements of Section 8.06 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 Master Servicer by the Company.
The Holders of Certificates entitled to at least 51% of the Voting Rights
may at any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Master 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 Master Servicer by the
Company.
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 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Master Servicer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the prede cessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder, and the Master
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
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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 8.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Master Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Master 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 Master
Servicer.
SECTION 8.09. 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 8.06, 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 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the Company
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, 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 8. 10,
such powers, duties, obligations, rights and trusts as the Company and the
Trustee may consider necessary or desirable. If the Company shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 8. 10 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Master Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the
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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.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.
Subject to Section 9.02, the respective obligations and responsibilities of
the Company, the Master Servicer and the Trustee created hereby (other than the
obligations of the Master Servicer to provide for and the Trustee to make
payments to Certificateholders as hereafter set forth) shall terminate upon
payment to the Certificateholders of all amounts held by or on behalf of the
Trustee and required to be paid to them hereunder following the earlier to occur
of (i) the repurchase by the Master Servicer of all Mortgage Loans and each REO
Property in respect thereof remaining in the Trust Fund at a price equal to (a)
100% of the unpaid principal balance of each Mortgage Loan (other than one as to
which a REO Property was acquired) on the day of repurchase together with
accrued interest on such unpaid principal balance at the related Net Mortgage
Rate to the first day of the month in which the proceeds of such repurchase are
to be distributed, plus (b) the appraised value of any REO Property less the
good faith estimate of the Master Servicer of liquidation expenses to be
incurred in connection with its disposal thereof, such appraisal to be conducted
by an appraiser mutually agreed upon by the Master Servicer and the Trustee at
the expense of the Master Servicer, (but not more than the unpaid principal
balance of the related Mortgage Loan, together with accrued interest on that
balance at the Net Mortgage Rate to the first day of the month of repurchase),
and (ii) the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund (or the
disposition of all REO Property in respect thereof); provided, however, that in
no event shall the trust created hereby continue beyond expiration of 21 years
from the death of the last survivor of the descendants of Joseph P. Kennedy, the
late ambassador of the United States to the Court of St. James, living on the
date hereof. In the case of any repurchase by the Master Servicer pursuant to
clause (i), the Master Servicer shall include in such repurchase price the
amount of any Advances that will be reimbursed to the Master Servicer pursuant
to Section 3.11 (iii) and the Master Servicer shall exercise reasonable efforts
to cooperate fully with the Trustee in effecting such repurchase and the
transfer of the Mortgage Loans and related Mortgage Files and related records to
the Master Servicer.
The right of the Master Servicer to repurchase all Mortgage Loans pursuant
to (i) above shall be conditioned upon the aggregate Stated Principal Balance of
such Mortgage Loans at the time of any such repurchase aggregating an amount
equal to or less than ___% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date. If such right is exercised, the Master
Servicer upon such repurchase shall provide to the Trustee, the certifica tion
required by Section 3.16.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distri bution and cancellation, shall be given promptly by the
Master Servicer by letter to the Trustee and shall be given promptly by the
Trustee to the Certificateholders mailed (a) in the event such notice is given
in connection with the Master Servicer's election to repurchase, not earlier
than the 15th day and not later than the 25th day of the month next preceding
the month of such final distribution or (b) otherwise during the month of such
final distribution on or before the Determination Date in such month, in each
case specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office of 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 Certificate Registrar
therein specified. In the event such notice is given in connection with the
Master Servicer's election to repurchase, the Master Servicer shall deposit in
the Custodial Account pursuant to Section 3. 10 on the last day of the related
Prepayment Period an amount equal to the above-described repurchase price
payable out of its own funds. Upon presentation
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and surrender of the Certificates by the Certificateholders, the Trustee shall
distribute to the Certificateholders (i) the amount otherwise distributable on
such Distribution Date, if not in connection with the Master Servicer's election
to repurchase, or (ii) if the Master Servicer elected to so repurchase, an
amount determined as follows: with respect to each Class A and Class B
Certificate, the outstanding Certificate Principal Balance thereof, plus one
month's interest thereon at the applicable Pass-Through Rate and any previously
unpaid Accrued Certificate Interest, subject to the priority set forth in
Section 4.01(b); and with respect to each Class R Certificate, the Percentage
Interest evidenced thereby multiplied by the difference, if any, between the
above described repurchase price and the aggregate amount to be distributed to
the Class A and Class B Certificateholders. Upon certification to the Trustee by
a Servicing Officer, following such final deposit, the Trustee shall promptly
release the Mortgage Files as directed by the Master Servicer for the remaining
Mortgage Loans, and the Trustee shall execute all assignments, endorsements and
other instruments required by the Master Servicer as being necessary to
effectuate such transfer.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned notice, the Trustee shall give a second 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 shall take reasonable steps as directed by the
Company, or appoint an agent to take reasonable steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If, within nine months after the second notice, all of 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.
SECTION 9.02. Additional Termination Requirements.
(a) In the event the Master Servicer repurchases the Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Master Servicer obtains for
the Trustee an Opinion of Counsel to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 9.02 will not (i) result in
the imposition of taxes on the net income derived from "prohibited transactions"
of the Trust Fund as defined in Section 86OF of the Code or (ii) cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) The Trustee shall establish a 90-day liquidation period and
specify the first day of such period in a statement attached to the Trust
Fund's final Tax Return pursuant to Treasury Regulation (S)1.86OF-1. The
Trustee shall satisfy all the requirements of a qualified liquidation under
86OF of the Code and any regulations thereunder, as evidenced by an Opinion
of Counsel obtained at the expense of the Master Servicer;
(ii) During such 90-day liquidation period, and at or prior to the
time of making of the final payment on the Certificates, the Master
Servicer 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
remaining cash on hand (other than cash retained to meet claims), and the
Trust Fund shall terminate at that time.
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(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.
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ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall make an election to treat the Trust 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 the purposes of the
REMIC election in respect of the Trust Fund, the Class A and Class B
Certificates shall be designated as the "regular interests" and the Class R
Certificates shall be designated as the sole class of "residual interest" in the
Trust Fund. The Trustee shall not permit the creation of any "interests" in the
Trust Fund (within the meaning of Section 86OG of the Code) other than the
Regular Certificates and the Residual Certificates.
(b) The Closing Date is hereby designated as the "startup day" of the
Trust Fund within the meaning of Section 86OG(a)(9) of the Code.
(c) The Trustee shall hold a Class R Certificate representing a 0.01 %
Percentage interest of all Class R Certificates and shall be designated as the
tax matters person of the Trust Fund in the manner provided under Treasury
regulations section 1.86OF-4(d) and temporary Treasury regulations section
301.6231(a)(7)-1T. The Trustee, as 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. 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. The legal expenses and costs of any such action described in this
subsection and any liability resulting therefrom shall constitute expenses of
the Trust Fund and the Trustee shall be entitled to reimbursement therefor
unless such legal expenses and costs are incurred by reason of the Trustee's
willful misfeasance, bad faith or negligence.
(d) Except as provided in Section 4.05, 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. 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 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
Permitted Transferee, (ii) 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 (using the
Prepayment Assumption) 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 Company 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.
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(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 thereof as a REMIC under the REMIC Provisions (and the
Master 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 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 86OF(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 86OG(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
Master 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 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 Master 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 Master 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 will consist of "qualified
mortgages" as defined in Section 86OG(a)(3) of the Code and "permitted
investments" as defined in Section 86OG(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 86OF(a)(2) of the Code,
on "net income from foreclosure property" of the Trust Fund as defined in
Section 86OG(c) of the Code, on any contributions to the Trust Fund after the
Startup Day therefor pursuant to Section 86OG(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 pursuant to Section 10.03 hereof,
if such tax arises out of or results from the willful misfeasance, bad faith or
negligence in performance by the Trustee of any of its obligations under this
Article X, (ii) to the Master Servicer pursuant to Section 10.03 hereof, if such
tax arises out of or results from a breach by the Master Servicer of any of its
obligations under Article III or this Article X, or otherwise (iii) against
amounts on deposit in the Custodial Account and shall be paid by withdrawal
therefrom.
(h) On or before April 15 of each calendar year, commencing April 15,
19_, the Trustee shall deliver to the Master 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 Master 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) Following the Startup Day, the Trustee shall not accept any
contributions of assets to the Trust Fund other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.04
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 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
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local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which the Trust Fund will receive a fee or other compensation for
services nor permit either such REMIC to receive any income from assets other
than "qualified mortgages" as defined in Section 86OG(a)(3) of the Code or
"permitted investments" as defined in Section 86OG(a)(5) of the Code.
(1) Solely for purposes of satisfying Section 1.86OG-1(a)(4)(iii) of the
Treasury regulations, and based on certain assumptions described below, the
"latest possible maturity date" by which the Certificate Principal Balances of
the Certificates representing a regular interest in the Trust Fund would be
reduced to zero is __________ 25, 20__, which is the Distribution Date
immediately following the latest scheduled maturity of any Mortgage Loan as
determined assuming that (i) scheduled interest and principal payments on the
Mortgage Loans are received in a timely manner, with no delinquencies or losses,
(ii) there are no principal prepayments, and (iii) neither the Seller nor the
Master Servicer will repurchase any Mortgage Loans.
SECTION 10.02. Prohibited Transactions and Activities.
Neither the Company, the Master 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 IX of this Agreement or (iv) a purchase of
Mortgage Loans pursuant to Article 11 or III of this Agreement) nor acquire any
assets for the Trust Fund, nor sell or dispose of any investments in the
Custodial Account or the Certificate Account for gain, nor accept any
contributions to the Trust Fund after the Closing Date unless it has 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 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.
SECTION 10.03. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Company and the
Master Servicer for any taxes and costs including, without limitation, any
reasonable attorneys fees imposed on or incurred by the Trust Fund, the Company
or the Master Servicer, as a result of the willful misfeasance, bad faith or
negligence by the Trustee with respect to the Trustee's covenants set forth in
this Article X.
(b) The Master Servicer agrees to indemnify the Trust Fund, the Company
and the Trustee for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Company or the Trustee, as a result of a breach of the Master Servicer's
covenants set forth in this Article X or in Article III 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
Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the Company, the Master
Servicer and the Trustee without the consent of any of the Certificateholders,
(i) to cure any ambiguity, (ii) to correct or supplement any provisions herein
which may be defective or inconsistent with any other provisions herein or to
correct any error, (iii) to change the timing and/or nature of deposits in the
Certificate Account, provided that (a) such change would not adversely affect in
any material respect the interests of any Certificateholder, as evidenced by an
Opinion of Counsel, and (b) such change would not adversely affect the then-
current rating of any rated class of Certificates, as evidenced by a letter from
each applicable Rating Agency, (iv) to modify, eliminate or add to any of the
provisions of the Trust Fund (a) to such extent as shall be necessary to
maintain the qualification of the Trust Fund as a REMIC or to avoid or minimize
the risk of imposition of any tax on the Trust Fund, provided that the Trustee
has received an Opinion of Counsel to the effect that (1) such action is
necessary or desirable to maintain such qualification or to avoid or minimize
such risk, and (2) such action will not adversely affect in any material respect
the interests of any Certificateholder, or (b) to restrict the transfer of the
Class R Certificates, provided that the Company has determined that the then-
current ratings of the Class A Certificates will not be adversely affected, as
evidenced by a letter from each Rating Agency, and that any such amendment will
not give rise to any tax with respect to the transfer of the Class R
Certificates to a non-Permitted Transferee, (v) to make any other provisions
with respect to matters or questions arising this Agreement which are not
materially inconsistent with the provisions thereof, provided that such action
will not adversely affect in any material respect the interests of any
Certificateholder, or (vi) to amend specified provisions that are not material
to holders of any class of Certificates offered hereunder.
This Agreement may also be amended from time to time by the Company, the
Master Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66-2/3% of the Voting Rights allocated to each Class
affected thereby for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments 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 11.01, Certificates registered in the name of the Seller or the
Master Servicer or any affiliate thereof shall be entitled to Voting Rights with
respect to matters described in clauses (i) and (ii) 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.
It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the
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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.
Prior to executing any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel (provided by the Person
requesting such amendment) to the effect that such amendment is authorized or
permitted by this Agreement. The cost of an Opinion of Counsel delivered
pursuant to this Section 11.01 shall be an expense of the party requesting such
amendment, but in any case shall not be an expense of the Trustee.
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 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer and at the expense of the Company on direction by the Trustee,
but only upon direction accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided 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 party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a notice of an Event of Default, or of a default
by the Seller or the Trustee in the performance of any obligation hereunder, and
of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such
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action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 11.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance with
the laws of the State of New York and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
All demands, notices and direction hereunder shall be in writing and shall
be deemed effective upon receipt when delivered to (a) in the case of the
Company, ________________________, ____________________________________,
Attention: ____________________, or such other address as may hereafter be
furnished to the Trustee and the Master Servicer in writing by the Company, (b)
in the case of the Trustee,_______________________________________________,
Attention: _______________________________, or such other address as may
hereafter be furnished to the Master Servicer and the Company in writing by the
Trustee and (c) in the case of the Master Servicer, [ICI Funding Corporation]
[20371 Irvine Avenue, Suite 200, Santa Ana Heights, CA 92707,] Attention:
__________________________ or such other address as may hereafter be furnished
to the Company and the Trustee in writing. Any notice required or permitted to
be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.07. Successors and Assigns; Third Party Beneficiary.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Trustee and the
Certificateholders. The parties hereto agree that the Seller is the intended
third party beneficiary of Sections 3.07, 3.10 and 3.22 hereof, and that the
Seller may enforce such provisions to the same extent as if the Seller were a
party to this Agreement.
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SECTION 11.08. Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
SECTION 11.09. Notice to Rating Agencies and Certificateholder.
The Trustee shall use its best efforts to promptly provide notice to the
Rating Agency referred to below with respect to each of the following of which
it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant to Section
2.04;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custodial Account or the Certificate
Account.
In addition, the Trustee shall promptly furnish to the Rating Agency copies
of the following:
1. Each report to Certificateholders described in Section 4.02;
2. Each annual independent public accountants' servicing report received
as
described in Section 3.20; and
3. Each Master Servicer compliance report received as described in
Section 3.19.
Any such notice pursuant to this Section 11.09 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 to (i) in the
case of [_________________________] Attention: ____________, and (ii) in the
case of [____________________________________________________] or, in each case,
such other address as such Rating Agency may designate in writing to the parties
thereto.
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IN WITNESS WHEREOF, the Company, the Master Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized all as of the day and year first above written.
ICIFC SECURED ASSETS CORP.,
Company
By:________________________________________
[ICI FUNDING CORPORATION]
[NAME OF MASTER SERVICER],
Master Servicer
By:________________________________________
[NAME OF TRUSTEE]
Trustee
By:________________________________________