EXHIBIT 4.2
Exhibit 4.2
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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_-__
________________________________________________________________________________
________________________________________________________________________________
TABLE OF CONTENTS
___________
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.............................................. 2
Accrued Certificate Interest.......................................... 2
Adjustment Date....................................................... 2
Advance............................................................... 2
Agreement............................................................. 2
Anniversary........................................................... 2
Assignment............................................................ 2
Assignment Agreement.................................................. 2
Available Distribution Amount......................................... 2
Bankruptcy Amount..................................................... 3
Bankruptcy Code....................................................... 3
Bankruptcy Loss....................................................... 3
Business Day.......................................................... 3
Cash Liquidation...................................................... 3
Certificate........................................................... 3
Certificate Account................................................... 3
Certificate Account Deposit Date...................................... 4
Certificateholder..................................................... 4
Certificate Owner..................................................... 4
Certificate Principal Balance......................................... 4
Closing Date.......................................................... 4
Code.................................................................. 4
Collateral Value...................................................... 4
Company............................................................... 4
Converted Mortgage Loan............................................... 4
Convertible Mortgage Loan............................................. 4
Converting Mortgage Loan.............................................. 4
Corporate Trust Office................................................ 5
Custodial Account..................................................... 5
Cut-off Date.......................................................... 5
Debt Service Reduction................................................ 5
Deficient Valuation................................................... 5
Definitive Certificate................................................ 5
Deleted Mortgage Loan................................................. 5
Determination Date.................................................... 5
Distribution Date..................................................... 5
Due Date.............................................................. 5
Due Period............................................................ 5
Duff & Phelps......................................................... 5
Eligible Account...................................................... 5
Event of Default...................................................... 5
Excess Bankruptcy Loss................................................ 6
Excess Fraud Loss..................................................... 6
Excess Special Hazard Loss............................................ 6
Extraordinary Events.................................................. 6
Extraordinary Losses.................................................. 7
FDIC.................................................................. 7
FHLMC................................................................. 7
Fitch................................................................. 7
FNMA.................................................................. 7
Fraud Losses.......................................................... 7
Fraud Loss Amount..................................................... 7
Funding Date.......................................................... 7
Gross Margin.......................................................... 7
Index................................................................. 7
ICI Funding Corporation............................................... 8
Initial Certificate Principal Balance................................. 8
Insurance Policy...................................................... 8
Insurance Proceeds.................................................... 8
Late Collections...................................................... 8
Letter of Credit...................................................... 8
Letter of Credit Issuer............................................... 8
Liquidation Proceeds.................................................. 8
Loan-to-Value Ratio................................................... 8
Master Servicer....................................................... 8
Maximum Interest Rate................................................. 8
Minimum Interest Rate................................................. 8
Monthly Payment....................................................... 8
Moody's............................................................... 9
Mortgage.............................................................. 9
Mortgage File......................................................... 9
Mortgage Loan......................................................... 9
Mortgage Loan Schedule................................................ 9
Mortgage Note......................................................... 10
Mortgage Rate......................................................... 10
Mortgaged Property.................................................... 10
Mortgagor............................................................. 10
Net Mortgage Rate..................................................... 10
Nonrecoverable Advance................................................ 10
Officers' Certificate................................................. 10
Opinion of Counsel.................................................... 11
OTS................................................................... 11
Outstanding Mortgage Loan............................................. 11
Ownership Interest.................................................... 11
Pass-Through Rate..................................................... 11
Percentage Interest................................................... 11
Periodic Cap.......................................................... 11
Permitted Instruments................................................. 11
Person................................................................ 12
Prepayment Assumption................................................. 12
Prepayment Interest Shortfall......................................... 12
Prepayment Period..................................................... 12
Primary Hazard Insurance Policy....................................... 12
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Primary Mortgage Insurance Policy..................................... 13
Principal Prepayment.................................................. 13
Purchase Price........................................................ 13
Qualified Insurer..................................................... 13
Qualified Substitute Mortgage Loan.................................... 13
Rating Agency......................................................... 14
Realized Loss......................................................... 14
Record Date........................................................... 14
Relief Act............................................................ 14
Remittance Report..................................................... 14
REO Acquisition....................................................... 14
REO Disposition....................................................... 14
REO Imputed Interest.................................................. 14
REO Proceeds.......................................................... 14
REO Property.......................................................... 15
Request for Release................................................... 15
Required Insurance Policy............................................. 15
Responsible Officer................................................... 15
Seller................................................................ 15
Seller's Warranty Certificate......................................... 15
Servicing Account..................................................... 15
Servicing Advances.................................................... 15
Servicing Fee......................................................... 15
Servicing Fee Rate.................................................... 15
Servicing Officer..................................................... 15
Single Certificate.................................................... 15
Special Hazard Amount................................................. 16
Special Hazard Percentage............................................. 16
Standard & Poor's..................................................... 16
Stated Principal Balance.............................................. 16
Sub-Servicer.......................................................... 16
Sub-Servicer Remittance Date.......................................... 16
Sub-Servicing Account................................................. 16
Sub-Servicing Agreement............................................... 16
Tax Returns........................................................... 16
Transfer.............................................................. 16
Transferor............................................................ 16
Trust Fund............................................................ 17
Trustee............................................................... 17
Trustee's Fee......................................................... 17
Uninsured Cause....................................................... 17
Voting Rights......................................................... 17
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.................................................................. 18
SECTION 2.02. Acceptance of the Trust Fund by the Trustee................................................... 20
SECTION 2.03. Representations, Warranties and Covenants of the Master Servicer and the Company.............. 21
SECTION 2.04. Representations and Warranties of the Seller; Repurchase and Substitution..................... 23
SECTION 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund............................... 24
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.................................................... 25
SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers........................... 26
SECTION 3.03. Successor Sub-Servicers...................................................................... 26
SECTION 3.04. Liability of the Master Servicer............................................................. 26
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and Trustee or Certificateholders.......... 27
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee............................. 27
SECTION 3.07. Collection of Certain Mortgage Loan Payments................................................. 27
SECTION 3.08. Sub-Servicing Accounts....................................................................... 28
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts....................... 28
SECTION 3.10. Custodial Account............................................................................ 28
SECTION 3.11. Permitted Withdrawals From the Custodial Account............................................. 29
SECTION 3.12. Permitted Instruments........................................................................ 30
SECTION 3.13. Maintenance of the Letter of Credit, Primary Mortgage Insurance and Primary Hazard Insurance. 30
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.................................... 32
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.................................................... 33
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.............................................. 34
SECTION 3.17. Servicing Compensation....................................................................... 35
SECTION 3.18. Maintenance of Certain Servicing Policies.................................................... 35
SECTION 3.19. Annual Statement as to Compliance............................................................ 35
SECTION 3.20. Annual Independent Public Accountants' Servicing Statement................................... 36
SECTION 3.21. Access to Certain Documentation.............................................................. 36
SECTION 3.22. Title, Conservation and Disposition of REO Property.......................................... 37
SECTION 3.23. Additional Obligations of the Master Servicer................................................ 38
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SECTION 3.24. Additional Obligations of the Company......................................................... 38
SECTION 3.25. Converted Mortgage Loans; Purchase Obligations Upon Conversion; Administration by the Trustee. 38
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Certificate Account; Distributions.
SECTION 4.02. Statements to Certificateholders.............................................................. 40
SECTION 4.03. Remittance Reports; Advances by the Master Servicer........................................... 42
SECTION 4.04. Allocation of Realized Losses................................................................. 43
SECTION 4.05. Information Reports to be Filed by the Master Servicer........................................ 43
SECTION 4.06. The Letter of Credit.......................................................................... 43
SECTION 4.07. Compliance with Withholding Requirements...................................................... 45
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
SECTION 5.02. Registration of Transfer and Exchange of Certificates......................................... 46
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates............................................. 47
SECTION 5.04. Persons Deemed Owners......................................................................... 47
ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
SECTION 6.01. Liability of the Company and the Master Servicer.............................................. 48
SECTION 6.02. Merger, Consolidation or Conversion of the Company or the Master Servicer..................... 48
SECTION 6.03. Limitation on Liability of the Company, the Master Servicer and Others........................ 48
SECTION 6.04. Limitation on Resignation of the Master Servicer.............................................. 49
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default............................................................................. 50
SECTION 7.02. Trustee to Act; Appointment of Successor...................................................... 51
SECTION 7.03. Notification to Certificateholders............................................................ 52
SECTION 7.04. Waiver of Events of Default................................................................... 52
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.................................................. 53
SECTION 8.02. Certain Matters Affecting the Trustee.............................. 54
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.............. 55
SECTION 8.04. Trustee May Own Certificates....................................... 55
SECTION 8.05. Payment of Trustee's Fees.......................................... 55
SECTION 8.06. Eligibility Requirements for Trustee............................... 55
SECTION 8.07. Resignation and Removal of the Trustee............................. 56
SECTION 8.08. Successor Trustee.................................................. 56
SECTION 8.09. Merger or Consolidation of Trustee................................. 57
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...................... 57
SECTION 8.11. Information Reports and Tax Returns................................ 58
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans..... 59
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment......................................................... 61
SECTION 10.02. Recordation of Agreement; Counterparts............................ 62
SECTION 10.03. Limitation on Rights of Certificateholders........................ 62
SECTION 10.04. Governing Law..................................................... 63
SECTION 10.05. Notices........................................................... 63
SECTION 10.06. Severability of Provisions........................................ 63
SECTION 10.07. Successors and Assigns; Third Party Beneficiary................... 63
SECTION 10.08. Article and Section Headings...................................... 63
SECTION 10.09. Notice to Rating Agencies and Certificateholder................... 64
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Signatures
Acknowledgments
Exhibit A Form of A Certificate
Exhibit B Form of Irrevocable Letter of Credit
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 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 (the
"Certificates"), which will evidence the entire beneficial ownership interest in
the Mortgage Loans (as defined herein). The Mortgage Loans have an aggregate
Stated Principal Balance as of the Cut-off Date equal to $_____________. The
Mortgage Loans are adjustable 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, one month's interest accrued at the then applicable Pass-Through Rate on
the Certificate Principal Balance of the Certificates 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 the 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 covered by draws on the
Letter of Credit pursuant to Section 4.04, (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, 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 to the
Certificates, in proportion to their respective amounts of Accrued Certificate
Interest which would have resulted absent such reductions.
"Adjustment Date": With respect to each Mortgage Loan, the date set
forth in the related Mortgage Note on which the Mortgage Rate may change and
each semi-annual anniversary of such date. The first Adjustment Date as to each
Mortgage Loan is set forth in the Mortgage Loan Schedule.
"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 ____________, 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,
2
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, 2.04 and 3.25, 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 draws
made under the Letter of Credit with respect to Bankruptcy Losses since the Cut-
off Date up to such date of determination 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 the 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, the Certificate Account or
the office of the Letter of Credit Issuer at which draws under the Letter of
Credit are to be made is 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 one of the Certificates, executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit A.
"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.
3
"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 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 10.01. 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 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.
"Certificate Register": The register maintained pursuant to Section
5.02.
"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.
"Converted Mortgage Loan": Any Convertible Mortgage Loan with respect
to which the interest rate borne by such Mortgage Loan has been converted from
an adjustable interest rate to a fixed interest rate.
"Convertible Mortgage Loan": Any Mortgage Loan which by its terms
grants to the related Mortgagor the option to convert the interest rate borne by
such Mortgage Loan from an adjustable interest rate to a fixed interest rate.
"Converting Mortgage Loan": Any Convertible Mortgage Loan with
respect to which the related Mortgagor has given notice of his intent to convert
from an adjustable interest rate to a fixed interest rate and prior to the
conversion of such Mortgage Loan.
4
"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_-__.
"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.
"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.
"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
5
immediately preceding the Distribution Date next following the date of
investment in such collateral or the 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 Certificates). 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.
6
"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 draws made under the Letter of Credit with respect to Fraud
Losses 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 aggregate amount of draws made under the Letter of Credit with
respect to Fraud Losses since the most recent anniversary of the Cut-off Date up
to such date of determination. On and after the fifth anniversary of the Cut-off
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 the 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.
"Gross Margin": As to each Mortgage Loan, the fixed percentage set
forth in the related Mortgage Note and indicated in Exhibit H hereto which
percentage is added to the Index on each Adjustment Date to determine (subject
to rounding in accordance with the related Mortgage Note, Periodic Cap, Maximum
Interest Rate and Minimum Interest Rate) the interest rate to be borne by such
Mortgage Loan until the next Adjustment Date.
"Index": With respect to any Mortgage Loan, the Cost of Funds Index
reflecting the monthly weighted average cost of funds of savings and loan
associations and savings banks, the home offices of which are located in
Arizona, California and Nevada, that are member institutions of the FHLB of San
Francisco, as published in The Wall Street Journal, as most recently available
-----------------------
as of the date ____ days prior to the relevant Adjustment Date, or in the event
that such index is no longer available, an index selected by the Master Servicer
and reasonably acceptable to the Trustee that is based on comparable
information.
7
["ICI Funding Corporation": ICI Funding Corporation, a
___________________ corporation, and any successor thereto.]
"Initial Certificate Principal Balance": With respect to the
Certificates, $_____________.
"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.
"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.
"Letter of Credit": The irrevocable letter of credit covering certain
losses on the Mortgage Loans in all of the Mortgage Pools, in the form of
Exhibit B hereto, issued by the letter of Credit Issuer, naming the Trustee as
beneficiary for the benefit of the Certificateholders, as the same may be
terminated, modified or reduced from time to time pursuant to its terms and
Section 4.06, and any replacement letter of credit obtained pursuant to Section
4.06.
"Letter of Credit Issuer": ______________, or if a replacement
Letter of Credit is issued in accordance with the terms hereof, the issuer of
such replacement Letter of Credit.
"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.
"Maximum Interest Rate": As to any Mortgage Loan, the maximum
interest rate that may be borne by such Mortgage Loan as set forth in the
related Mortgage Note and indicated in Exhibit H, which rate may be applicable
to such Mortgage Loan at any time during the life of such Mortgage Loan.
"Minimum Interest Rate": As to any Mortgage Loan, the minimum
interest rate that may be borne by such Mortgage Loan as set forth in the
related Mortgage Note and indicated in Exhibit H hereto, which rate may be
applicable to such Mortgage Loan at any time during the life of such Mortgage
Loan.
"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
8
Valuations occuring 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;
(ii) the street address, city, state and zip code of the Mortgaged
Property;
(iii) the Mortgage Rate;
(iv) Maximum Interest Rate;
(v) Minimum Interest Rate;
(vi) Gross Margin;
(vii) the first Adjustment Rate;
(viii) the Periodic Cap;
(ix) the maturity date;
(x) the original principal balance;
(xi) the first payment date;
(xii) the type of Mortgaged Property;
9
(xiii) the Monthly Payment in effect as of the Cut-off Date;
(xiv) the principal balance as of the Cut-off Date;
(xv) the occupancy status;
(xvi) the purpose of the Mortgage Loan;
(xvii) the Collateral Value of the Mortgaged Property;
(xviii) the original term to maturity;
(xix) the paid-through date of the Mortgage Loan;
(xx) the Loan-to-Value Ratio; and
(xxi) 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 (xiv) 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 clause (xiii) 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 Servicing Fee Rate.
"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 or REO Proceeds. 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.
"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.
10
"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, or (b) 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.
"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, 2.04 or 3.25.
"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.
"Pass-Through Rate": With respect to the Certificates and any
Distribution Date, a rate equal to the weighted average, expressed as a
percentage, of the Net Mortgage 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).
"Percentage Interest": With respect to any Certificate, the undivided
percentage ownership interest equal to the initial Certificate Principal Balance
thereof divided by the aggregate Initial Certificate Principal Balance of all of
the Certificates.
"Periodic Cap": With respect to the Mortgage Loans, the periodic rate
cap which limits the increase or the decrease of the related Mortgage Rate on
any Adjustment Date to _______%.
"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
11
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
(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.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"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.
12
"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.
"Purchase Price": With respect to any Mortgage Loan (or REO Property)
required to be purchased pursuant to Section 2.02, 2.04 or 3.25, 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.
13
"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 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.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"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 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.
14
"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.
"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.
"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.
"Single Certificate": A Certificate evidencing the minimum
denomination of the Certificates as set forth in Section 5.01.
15
"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 draws made under the Letter of Credit in accordance with
Section 4.04 since the Cut-off Date 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.]
"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.
"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.
"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": [To be provided.]]
"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.
16
"Trust Fund": The corpus of the trust created by this Agreement, to
the extent described herein, consisting of the Mortgage Loans, such assets as
shall from time to time be identified as deposited in respect of the Mortgage
Loans in the Custodial Account and in the Certificate Account, property which
secured a Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure, proceeds of any Primary Hazard Insurance Policies, if any,
and the Letter of Credit (or any alternate form of credit support substituted
therefor) and all proceeds thereof.
"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.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights shall be
allocated among Holders of the Certificates, in proportion to the outstanding
Certificate Principal Balances of their respective Certificates.
17
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 Imperial
Credit Secured Assets Corp., Mortgage Pass-Through 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 Imperial
Credit 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
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(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 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 pen-nit 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
19
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 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.
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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;
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(v) The Master Servicer is not in violation of, and its
execution and delivery of this 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;
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(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;
(iv) The Mortgage Loans are fully-amortizing, adjustable-
rate mortgage loans with 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
Certificateholdersits 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 90 days 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
23
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. 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. The costs of any substitution as described
above, including any related assignments, opinions or other documentation in
connection therewith shall be dome 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, 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.
24
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 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 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.
25
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.
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
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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 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.
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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 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;
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(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, 3.25
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 required to be deposited pursuant to
Section 3.25.
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];
(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;
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(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 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; and
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).
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 the Letter of Credit, Primary Mortgage
Insurance and Primary Hazard Insurance.
(a) The Master Servicer covenants and agrees to exercise its best
reasonable efforts to maintain and keep the Letter of Credit in full force and
effect in accordance with Section 4.06 until the termination of the Trust Fund
created hereby, unless the amount available to be drawn thereunder has been
exhausted or unless the Letter of Credit has been terminated pursuant to the
terms thereof or hereof. As to any Distribution Date, with respect to any
Mortgage Loan as to which liquidation has been completed (which shall be deemed
to have occurred when the Master Servicer determines that it has received all
Insurance Proceeds
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(other than proceeds from a drawing under the Letter of Credit), Liquidation
Proceeds and other recoveries which the Master Servicer deems to be recoverable)
during the preceding calendar month or was deemed to have occurred during such
preceding calendar month in accordance with Section 3.07 (other than any
Mortgage Loan relating to a Mortgaged Property which has suffered an
Extraordinary Loss), by 12:00 Noon, New York City time, on the related
Certificate Account Deposit Date, the Trustee shall draw on the Letter of
Credit, after receipt of the written statement of the Master Servicer delivered
pursuant to Section 4.04, pursuant to the terms thereof. In lieu of a draw under
the Letter of Credit as provided above, Southern Pacific Funding, at its sole
option, may, on the Certificate Account Deposit Date upon which such draw could
otherwise be made, deposit an amount equal to such draw into the Certificate
Account. After any drawing under the Letter of Credit or payment by Southern
Pacific Funding pursuant to this Section 3.13(a), the Trustee shall assign to
Southern Pacific Funding any rights in or to the related Mortgage Loan and such
Mortgage Loan will thereafter no longer be part of the Trust Fund. Upon receipt
by Southern Pacific Funding of any amounts in connection with a Mortgage Loan so
assigned to it, Southern Pacific Funding shall supply the Trustee with an
Officers' Certificate which sets forth such amount, and (except in the case of a
payment made by Southern Pacific Funding in lieu of a draw on the Letter of
Credit) Southern Pacific Funding shall cause the Letter of Credit Issuer to be
reimbursed to the extent required for reinstatement of the available amount
under the Letter of Credit. Upon receipt by the Trustee of such an Officers'
Certificate, if the Letter of Credit remains outstanding, the Trustee shall
request the reinstatement of the amount remaining under the Letter of Credit in
an amount equal to such recovered amount by delivering a certificate to the
Letter of Credit Issuer substantially in the form of Annex B to the Letter of
Credit.
Notwithstanding the foregoing, draws on the Letter of Credit, or
payments in lieu thereof, in connection with Fraud Losses shall not exceed in
the aggregate Fraud Loss Amount.
(b) The Master Servicer may terminate the Letter of Credit or reduce
the amount thereof (pursuant to Section 4.06(d)) or substitute an alternative
form of credit enhancement therefor, provided that prior to any such reduction,
termination or substitution, the Master Servicer shall obtain written
confirmation from the Rating Agency that such reduction, termination or
substitution would not adversely affect the then-current rating assigned to the
Certificates by such Rating Agency and provide a copy of such confirmation to
the Trustee and, provided that the Master Servicer obtains on Opinion of Counsel
to the effect that obtaining any such alternative form of credit support will
not adversely affect the classification of the Trust Fund as a grantor trust for
federal income tax purposes.
(c) 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.
(d) 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
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or cause to be taken such reasonableaction 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.
(e) 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
32
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 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
33
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 3.11
(iii) or 3.22, and third, for distribution in accordance with the provisions of
Section 4.01(b).
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
34
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.
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 fees and commissions
for the Letter of Credit, 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 provided 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,
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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 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.
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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. 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 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.
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
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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 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 the
Certificates, setting forth (i)(a) if less than 10% of the aggregate Certificate
Principal Balance of the 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 the 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 the
Certificates, then the weighted average price at which the Certificates were
sold and the aggregate percentage of Certificates 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 are retained by
the Company or an affiliated corporation, or are delivered to the Seller, the
fair market value thereof 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 such Certificates to the extent such
information can in the good faith judgment of the Company be determined by it.
SECTION 3.25. Converted Mortgage Loans; Purchase Obligations Upon
Conversion; Administration by the Trustee.
(a) The Trustee, as Noteholder (as defined in the Mortgage Notes for
the Mortgage Loans), hereby authorizes and directs the Master Servicer, on
behalf of the Noteholder, to determine fixed interest rates into which
Mortgagors under Convertible Mortgage Loans may convert the adjustable interest
rates on
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their Mortgage Notes in accordance with the fixed formula set forth insuch
Mortgage Notes. The Master Servicer agrees to make such determinations and
otherwise administer the Convertible Mortgage Loans as contemplated in the
Mortgage Notes until the later to occur of (i) the date on which all the
Convertible Mortgage Loans have become Converted Mortgage Loans, and (ii) the
last date on which Mortgagors have the option to convert the adjustable interest
rates on their Mortgage Notes to fixed interest rates.
(b) Upon becoming aware of the intent to convert any Convertible
Mortgage Loan the Master Servicer will promptly notify the Trustee (if it holds
the related Mortgage File) and (if the Seller is not then the Master Servicer)
the Seller. Prior to the day on which a Convertible Mortgage Loan has become a
Converted Mortgage Loan, the Seller shall be obligated pursuant to the terms of
the Seller's Warranty Certificate to purchase a Converting Mortgage Loan at the
Purchase Price. All amounts paid by the Seller in connection with the purchase
of a Converting Mortgage Loan will be deposited in the Custodial Account. A
failure by the Seller to purchase a Converting Mortgage Loan will constitute an
Event of Default for the Seller in its capacity as Master Servicer under this
Agreement pursuant to Section 7.01.
(c) A Converting Mortgage Loan or a Converted Mortgage Loan shall
remain in the Trust Fund and all payments in respect thereof shall remain in the
Trust Fund unless and until such Converting Mortgage Loan or Converted Mortgage
Loan is purchased by the Seller pursuant to Section 3.25(b).
(d) Upon any purchase of a Converting Mortgage Loan by the Seller
pursuant to Section 3.25(b) and the deposit in the Custodial Account of the
Purchase Price, the Trustee shall give the Master Servicer written notice
thereof, and the Trustee shall release, or cause to be released, the related
Mortgage File, shall execute and deliver such instruments of transfer or
assignment (which shall be prepared by, and be at the expense of the Seller), in
each case without recourse, as the Seller, a third party, or the Trustee, as
purchaser thereof, 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 and
whereupon such Converted Mortgage Loan shall cease to be a part of the Trust
Fund.
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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 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 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 held by such Holder) of the
Available Distribution Amount.
(c) 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
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 the Certificates to the extent applicable:
(i) (a) the amount of such distribution to the
Certificateholders applied to reduce the Certificate Principal Balance
thereof, and (b) the aggregate amount included therein representing
Principal Prepayments;
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(ii) the amount of such distribution to the
Certificateholders allocable to interest;
(iii) if the distribution to the Certificateholders 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 4.03;
(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 the
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 amount of Servicing Fees paid to the Master
Servicer;
(viii) 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;
(ix) the number, aggregate principal balance and book value
of any REO Properties;
(x) the aggregate Accrued Certificate Interest remaining
unpaid, if any, for the Certificates, after giving effect to the
distribution made on such Distribution Date;
(xi) 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;
(xii) the aggregate amount of Realized Losses allocated to
the Certificates on such Distribution Date;
(xiii) the aggregate amount of any recoveries on previously
foreclosed loans from the Seller due to a breach of representation or
warranty;
(xiv) the weighted average remaining term to maturity of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date; and
(xv) 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
41
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 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. 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. 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
42
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 to the Letter of Credit and to the Certificates as
determined by the Trustee in accordance with the following provisions. All
Realized Losses, other than Excess Special Hazard Losses, Excess Bankruptcy
Losses, Excess Fraud Losses or Extraordinary Losses shall first be covered by
draws on the Letter of Credit by the Master Servicer pursuant to Section 4.06
and then allocated to the Certificates, in reduction of the Certificate
Principal Balance thereof. Any Excess Special Hazard Losses, Excess Bankruptcy
Losses, Excess Fraud Losses and Extraordinary Losses on the Mortgage Loans will
be allocated to the Certificates. Any allocation of the principal portion of
Realized Losses to 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.
Allocations of the interest portions of Realized Losses shall be made by
operation of the definition of "Accrued Certificate Interest". All Realized
Losses and all other losses allocated to the Certificates under this Section
4.04 will be allocated among the Certificates 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. The Letter of Credit.
(a) Except as otherwise set forth herein, the Master Servicer hereby
covenants and agrees to exercise its best reasonable efforts to maintain or
cause the Letter of Credit (or substitute credit enhancement), to be maintained
to the extent and in the form and amount and for the purposes set forth in
43
this Agreement. The Trustee shall draw on the Letter of Credit at the times and
in the manner set forth herein and therein.
(b) In the event that at any time the Letter of Credit remains
outstanding the short-term unsecured debt obligations of the Letter of Credit
Issuer are downgraded to "A-1" by Standard & Poor's, then, the Master Servicer
shall promptly notify the Trustee of such downgrade and, within 60 days of such
event, either (i) the Master Servicer shall obtain a replacement letter of
credit or other form of credit enhancement in accordance with this Section
4.06(b).
Prior to delivering any replacement letter of credit or other form of
credit enhancement to the Trustee pursuant to this Section 4.06(b), the Master
Servicer shall (i) obtain an Opinion of Counsel to the effect that such
replacement letter of credit or alternative form of credit support will not
adversely affect the classification of the Trust Fund as a grantor trust for
federal income tax purposes and (ii) written confirmation from the Rating Agency
that such replacement letter of credit or alternative form of credit enhancement
would not have adversely affected the then-current rating assigned to the
Certificates by such Rating Agency and deliver to the Trustee an Opinion of
Counsel to the effect that such replacement letter of credit or alternative form
of credit enhancement is a valid and legally binding obligation of the related
letter of credit issuer or issuer of such alternate form of credit enhancement
in accordance with its terms. Any replacement letter of credit shall be in
generally the same form as the form of Letter of Credit attached as Exhibit B
hereto, shall be issued by a Qualified Bank and the initial amount available to
be drawn thereunder shall equal the amount remaining under the previous Letter
of Credit. The cost of obtaining and maintaining any replacement letter of
credit or alternative form of credit enhancement shall be borne by the Master
Servicer.
The Trustee acknowledges such grant and accepts the trusts under this
Section 4.06 in accordance with the provisions hereof.
(c) Upon receipt of a certificate of a Servicing Officer of the
Master Servicer or the Company instructing the Trustee to reduce, modify or
terminate the amounts available under the Letter of Credit in accordance with
Section 3.13 and (i) in the case of a modification (but not a reduction or
termination of the Letter of Credit), an Opinion of Counsel to the effect that
any such modification of the Letter of Credit will not adversely affect the
classification of the Trust Fund as a grantor trust for federal income tax
purposes, and (ii) written confirmation from the Rating Agency to the effect
that the then-current rating assigned to the Certificates by such Rating Agency
will not be adversely affected by any such reduction, modification or
termination, the Trustee shall reduce, modify or terminate the Letter of Credit
pursuant to such instructions and Section 3.13 shall be deemed modified to the
extent set forth in such instructions.
On the Determination Date immediately following each anniversary of
the Cut-off Date the Master Servicer shall provide the Trustee with a
certificate of a Servicing Officer which sets forth the amounts, if any, by
which the amount available under the Letter of Credit, the Bankruptcy Amount,
the Fraud Loss Amount and the Special Hazard Amount are to be reduced in
accordance with the definitions thereof. In addition, for purposes of reducing
the amount available under the Letter of Credit, the Bankruptcy Amount, the
Fraud Loss Amount and the Special Hazard Amount, as applicable, the Master
Servicer shall notify the Trustee by means of a certificate of a Servicing
Officer of any amounts deposited by the Master Servicer in the Certificate
Account pursuant to Sections 3.11 (a), 3.12(b) and 3.20(a). Upon receipt of each
certificate of a Servicing Officer the Trustee will promptly notify the Letter
of Credit Issuer of such reductions in the form of Annex C to the Letter of
Credit.
In addition, for purposes of reducing the amount available under the
Letter of Credit, the Special Hazard Amount, the Fraud Loss Amount and the
Bankruptcy Amount, as applicable, upon realization thereof, the Master Servicer
shall notify the Trustee by means of an Officer's Certificate of any losses
incurred by the
44
Master Servicer in connection with any Mortgage Loan purchased pursuant to
Section 3.13, separately identifying any such losses which would have been
either Special Hazard Losses, Fraud Losses or Bankruptcy Losses, had the
Mortgage Loan not been so purchased. Upon receipt of such an Officers'
Certificate, the Trustee shall promptly notify the Letter of Credit Issuer of
such reduction by delivering a certificate to the Letter of Credit Issuer
substantially in the form of Annex C to the Letter of Credit. Upon receipt by
the Trustee of such an Officers' Certificate, if the Letter of Credit remains
outstanding, the Trustee shall request the reinstatement of the amount available
under the Letter of Credit (and the Fraud Loss Amount, Bankruptcy Amount or
Special Hazard Amount, if applicable) under the Letter of Credit in an amount
equal to such recovered amount be delivering a certificate to the Letter of
Credit Issuer substantially in the form of Annex B to the Letter of Credit.
(d) Upon termination of the Trust Fund pursuant to Article IX or upon
termination of the Letter of Credit pursuant to the terms of this Agreement
(including a draw of the entire amount available under the Letter of Credit
pursuant to Section 4.06(b)), the Trustee shall provide the Letter of Credit
Issuer with a certificate of termination pursuant to the provisions of the
Letter of Credit.
SECTION 4.07. 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 form annexed hereto as
Exhibits A. The Certificates will be issuable in registered form only. The
Certificates shall be issuable in minimum dollar denominations of $1,000 and
integral multiples of $1 in excess thereof, except that one Certificate may be
issued in an amount such that the denomination of such Certificate and the
aggregate denomination of all other outstanding Certificates together equal the
aggregate Certificate Principal Balance of the Certificates.
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.
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 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 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.
46
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 deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same 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.
47
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 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 remaining 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.
48
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.
49
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 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
50
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.
In addition, any failure of the Master Servicer to repurchase a Converting
Mortgage Loan pursuant to Section 3.25 shall constitute an Event of Default, and
in such event, all of the rights and obligations of the Master Servicer
hereunder may be terminated in accordance with the preceding sentence. 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
otherwise, 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 instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement 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 ("ICI Funding") 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 ICI Funding's
rights and obligations as Master Servicer hereunder and received after such
notice, that portion to which ICI Funding would have been entitled pursuant to
Sections 3.11 (ii), (iii), (iv), (v) and (viii) as well as the portion of its
related Servicing Fee in respect thereof, and any other amounts payable to ICI
Funding 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) 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 the
51
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 10.01 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.
52
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
grantor trust 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.
53
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.
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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,
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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.
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
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such instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 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
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the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.11. Information Reports and Tax Returns.
The Trustee shall prepare, execute and timely file such information
reports or returns as may be required from time to time under any applicable
federal, state or local law with respect to the Trust Fund or the
Certificateholders and shall timely provide Certificateholders of such Series
with information as to the Master Servicer's determination of monthly income
accrued by the Trust Fund. [Unless there is a statutory or administrative
clarification to the contrary, as evidenced by an Opinion of Counsel delivered
to the Trustee, requiring such information reports or returns to be prepared
based on a different method, the Trustee shall prepare such information returns
or reports based on a constant yield method with respect to the Certificates of
such Series, using the Prepayment Assumption and a representative initial
offering price for Certificates in computing such constant yield.]
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.
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 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. 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 Trustee shall be entitled
to all unclaimed funds and other assets which remain subject hereto.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. 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 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 (v) 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 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 10.01,
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.
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 10.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
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 10.01 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.
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SECTION 10.02. 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 10.03. 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 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.
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SECTION 10.04. 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 10.05. 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 10.06. 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 10.07. 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 Company, (b) in the case of the Trustee, 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.
SECTION 10.08. 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.
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SECTION 10.09. Notice to Rating Agencies and Certificateholder.
The Trustee shall use its best efforts to promptly provide notice to
the Rating Agencies referred to below and the Letter of Credit Issuer 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 10.09 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 CORPORATION]
[NAME OF MASTER SERVICER],
Master Servicer
By:_____________________________________
[NAME OF TRUSTEE]
Trustee
By:_____________________________________
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