EXHIBIT 4.1
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ACE Securities Corp.
Depositor,
and
____________________________
Servicer
and
______________________________
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of ____________, 199_
Asset-Backed Certificates
Series 199_-_
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POOLING AND SERVICING AGREEMENT, dated as of ____________, 199_, by
and among ACE Securities Corp., a Delaware corporation, in its capacity as
depositor (the "Depositor"), _____________________________, a ___________
corporation, in its capacity as servicer (the " Servicer"), and
_____________________________________, a ____________________________, in its
capacity as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell asset backed certificates (collectively,
the "Certificates"), to be issued hereunder in five classes (each, a "Class"),
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund (as defined herein), consisting primarily of the Mortgage Loans,
the Pre-Funding Account and the Capitalized Interest Account (each, as defined
herein). As provided herein, the Trustee will make an election to treat the
Trust Fund (other than the Pre-Funding Account and the Capitalized Interest
Account) as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes. The Class A Certificates (as defined herein) will represent
ownership of "regular interests" in the REMIC, and the Class R Certificates will
constitute the sole Class of "residual interest" in the REMIC for purposes of
the REMIC Provisions (as defined herein) under federal income tax law.
The following table sets forth the designation, type, aggregate
Original Security Balance (as defined herein), maturity date, initial ratings
and certain features for each Class of Certificates comprising the interests in
the Trust Fund created hereunder.
AGGREGATE
ORIGINAL
SECURITY
DESIGNATION TYPE BALANCE FEATURES INITIAL RATINGS
- ---------------- ------------- ------------- ------------- -----------------
Class A-1 Senior $ Senior
Class A-2 Senior $ Senior
Class A-3 Senior $ Senior
Class A-4 Senior $ Senior
Class R Subordinate n/a Residual n/a
The Mortgage Loans (as defined herein) have an aggregate Principal
Balance (as defined herein) as of the Cut-off Date equal to $________________.
The amount deposited by the Depositor in the Pre-Funding Account on the Closing
Date is $________________.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
"Accepted Servicing Practices": The Servicer's normal servicing
practices, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located.
"Account": Any Eligible Account established pursuant to Sections 5.03,
5.09, 6.01, 6.04, 6.12 or 6.13 hereof.
"Accrual Period": With respect to any Distribution Date, the previous
calendar month.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust Fund pursuant to Section 2.08 of this Agreement, a notice,
substantially in the form of Exhibit N, which shall be given not later than two
Business Days prior to the related Subsequent Transfer Date, of the Depositor's
designation of Subsequent Mortgage Loans to be sold to the Trust Fund and the
aggregate principal balance as of the Subsequent Cut-off Date of such Subsequent
Mortgage Loans.
"Affiliate": With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement": This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
"Appraised Value": As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced or modified Mortgage Loan as to which
it is the lesser of the appraised value determined above or the appraised value
determined in an appraisal at the time of refinancing or modification, as the
case may be.
"Assignment Of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders.
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"Authorized Denominations": With respect to each Class of Class A
Certificates, a minimum denomination of $________ Original Security Balance and
integral multiples of $________ Original Security Balance in excess thereof.
With respect to the Class R Certificates, a minimum Percentage Interest of ____%
and integral multiples of ____% in excess thereof.
"Available Funds": As defined in Section 6.04(a).
"Available Funds Shortfall": With respect to the Mortgage Loans and
any Distribution Date, an amount equal to the sum of (a) the Class A Interest
Distribution Amount minus the Available Funds for such Distribution Date and (b)
the Subordination Deficit.
"Business Day": Any day other than (a) a Saturday or Sunday, or (b) a
day on which banking institutions in the State of ___________, the State of
___________ or the state where the Trustee's corporate trust office is located
are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Account established and maintained
pursuant to Section 6.13, which must be an Eligible Account.
"Capitalized Interest Amount": As to any Distribution Date, an amount
equal to the lesser of (A) interest accrued for the related Accrual Period on an
amount equal to (i) the related Original Pre-Funded Amount minus (ii) the
aggregate Principal Balance of any related Subsequent Mortgage Loans transferred
prior to the first day of the month in which such Distribution Date occurs,
calculated at a rate equal to the sum of (a) the Class A Pass-Through Rate for
such Distribution Date, and (b) ____%; and (B) the related Available Funds
Shortfall (calculated without regard to the Capitalized Interest Amount
component of Available Funds).
"Certificate": Any Class A Certificate or Class R Certificate executed
by the Trustee on behalf of the Trust Fund and authenticated by the Trustee.
"Certificate Account": The account established in accordance with
Section 6.01(a) hereof and maintained by the Trustee.
"Certificateholder or Holder": The Person in whose name a Certificate
is registered in the Certificate Register, except that, neither a Disqualified
Organization nor a Non-United States Person shall be a Holder of a Class R
Certificate for any purposes hereof and, solely for the purposes of giving any
consent (except any consent required to be obtained pursuant to Section 11.03),
waiver, request or demand pursuant to this Agreement, any Certificate registered
in the name of the Depositor or the Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the rights to which it is entitled shall not be
taken into account in determining whether the requisite percentage of rights
necessary to effect any such consent has been obtained, except as otherwise
provided in Section 11.03. The Trustee shall be entitled to rely upon a
certification of the Depositor or the Master Servicer in determining if any
Certificates are registered in the name of a respective Affiliate. Any
Certificates on which payments are made under the Certificate Insurance Policy
shall be deemed to be outstanding and held by the Certificate Insurer to the
extent of such payment.
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"Certificate Insurance Payments Account": The Certificate Insurance
Payments Account established in accordance with Section 6.04(c) hereof and
maintained by the Trustee.
"Certificate Insurance Policy": The certificate guaranty insurance
policy No. _____, and all endorsements thereto dated the Closing Date, issued by
the Certificate Insurer for the benefit of the Class A Certificateholders, a
copy of which is attached hereto as Exhibit A-1.
"Certificate Insurer": ______________________, a stock insurance
company organized and created under the laws of the State of __________, and any
successors thereto.
"Certificate Insurer Default": The failure by the Certificate Insurer
to make a payment required under the Certificate Insurance Policy in accordance
with its terms.
"Certificate Register": As described in Section 4.02(a).
"Class A Carry-Forward Amount": As of any Distribution Date, the sum
of (a) the amount, if any, by which (i) the Insured Distribution Amount as of
the immediately preceding Distribution Date exceeded (ii) the amount actually
distributed to the Holders of the Class A Certificates on such Distribution Date
in respect thereof (including, without limitation, any Insured Payments paid to
the Holders of the Class A Certificates by the Certificate Insurer as described
in Sections 6.04 and 6.05 hereof) and (b) interest accrued for the related
Accrual Period on the amount described in clause (a), calculated at an interest
rate equal to the Class A Pass-Through Rate applicable to such Distribution
Date. Any Class A Carry-Forward Amount shall be deemed to be allocated first to
any related Subordination Deficit and second to any related Class A Interest
Distribution Amount.
"Class A Certificate": Any of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates or Class A-4 Certificates.
"Class A Certificateholder": A Holder of a Class A Certificate.
"Class A Interest Distribution Amount": With respect to the Class A
Certificates for any Distribution Date the sum of (i) the aggregate amount of
interest accrued for the related Accrual Period on the aggregate Security
Balance immediately prior to such Distribution Date at the Class A Pass-Through
Rate (based on a 360-day year and a 30-day month) and (ii) the portion of any
Class A Carry-Forward Amount which relates to a shortfall in a distribution of a
Class A Interest Distribution Amount as of such Distribution Date.
"Class A Pass-Through Rate": As of any Distribution Date, the per
annum rate equal to (i) the weighted average of the Mortgage Interest Rates,
minus (ii) the sum of the rates per annum used to determine the Servicing Fee,
the Trustee Fee and the Premium Percentage.
"Class A Principal Distribution Amount": For any Distribution Date,
the lesser of:
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(a) the excess of (i) the sum, as of such Distribution Date, of (A) the
Available Funds and (B) any related Insured Payment over (ii) the
Class A Interest Distribution Amount; and
(b) the sum, without duplication, of:
(i) the portion of any Class A Carry-Forward Amount which relates to a
shortfall in a distribution of a Subordination Deficit,
(ii) all scheduled installments of principal in respect of the Mortgage
Loans received or advanced during the related Due Period, together
with all unscheduled recoveries of principal in respect of the
Mortgage Loans received by the Servicer during the prior calendar
month,
(iii) the Principal Balance of each Mortgage Loan that was repurchased by
the Seller, by an Affiliate of the Seller or by the Depositor,
(iv) any Substitution Adjustments delivered by the Depositor on the related
Servicer Remittance Date in connection with a substitution of a
Mortgage Loan,
(v) the Net Liquidation Proceeds collected by the Servicer of all Mortgage
Loans during the related Due Period (to the extent such Net
Liquidation Proceeds related to principal),
(vi ) the amount of any Subordination Deficit for such Distribution Date,
(vii) the proceeds received by the Trustee with respect to the Mortgage
Loans from any termination of the Trust Fund (to the extent such
proceeds are related to principal),
(viii)the amount of any Subordination Increase Amount for such
Distribution Date, and
(ix ) with respect to the Distribution Date occurring in __________ 199_,
any amounts in the Pre-Funding Account after giving effect to any
purchase of related Subsequent Mortgage Loans;
minus
(x) the amount of any Subordination Reduction Amount for such Distribution
Date.
"Class A-1 Certificate": Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit B-1 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein
and evidencing an interest designated as a "regular interest" in the REMIC for
the purposes of the REMIC Provisions.
"Class A-2 Certificate": Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit B-1 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein
and evidencing an interest designated as a "regular interest" in the REMIC for
the purposes of the REMIC Provisions.
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"Class A-3 Certificate": Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit B-1 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein
and evidencing an interest designated as a "regular interest" in the REMIC for
the purposes of the REMIC Provisions.
"Class A-4 Certificate": Any Certificate designated as a "Class A-4
Certificate" on the face thereof, in the form of Exhibit B-1 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein
and evidencing an interest designated as a "regular interest" in the REMIC for
the purposes of the REMIC Provisions.
"Class R Certificate": Any one of the Class R Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit B-2, subordinate to the Class A Certificates in
right of payment to the extent set forth herein and evidencing an interest
designated as a "residual interest" in the REMIC for purposes of the REMIC
Provisions.
"Class R Certificateholder": A Holder of a Class R Certificate.
"Closing Date": _________, 199_.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The Eligible Account established and maintained
by the Servicer pursuant to Section 5.03.
"Combined Loan-to-Value Ratio": With respect to any Mortgage Loan
secured by a second lien on the related Mortgaged Property, as of any date, the
fraction, expressed as a percentage, the numerator of which is the sum of (i)
the original principal balance of such Mortgage Loan and (ii) the original
aggregate principal balance of the related Senior Mortgage Loans (if any) at the
date of determination, and the denominator of which is the Appraised Value of
the related Mortgaged Property.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 6.09 hereof.
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
"Custodian": As defined in Section 2.02(c).
"Cut-off Date": _________, 199_.
["DCR": Duff & Phelps Credit Rating Co., or its successor in
interest.]
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a
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proceeding under the United States Bankruptcy Code, except such a reduction that
constitutes a Deficient Valuation or a permanent forgiveness of principal.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
"Deleted Mortgage Loan": A Mortgage Loan replaced by or to be replaced
by a Qualified Substitute Mortgage Loan.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31- day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depositor": ACE Securities Corp., a Delaware corporation, and any
successor thereto.
"Depository": The Depository Trust Company, 55 Water Street, New York,
New York 10041 and any successor Depository hereafter named. The nominee of the
initial Depository for purposes of registering those Certificates that are to be
book-entry Certificates is Cede & Co. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the Uniform Commercial
Code of the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
"Direct Participant": Any broker-dealer, bank or other financial
institution for which the Depository holds Class A Certificates from time to
time as a securities depositary.
"Disqualified Non-United States Person": A transferee of a Class R
Certificate other than a person that (i) is not a Non-United States Person or
(ii) is a Non-United States Person that holds a Class R Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or (iii) is a Non-United States Person that has delivered to
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will not be
disregarded for federal income tax purposes.
"Disqualified Organization": Any of (i) the United States, any State
or political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its activities are subject to tax and, except
for the FHLMC, a majority of its board of directors is not selected by such
governmental unit), (ii) any foreign government, any international
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organization, or any agency or instrumentality of any of the foregoing, (iii)
any organization (other than certain farmers' cooperatives described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
(unless such organization is subject to the tax imposed by Section 511 of the
Code on unrelated business taxable income), or rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (iv) any other
Person so designated by the Trustee based upon an Opinion of Counsel provided to
the Trustee that the holding of an ownership interest in a Class R Certificate
by such Person may cause the REMIC or any Person having an ownership interest in
any Class of Certificates (other than such Person) to incur liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the transfer of an ownership interest in the Class R Certificate to such Person.
The terms "United States", "State" and "international organization" shall have
the meanings set forth in Section 7701 of the Code.
"Distribution Date": The 25th day of any month or if such 25th day is
not a Business Day, the first Business Day immediately following, commencing on
______________, 199_.
"Due Date": The first day of each calendar month.
"Due Period": With respect to each Distribution Date, the period
beginning on the opening of business on the second day of the calendar month
preceding the calendar month in which such Distribution Date occurs, and ending
at the close of business on the first day of the calendar month in which such
Distribution Date occurs.
"Eligible Account": Either (A) an account or accounts maintained with
an institution (which may include the Trustee, provided such institution
otherwise meets these requirements) whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated AA or better by [S&P], [DCR] and [Fitch] and Aa2 or better by [Moody's]
and in the highest short term rating by the Rating Agencies, and which is (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association (including the Trustee)
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and the Rating Agencies or (B) a trust
account or accounts maintained with the corporate trust department of a federal
or state chartered depository institution acceptable to each Rating Agency and
the Certificate Insurer (the Trustee shall be deemed acceptable, provided that
the Trustee otherwise meets these requirements), having capital and surplus of
not less than $50,000,000, acting in its fiduciary capacity.
"ERISA": As defined in Section 4.02(m) hereof.
"Event Of Default": One or more of the events described in Section
7.01 hereof.
"Excess Subordinated Amount": With respect to any Distribution Date,
the difference, if any, between (a) the Subordinated Amount that would exist on
such Distribution Date after taking into account all distributions to be made on
such Distribution Date (exclusive
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of any reductions thereto attributable to Subordination Reduction Amounts on
such Distribution Date) and (b) the Required Subordinated Amount for such
Distribution Date.
"FDIC": The Federal Deposit Insurance Corporation and any successor
thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation and any successor
thereto.
"FNMA": Fannie Mae and any successor thereto.
["Fitch": Fitch Investors Service, L.P., or its successor in
interest.]
"Foreclosure Profits": As to any Distribution Date, (i) Net
Liquidation Proceeds in respect of each Mortgage Loan that became a Liquidated
Mortgage Loan during the month immediately preceding the month of such
Distribution Date minus (ii) the sum of the unpaid principal balance of each
such Liquidated Mortgage Loan plus accrued and unpaid interest at the applicable
Mortgage Interest Rate on the unpaid principal balance thereof from the Due Date
to which interest was last paid by the Mortgagor (or, in the case of a
Liquidated Mortgage Loan that had been an REO Mortgage Loan, from the Due Date
to which interest was last deemed to have been paid pursuant to Section 5.12) to
the first day of the month following the month in which such Mortgage Loan
became a Liquidated Mortgage Loan.
"GAAP": Generally accepted accounting principles.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Initial Capitalized Interest Amount": The amount to be paid by the
Depositor to the Trustee for deposit into the Capitalized Interest Account
pursuant to Section 6.13(a) on the Closing Date, which amount is $ __________.
"Initial Mortgage Loan": A Mortgage Loan assigned and transferred to
the Trustee on the Closing Date, as listed on the Mortgage Loan Schedule
attached hereto as Exhibit D.
"Initial Specified Subordinated Amount": An amount equal to ___% of
the Original Pool Principal Balance.
"Insurance Agreement": The Insurance Agreement dated as of ______,
199_ among the Certificate Insurer, the Depositor, the Servicer and the Trustee,
as such agreement may be amended or supplemented in accordance with the
provisions thereof.
"Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to the
related Mortgagor in accordance with Accepted Servicing Practices. "Insurance
Proceeds" do not include "Insured Payments."
"Insured Distribution Amount": With respect to any Distribution Date,
the sum of (a) the Class A Interest Distribution Amount with respect to such
Distribution Date and (b) the Subordination Deficit, if any, as of such
Distribution Date.
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"Insured Payment": The sum of (i) with respect to each Distribution
Date, the Available Funds Shortfall and (ii) any unpaid Preference Amount.
"Liquidated Loan Loss": With respect to any Distribution Date, the
aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan during the Due Period preceding such
Distribution Date, equal to (i) the unpaid principal balance of each such
Liquidated Mortgage Loan, plus accrued interest thereon in accordance with the
amortization schedule at the time applicable thereto at the applicable Mortgage
Interest Rate from the Due Date as to which interest was last paid with respect
thereto through the last day of the month in which such Mortgage Loan became a
Liquidated Mortgage Loan, minus (ii) Net Liquidation Proceeds with respect to
such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to which the
related Mortgaged Property has been acquired, liquidated or foreclosed and with
respect to which the Servicer determines that all Liquidation Proceeds which it
expects to recover have been recovered.
"Liquidation Expenses": Expenses incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.05, 5.06 and 5.12 respecting the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration or
preservation of the related Mortgaged Property. Liquidation Expenses shall not
include any previously incurred expenses in respect of an REO Mortgage Loan
which have been netted against related REO Proceeds.
"Liquidation Proceeds": Amounts received by the Servicer (including
Insurance Proceeds) in connection with the liquidation of defaulted Mortgage
Loans or property acquired in respect thereof, whether through foreclosure, sale
or otherwise, including payments in connection with such Mortgage Loans received
from the Mortgagor, other than amounts required to be paid to the Mortgagor
pursuant to the terms of the applicable Mortgage or to be applied otherwise
pursuant to law.
"Loan Repurchase Price": As defined in Section 2.04(b).
"Loan-to-Value Ratio or LTV": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of such Mortgage Loan, as of the date of origination of the Mortgage
Loan, divided by the Appraised Value of the related Mortgaged Property.
"Majority Certificateholders": The Holder or Holders of Class A
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
"Monthly Payment": As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the scheduled payment of principal and interest due
thereon for such Due Date (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any
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bankruptcy, other than Deficient Valuations 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 other instrument creating a
first lien or second lien on the Mortgaged Property.
"Mortgage File": The mortgage documents listed in Exhibit C attached
hereto pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement; provided
that whenever the term "Mortgage File" is used to refer to documents actually
received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.
"Mortgage Impairment Insurance Policy": As defined in Section 5.07.
"Mortgage Interest Rate": The fixed per annum rate at which interest
accrued on the unpaid principal balance thereof, which rate is the Mortgage
Interest Rate for such Mortgage Loan indicated on the related Mortgage Loan
Schedule.
"Mortgage Loan": An individual mortgage loan which is assigned and
transferred to the Trustee pursuant to this Agreement and identified on Exhibit
D hereto, together with the rights and obligations of a holder thereof and
payments thereon and proceeds therefrom (other than payments of interest that
accrued on each Mortgage Loan up to and including the Due Date therefor
occurring, with respect to the Mortgage Loans prior to the Cut-off Date), the
Mortgage Loans originally subject to this Agreement being identified on the
Mortgage Loan Schedule. As applicable, Mortgage Loan shall be deemed to refer to
the related REO Property.
"Mortgage Loan Schedule": The lists of the Mortgage Loans transferred
to the Trustee on or before the Closing Date or Subsequent Transfer Date as part
of the Trust Fund and attached hereto as Exhibit D and delivered in computer
readable format, which list shall set forth at a minimum the following
information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the city, state and zip code of the Mortgaged Property;
(iii) the type of property;
(iv) the current Monthly Payment as of the Cut-off Date;
(v) the original number of months to maturity;
(vi) the scheduled maturity date;
(vii) the Principal Balance as of the Cut-off Date (with respect to an
Initial Mortgage Loan) or subsequent Cut-off Date (with respect
to a Subsequent Mortgage Loan);
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(viii) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio at
origination;
(ix) the Mortgage Interest Rate as of the Cut-off Date (with respect
to an Initial Mortgage Loan) or Subsequent Cut-off Date (with
respect to a Subsequent Mortgage Loan);
(x) the Mortgage Interest Rate
(xi) the Appraised Value;
(xii) the stated purpose of the loan at origination;
(xiii) the type of occupancy at origination;
(xiv) the documentation type (as described in the Underwriting
Guidelines);
(xv) the loan classification (as described in the Underwriting
Guidelines);
(xvi) the Servicing Fee with respect to such Mortgage Loan, expressed
as a rate per annum; and
(xvii) whether such Mortgage Loan is secured by a first lien or second
lien.
Such schedule may consist of multiple reports that collectively set
forth all of the information required.
"Mortgage Note": The original, executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, consisting of a fee simple estate in a single parcel of land improved by a
Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Distribution Date, an amount
equal to (i) the aggregate Foreclosure Profits with respect to such Distribution
Date minus (ii) Liquidated Loan Losses with respect to such Distribution Date.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances and unreimbursed Servicing Advances made by the Servicer. For
all purposes of this Agreement, Net Liquidation Proceeds shall be allocated
first to accrued and unpaid interest on the related Mortgage Loan and then to
the unpaid principal balance thereof.
"Net Monthly Excess Cashflow": As of any Distribution Date, an amount
equal to (x) the Available Funds minus (y) the sum of (i) sum of the Class A
Interest Distribution Amount and the amount described in clause (b) of the
definition of Class A Principal Distribution Amount (calculated for this purpose
without regard to any Subordination Increase Amount, Subordination Reduction
Amount or portion thereof included therein) and (ii) the Reimbursement Amount,
if any, for such Distribution Date.
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"Net Mortgage Interest Rate": With respect to each Mortgage Loan at
any time of determination, a rate equal to (i) the Mortgage Interest Rate on
such Mortgage Loan minus (ii) the sum of the per annum rates used to determine
the related Servicing Fee and Trustee Fee and the Premium Percentage. Any
regular monthly computation of interest at such rate shall be based upon annual
interest at such rate on the applicable amount divided by twelve.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds net of
any related expenses of the Servicer.
"Nonrecoverable Advances": With respect to any Mortgage Loan, (a) any
Periodic Advance or Servicing Advance previously made and not reimbursed from
late collections pursuant to Section 5.04(b), or (b) a Periodic Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Servicer,
as evidenced by an Officer's Certificate delivered to the Certificate Insurer
and the Trustee would not be ultimately recoverable pursuant to Sections 5.04
and Section 6.02.
"Non-United States Person": Any Person other than a United States
Person.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the President or a Vice President and the Treasurer, the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Seller and/or the
Servicer, or the Depositor, as required by this Agreement.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be counsel for the Seller, the Servicer, the Trustee, a
Certificateholder or a Certificateholder's prospective transferee or the
Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of the Trust Fund as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact independent of the Seller, the Servicer and the Trustee, (ii) does not have
any direct financial interest or any material indirect financial interest in the
Seller or the Servicer or the Trustee or in an Affiliate thereof, (iii) is not
connected with the Seller or the Servicer or the Trustee as an officer,
employee, director or person performing similar functions and (iv) is reasonably
acceptable to the Certificate Insurer.
"Original Pool Principal Balance": The Pool Principal Balance as of
the Cut-off Date, which is $_____________.
"Original Pre-Funded Amount": The amount deposited by the Depositor
in the Pre-Funding Account on the Closing Date, which amount is $______________.
"Original Security Balance": As of the Startup Day and as to the Class
A-1 Certificates, $__________, as to the Class A-2 Certificates, $__________, as
to the Class A-3 Certificates, $__________, and as to the Class A-4
Certificates, $__________. The Class R Certificates do not have an Original
Security Balance.
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"Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Mortgage Loan) which was not the subject of a Principal
Prepayment in Full prior to such Due Date, which did not become a Liquidated
Mortgage Loan prior to such Due Date, which was not repurchased by the Seller
prior to such Due Date pursuant to Section 2.04 and which was not repurchased by
an Affiliate of the Seller pursuant to Section 5.18.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Owner-Occupied Mortgaged Property": A Residential Dwelling as to
which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (b) the Seller has no actual knowledge that such Residential
Dwelling is not so occupied.
"Percentage Interest": With respect to a Class A Certificate and any
date of determination, the portion evidenced by such Certificate, expressed as a
percentage rounded to four decimal places, equal to a fraction the numerator of
which is the initial Authorized Denomination represented by such Certificate and
the denominator of which is the Original Security Balance of such Class of
Certificate. With respect to a Class R Certificate and any date of
determination, the portion evidenced thereby as stated on the face of such
Certificate.
"Periodic Advance": The aggregate of the advances with respect to
Mortgage Loans and REO Properties required to be made by the Servicer on any
Servicer Remittance Date pursuant to Section 5.21 hereof, the amount of any such
advances being equal to the sum of: (i) with respect to the Mortgage Loans other
than REO Properties as described in clause (ii) below), all Monthly Payments
(net of the related Servicing Fee) on such Mortgage Loans that were delinquent
as of the close of business on the Business Day preceding the related Servicer
Remittance Date, plus (ii) with respect to each REO Property, which REO Property
was acquired during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount equal to the
Monthly Payment (net of the related Servicing Fee) for the most recently ended
Due Period for the related Mortgage Loan minus the net income from such REO
Property transferred to the related Certificate Account for such Distribution
Date, minus (iii) the amount of any advance otherwise required for such
Distribution Date pursuant to clauses (i) and (iii) above which the Servicer has
determined to be a Nonrecoverable Advance.
"Permitted Investments": As used herein, Permitted Investments shall
include the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States and any obligation of, or guaranties by, FHLMC or FNMA (other
than senior debt obligations and mortgage pass-through certificates
guaranteed by FHLMC or FNMA) shall be a Permitted Investment; provided that
at the time of such investment, such investment is acceptable to the
Certificate Insurer, but
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excluding any of such securities whose terms do not provide for payment of
a fixed dollar amount upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances issued by any bank or trust company
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal or state banking
authorities, provided that at the time of such investment or contractual
commitment providing for such investment the short-term debt obligations of
such bank or trust company at the date of acquisition thereof have been
rated in its highest rating by each Rating Agency;
(c) commercial paper (having original maturities of not more than 180
days) rated in its highest rating by each Rating Agency;
(d) investments in money market funds rated in its highest rating by
each Rating Agency; and
(e) investments approved by the Rating Agencies and the Certificate
Insurer in writing delivered to the Trustee;
provided that each such Permitted Investment shall be a "permitted
investment" within the meaning of Section 860G(a)(5) of the Code and that
no instrument described hereunder shall evidence either the right to
receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal
payments with respect to such instrument provided a yield to maturity at
par greater than 120% of the yield to maturity at par of the underlying
obligations; and provided, further, that no instrument described hereunder
may be purchased at a price greater than par.
"Permitted Transferee": Any transferee of a Class R Certificate other
than a Disqualified Non-United States Person or Disqualified Organization.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": As defined in Section 4.02(m).
"Policy Business Day": A Business Day as defined in the Certificate
Insurance Policy.
"Pool Principal Balance": The sum of the aggregate Principal Balances
of the Mortgage Loans and the Pre-Funded Amount as of any date of determination.
"Preference Amount": Any amount previously distributed to a Class A
Certificateholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
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"Preference Claim": As defined in Section 6.04(f).
"Pre-Funded Amount": With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
"Pre-Funding Account": The account established and maintained pursuant
to Section 6.12.
"Pre-Funding Period": The period beginning on the Closing Date and
ending on the earlier of the date on which (a) the amount on deposit in the
related Pre-Funding Account is less than $_________ or (b) the close of business
on __________, 199_.
"Premium Amount": Beginning on the third Distribution Date and on each
Distribution Date thereafter, the product of 1/12 of the Premium Percentage and
the aggregate Balance for the Class A Certificates immediately prior to the
related Distribution Date.
"Premium Exhibit": The document attached hereto as Exhibit R.
"Premium Percentage": With respect to any Mortgage Loan, the rate per
annum set forth in the Premium Exhibit.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was the subject during the related Due Period
of a Principal Prepayment in Full or Curtailment, an amount equal to (a) 30
days' interest on the Principal Balance of such Mortgage Loan at a per annum
rate equal to the Mortgage Interest Rate minus the rate at which the Servicing
Fee is calculated minus (b) the amount of interest actually remitted by the
Mortgagor in connection with such Principal Prepayment in Full or Curtailment
less the Servicing Fee for such Mortgage Loan in such month.
"Principal Balance": As to any Mortgage Loan and Distribution Date,
the principal balance of such Mortgage Loan as of the Due Date preceding such
date of determination as specified for such Due Date in the amortization
schedule (before any adjustment to such amortization schedule by reason of any
bankruptcy (other than Deficient Valuations) or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to Principal
Prepayments in Full or Curtailments received prior to such Due Date, Deficient
Valuations incurred prior to such Due Date, to any Curtailments applied by the
Servicer in reduction of the unpaid principal balance of such Mortgage Loan as
of such Due Date and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor. The
Principal Balance of a Mortgage Loan which becomes a Liquidated Mortgage Loan
prior to such Due Date shall be zero.
"Principal Prepayment in Full": Any payment or other recovery of
principal on a Mortgage Loan equal to the outstanding principal balance thereof,
received in advance of the final scheduled Due Date which is not intended as an
advance payment of a scheduled Monthly Payment.
"Purchase Agreement": The Mortgage Loan Purchase Agreement, dated as
of the date hereof, between the Seller and the Depositor relating to the sale of
the Mortgage Loans to the Depositor.
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"Principal Remittance Amount": As of any Distribution Date, the sum,
without duplication of the amounts specified in clauses (b)(ii) through (v),
(vii) and (viii) of the definition of Class A Principal Distribution Amount.
"Qualified Mortgage": "Qualified Mortgage" shall have the meaning set
forth in the definition thereof at Section 860G(a)(3) of the Code (or any
successor statute thereto) (but without regard to the rule in Treasury
Regulation Section 1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any similar provision).
"Qualified Substitute Mortgage Loan": A mortgage loan or mortgage
loans substituted for a Deleted Mortgage Loan pursuant to Section 2.04 or 3.03
hereof, which (a) has the same or greater interest rate, (b) relates or relate
to a detached one-family residence or to the same type of Residential Dwelling
as the Deleted Mortgage Loan and in each case has or have the same or a better
lien priority as the Deleted Mortgage Loan and has the same occupancy status or
is an Owner Occupied Mortgaged Property, (c) matures or mature no later than
(and not more than one year earlier than) the Deleted Mortgage Loan (except
during the first 90 days after the Cut-off Date), (d) has or have a Loan-to-
Value Ratio or Loan-to-Value Ratios (or Combined Loan-to-Value Ratio or Combined
Loan-to-Value Ratios, with respect to a Second Mortgage Loan) at the time of
such substitution no higher than the Loan-to-Value Ratio (or Combined Loan-to-
Value Ratio, with respect to a Second Mortgage Loan) of the Deleted Mortgage
Loan, (e) has or have a principal balance or principal balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, (f) satisfies or satisfy the criteria set forth
from time to time in the definition of "qualified replacement mortgage" in
Section 860G(a)(4) of the Code (or any successor statute thereto) and (g)
complies or comply as of the date of substitution with each representation and
warranty set forth in Sections 3.01 and 3.02 of the Purchase Agreement.
"Rating Agency": [S&P], [DCR], [Fitch] or [Moody's].
"Record Date": With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
"Released Mortgaged Property Proceeds": As to any Mortgage Loan,
proceeds received by the Master Servicer in connection with (a) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise;
which are not released to the Mortgagor in accordance with applicable law,
Accepted Servicing Practices and this Agreement.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations promulgated thereunder and published
rulings, notices and announcements, as the foregoing may be in effect from time
to time.
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"Reimbursement Amount": As of any Distribution Date, the sum of (a)(i)
all Insured Payments (as defined in the Certificate Insurance Policy) previously
paid by the Certificate Insurer and in each case not previously repaid to the
Certificate Insurer pursuant to Sections 6.05(b) or 6.05(c) hereof plus (ii)
interest accrued on each such Insured Payment and Preference Payments not
previously repaid calculated at the Class A Pass-Through Rate from the date such
Insured Payment or Preference Amount was made and (b)(i) any amounts then due
and owing to the Certificate Insurer under the Insurance Agreement, as certified
to the Trustee by the Certificate Insurer plus (ii) interest on such amounts at
the Late Payment Rate (as defined in the Insurance Agreement). The Certificate
Insurer shall notify the Trustee and the Depositor of the amount of any
Reimbursement Amount.
"REO Acquisition": The acquisition of any REO Property pursuant to
Section 5.12.
"REO Disposition": The final sale by the Master Servicer of a
Mortgaged Property acquired by the Master Servicer in foreclosure or by deed in
lieu of foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust Fund.
"REO Proceeds": Proceeds received in respect of any REO Mortgage Loan
(including, without limitations, proceeds from the rental of the related
Mortgaged Property).
"REO Property": As described in Section 5.12.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
"Request for Release": A request for release in substantially the form
attached as Exhibit H hereto.
"Required Subordinated Amount": For each Distribution Date, the amount
determined as follows: [describe].
"Residential Dwelling": A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development, a townhouse or a
manufactured housing unit which is non-mobile.
"Responsible Officer": When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. When used with respect to the Seller or
the Servicer, the President or any Vice President, Assistant Vice President, or
any Secretary or Assistant Secretary.
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["S&P": Standard & Poor's, or its successor in interest.]
"Second Mortgage Loan": Any Mortgage Loan secured by a second lien on
the related Mortgaged Property.
"Security Balance": With respect to each Class of Class A
Certificates, as determined separately, as of any time of determination, the
related Original Security Balance less any amounts distributed in reduction of
the Security Balance thereof pursuant to Section 6.05 on all prior Distribution
Dates. The Class R Certificates do not have a "Security Balance".
"Seller": ________________, or its successor in interest.
"Senior Mortgage Loan": With respect to any Second Mortgage Loan, a
mortgage loan on the related Mortgaged Property that is senior to the lien
provided by such Second Mortgage Loan.
"Servicer": _______________, a _________ corporation, or any
successor appointed as herein provided.
"Servicer Remittance Amount": With respect to any Servicer Remittance
Date, an amount equal to the sum of (i) all unscheduled collections of principal
and interest on the Mortgage Loans (including Principal Prepayments in Full and
Curtailments, Net REO Proceeds and Net Liquidation Proceeds, if any) collected
by the Servicer during the prior calendar month and all scheduled Monthly
Payments due on the related Due Date and received on or prior to the Business
Day preceding such Servicer Remittance Date, (ii) all Periodic Advances made by
the Servicer with respect to payments due to be received on the Mortgage Loans
on the related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to this Agreement but excluding the
following:
(a) amounts received on particular Mortgage Loans as late payments of
principal or interest and respecting which the Servicer has previously made an
unreimbursed Periodic Advance;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds which
represents any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees, prepayment
fees and similar fees;
(f) certain other amounts which are reimbursable to the Servicer, as
provided in this Agreement; and
(g) Net Foreclosure Profits.
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"Servicer Remittance Date": With respect to any Distribution Date, the
18th of the month in which such Distribution Date occurs, or if such 18th day is
not a Business Day, the Business Day preceding such 18th day.
"Servicing Account": The account created and maintained pursuant to
Section 5.09.
"Servicing Advances": All reasonable and customary "out-of-pocket"
costs and expenses relating to a borrower default or delinquency or other
unanticipated event incurred by the Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property including, without
limitation, taxes and insurance costs, (b) any enforcement or judicial
proceedings, including foreclosures, (c) the management and liquidation of the
REO Property, including reasonable fees paid to any independent contractor in
connection therewith, (d) compliance with the obligations under Sections 5.02
(limited solely to the reasonable and customary out-of-pocket expenses of the
subservicer), 5.05, 5.07, 5.09 or 5.10, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Master Servicer to the
extent provided in Section 5.04(a) and 5.10.
"Servicing Compensation": The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 5.14.
"Servicing Fee": As to each Mortgage Loan, the annual fee payable to
the Servicer and the related Subservicer, if any, as indicated on the related
Mortgage Loan Schedule. Such fee shall be ___% per annum. Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Certificate Insurer by the Servicer, as such list may from
time to time be amended.
"Startup Day": The day designated as such pursuant to Section 10.01(b)
hereof.
"Subordinated Amount": As of any Distribution Date, the difference, if
any, between (a) the Pool Principal Balance as of the close of business on the
last day of the related Due Period and (b) the aggregate Security Balance of the
Class A Certificates as of such Distribution Date (after taking into account the
payment of the Principal Remittance Amount related to such Distribution Date);
provided, however, that such amount shall not be less than zero.
"Subordination Deficiency Amount": With respect to any Distribution
Date, the amount, if any, by which (a) the Required Subordinated Amount
applicable to such Distribution Date exceeds (b) the Subordinated Amount
applicable to such Distribution Date prior to taking into account the payment of
any related Subordination Increase Amounts on such Distribution Date.
20
"Subordination Deficit": As of any Distribution Date, the amount, if
any, by which (a) the aggregate Security Balance of the Class A Certificates
(after taking into account the payment of the Class A Principal Distribution
Amount (other than payments in respect thereof under the Certificate Insurance
Policy)) on such date exceeds (b) the Pool Principal Balance determined as of
the end of the immediately preceding Due Period.
"Subordination Increase Amount": With respect to any Distribution
Date, the lesser of (a) the Subordination Deficiency Amount as of such
Distribution Date (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date (other than clause
(viii) thereof)) and (b) the amount of Net Monthly Excess Cashflow on such
Distribution Date.
"Subordination Reduction Amount": With respect to any Distribution
Date, an amount equal to the lesser of (a) the Excess Subordinated Amount for
such Distribution Date and (b) the Principal Remittance Amount for the prior Due
Period.
"Subsequent Cut-off Date": With respect to those Subsequent Mortgage
Loans which are sold to the Trust Fund pursuant to a Subsequent Transfer
Instrument, the close of business on the day prior to the related Subsequent
Transfer Date.
"Subsequent Mortgage Loan": A Mortgage Loan sold by the Depositor to
the Trust Fund pursuant to Section 2.08, such Mortgage Loan being identified on
the Mortgage Loan Schedule attached to a Subsequent Transfer Instrument.
"Subsequent Transfer Date": With respect to each Subsequent Transfer
Instrument, the date on which the related Subsequent Mortgage Loans are sold to
the Trust Fund.
"Subsequent Transfer Instrument": Each Subsequent Transfer Instrument
dated as of a Subsequent Transfer Date executed by the Trustee and the Depositor
substantially in the form of Exhibit N, by which Subsequent Mortgage Loans are
sold to the Trust Fund.
"Substitution Adjustment": As to any date on which a substitution
occurs pursuant to Sections 2.04 or 3.03, the amount (if any) by which the
aggregate principal balances (after application of principal payments received
on or before the date of substitution of any Qualified Substitute Mortgage Loans
as of the date of substitution), are less than the aggregate of the Principal
Balances of the related Deleted Mortgage Loans.
"Tax Matters Person": The Person or Persons appointed pursuant to
Section 10.01(c) from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) of the Trust Fund.
"Tax Return": The federal income tax return on Internal Revenue
Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax
Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
21
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provision of federal, state or local tax laws in
connection with the Trust Fund.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit And Agreement": As defined in Section 4.02(j).
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
"Trustee": _____________, or its successor in interest, or any
successor trustee appointed as herein provided.
"Trustee Fee": As to any Distribution Date, the fee payable to the
Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to 1/12 of ___% of the sum of the Principal Balance of each Mortgage Loan
and the Pre-Funded Amount as of the immediately preceding Due Date.
"Trustee Remittance Report": As defined in Section 6.07.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (a) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof after the Cut-off Date, (b) such assets as from
time to time are identified as deposited in the Certificate Accounts (including
the Special Deposit), (c) such assets as from time to time are identified as REO
Property and collections thereon and proceeds thereof, assets that are deposited
in the Accounts, including amounts on deposit in the Accounts and invested in
Permitted Investments, (d) the Trustee's rights with respect to the Mortgage
Loans under all insurance policies required to be maintained pursuant to this
Agreement (including the Certificate Insurance Policy) and any Insurance
Proceeds (and any proceeds of the Certificate Insurance Policy), (e) Liquidation
Proceeds, (f) Released Mortgaged Property Proceeds, (g) the representations and
warranties of the Seller pursuant to the Purchase Agreement and (h) amounts on
deposit in the Capitalized Interest Account and the Pre-Funding Accounts.
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and filed
pursuant to the UCC.
"Underwriting Guidelines": The underwriting guidelines of the Seller.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
whose income is subject to
22
United States federal income tax regardless of its source, or a trust if a court
within the United States is able to exercise primary jurisdiction over the
administration of such trust and one or more United States Persons have the
power to control all substantial decisions of such trust.
"Unpaid REO Amortization": As to any REO Mortgage Loan and any month,
the aggregate of the installments of principal and accrued interest (adjusted to
the related Net Mortgage Interest Rate) deemed to be due in such month and in
any prior months that remain unpaid, calculated in accordance with Section 5.12.
Section 1.02 PROVISIONS OF GENERAL APPLICATION. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined in this Article include the plural as well as
the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest (other than with respect to the
Mortgage Loans, or as otherwise specifically set forth herein) provided for
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All calculations of interest with respect to any Mortgage Loan provided
for herein shall be made in accordance with the terms of the related Mortgage
Note and Mortgage.
(f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Certificates, prepayments with
respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with customary servicing practices consistent with the
terms of the related Mortgage Note and Mortgage to reduce the outstanding
principal balance of such Mortgage Loan on which interest accrues.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 CONVEYANCE OF MORTGAGE LOANS; SPECIAL DEPOSIT; PRIORITY
AND SUBORDINATION OF OWNERSHIP INTERESTS. (a) The Depositor does hereby sell,
transfer, assign, set over and convey to the Trustee without recourse but
subject to the provisions in this Section 2.01 and the other terms and
provisions of this Agreement, all of the right, title and interest of the
Depositor in and to the Mortgage Loans (other than interest due thereon before
the Cut-off Date), and all other assets included or to be included in the Trust
Fund for the benefit of the Certificateholders and the Certificate Insurer. In
connection with such transfer and assignment, and pursuant to Section ____ of
the Purchase Agreement, the Depositor does hereby also irrevocably transfer,
assign, set over and otherwise convey to the Trustee all of its rights under the
Purchase Agreement including, without limitation, its right to exercise the
remedies created by Sections ____ and ____ of the Purchase Agreement for
breaches of representations and warranties, agreements and covenants of the
Seller contained in Sections ____ and ____ of the Purchase Agreement.
(b) The rights of the Certificateholders to receive payments with
respect to the Mortgage Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. In this regard, all rights of the Class R Certificateholders to
receive payments in respect of the Class R Certificates, are subject and
subordinate to the preferential rights of the Class A Certificateholders to
receive payments in respect of the Class A Certificates and to the Certificate
Insurer's rights to be reimbursed for Insured Payments together with interest
thereon at the rate specified herein or in the Insurance Agreement. In
accordance with the foregoing, the ownership interest of the Class R
Certificateholders in amounts deposited in the Certificate Account from time to
time shall not vest unless and until such amounts are distributed in respect of
the Class R Certificates in accordance with the terms of this Agreement.
(c) It is intended that the conveyance of the Mortgage Loans by the
Depositor to the Trustee as provided in this Section be, and be construed as, a
sale of the Mortgage Loans by the Depositor to the Trustee for the benefit of
the Certificateholders. It is, further, not intended that such conveyance be
deemed a pledge of the Mortgage Loans by the Depositor to the Trustee to secure
a debt or other obligation of the Depositor. However, in the event that the
Mortgage Loans are held to be property of the Depositor, or if for any reason
this Agreement is held or deemed to create a security interest in the Mortgage
Loans, 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 Depositor to the Trustee of a security interest in all of
the Depositor's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Mortgage Files, (B) all amounts
payable to the holders of the Mortgage Loans in
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accordance with the terms thereof and (C) all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including without limitation all amounts from time to time held
or invested in the Certificate Account or the Collection Account, whether in the
form of cash, instruments, securities or other property and (2) an assignment by
the Depositor to the Trustee of any security interest in any and all of the
Seller's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to the property
described in the foregoing clauses (1)(A) through (C) granted by the Seller to
the Depositor pursuant to the Purchase Agreement; (c) the possession by the
Trustee or its agent of Mortgage Notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" or possession by a purchaser or a
person designated by such secured party, for purposes of perfecting the security
interest pursuant to the New York 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 Depositor and, at the
Depositor's direction, the Seller and the Trustee shall, to the extent
consistent with this Agreement, take such reasonable actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of the Agreement.
Section 2.02 POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE FILES.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage Note,
the Mortgage and the contents of the Mortgage File related to each Initial
Mortgage Loan is vested in the Trustee for the benefit of the Certificateholders
and the Certificate Insurer.
(b) Pursuant to Section ____ of the Purchase Agreement, the Depositor
has delivered or caused to be delivered the Mortgage File related to each
Initial Mortgage Loan to the Trustee.
(c) The Trustee may enter into a custodial agreement pursuant to which
the Trustee will appoint a custodian (a "Custodian") to hold the Mortgage Files
in trust for the benefit of all present and future Certificateholders and the
Certificate Insurer; provided, however, that the custodian so appointed shall in
no event be the Depositor or the Servicer or any Person known to a Responsible
Officer of the Trustee to be an Affiliate of the Depositor or the Servicer. The
Trustee hereby appoints ___________________ as the initial Custodian.
(d) The Custodian shall afford the Depositor, the Certificate Insurer
and the Servicer reasonable access to all records and documentation regarding
the Mortgage Loans relating to this Agreement, such access being afforded at
customary charges, upon reasonable request and during normal business hours at
the offices of the Custodian.
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Section 2.03 DELIVERY OF MORTGAGE LOAN DOCUMENTS AND CERTIFICATE
INSURANCE POLICY. (a) In connection with each conveyance pursuant to Section
2.01 hereof, the Depositor has delivered or does hereby agree to deliver or
cause to be delivered to the Trustee on or before the Closing Date, the
Certificate Insurance Policy, the Mortgage Loan Schedule and each of the
following documents for each Mortgage Loan sold by the Seller to the Depositor
and sold by the Depositor to the Trust Fund:
(i) The original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsements from the originator of such
Mortgage Loan to the Seller, endorsed by the Seller without recourse in the
following form: "Pay to the order of , without recourse" and signed in the
name of the Seller by an authorized officer;
(ii) The original Mortgage with evidence of recording indicated
thereon;
(iii) An original assignment of the original Mortgage, in suitable
form for recordation in the jurisdiction in which the related Mortgaged Property
is located, such assignment to be in blank and signed in the name of the Seller
by an authorized officer;
(iv) The originals of all intervening assignments of the Mortgage
(with evidence of recording thereon) showing a complete chain of
assignments from the originator of such Mortgage Loan to the Seller;
(v) Any assumption, modification (with evidence of recording
thereon), consolidation or extension agreements;
(vi) The original policy of title insurance (or a commitment for
title insurance, if the policy is being held by the title insurance company
pending recordation of the Mortgage); and
(vii) The certificate of primary mortgage guaranty insurance, if any,
issued with respect to such Mortgage Loan;
PROVIDED, HOWEVER, that as to certain Mortgages or assignments thereof
which have been delivered or are being delivered to recording offices for
recording and have not been returned to the Seller in time to permit their
delivery hereunder at the time of such transfer, in lieu of delivering such
original documents, the Depositor shall deliver to the Trustee a true copy
thereof with a certification by the Seller on the face of such copy
substantially as follows: "certified true and correct copy of original which has
been transmitted for recordation". The Seller will deliver such original
documents, together with any related policy of title insurance not previously
delivered, on behalf of the Depositor to the Trustee promptly after they are
received, but in any event no later than 120 days after the Closing Date. The
Depositor agrees, at its own expense, to record (or to provide the Trustee with
evidence of recordation thereof) each assignment referred to in clause (iii)
above promptly after the Closing Date in the appropriate public office for real
property records, provided that such assignments are redelivered by the Trustee
to the Seller upon the Seller's written request and at the Seller's expense,
unless the Seller (at its expense) furnishes to the Trustee, the Certificate
Insurer and the Rating Agencies an unqualified Opinion of Counsel reasonably
acceptable to the Trustee to the effect that recordation of such assignment is
not necessary under applicable state law to preserve the Trustee's interest in
the related Mortgage Loan
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against the claim of any subsequent transferee of such Mortgage Loan or any
successor to, or creditor of, the Seller.
Within a period of 14 days from the Closing Date, the Trustee shall
complete the endorsement of each Mortgage Note such that the final endorsement
appears in the following form:
"Pay to the order of ___________ as Trustee under that certain Pooling
and Servicing Agreement dated as of ________, 199_, for ACE Securities
Corp., Asset Backed Certificates, Series 199_-_, without recourse."
Within a period of 14 days from the Closing Date, the Trustee shall
also complete the endorsement of each Assignment of Mortgage and Assignment of
Leases, if any, such that the final Assignment of Mortgage appears in the
following form:
__________________, as Trustee under that certain Pooling and
Servicing Agreement dated as of _______, 199_, for _______________,
ACE Securities Corp., Asset Backed Certificates, Series 199_-_."
(b) In the event that any such original document is required pursuant
to the terms of this Section 2.03 to be a part of a Mortgage File, such document
shall be delivered promptly by the Depositor to the Trustee. In acting as
custodian of any such original document, the Servicer agrees further that it
does not and will not have or assert any beneficial ownership interest in the
Mortgage Loans or the Mortgage Files.
Section 2.04 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE. (a) The Trustee agrees to execute and
deliver to the Depositor, the Certificate Insurer, the Servicer and the Seller
on or prior to the Closing Date an acknowledgment of receipt of the Certificate
Insurance Policy and, with respect to each Mortgage Loan, on or prior to the
Closing Date, an acknowledgment of receipt of the original Mortgage Note (with
any exceptions noted), in the form attached as Exhibit E hereto and declares
that it will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the definition of Trust Fund
and delivered to the Trustee, as Trustee in trust upon and subject to the
conditions set forth herein for the benefit of the Certificateholders and the
Certificate Insurer. The Trustee agrees, for the benefit of the
Certificateholders and the Certificate Insurer, to review (or cause to be
reviewed) each Mortgage File within 45 Business Days after the Closing Date
(with respect to the Mortgage Loans), and to deliver to the Seller, the
Servicer, the Depositor and the Certificate Insurer a certification in the form
attached hereto as Exhibit F to the effect that, as to each Mortgage Loan listed
in the related Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents required to be delivered to it
pursuant to Section 2.03 are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not constitute
physical alteration if initialed by the Mortgagor), appears regular on its face
and relates to such Mortgage Loan, and (iii) based on its
27
examination and only as to the foregoing documents, the information set forth on
the Mortgage Loan Schedule as to the information set forth in (i), (ii), (v),
(vi), (x), (xi), (xiii), (xiv), (xv), (xx) and (xxii) of the definition of
"Mortgage Loan Schedule" set forth herein accurately reflects the information
set forth in the Mortgage File delivered on such date. The Trustee makes no
representations as to and shall not be responsible to verify (i) the validity,
legality, enforceability, sufficiency, due authorization, recordability or
genuineness of any of the documents contained in each Mortgage File or of any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
By _________, 199_, the Trustee shall deliver (or cause to be
delivered) to the Servicer, the Seller, the Depositor and the Certificate
Insurer a final certification in the form attached hereto as Exhibit G to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), (i) all
documents required to be delivered to it pursuant to Section 2.03 are in its
possession, (ii) each such document has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Mortgagor), appears regular on its face and relates to such Mortgage Loan,
and (iii) based on its examination and only as to the foregoing documents, the
information set forth in (i), (ii), (v), (vi), (x), (xi), (xiii), (xiv), (xv),
(xx) and (xxii) of the definition of "Mortgage Loan Schedule" set forth herein
accurately reflects the information set forth in the Mortgage File delivered on
such date.
(b) If the Certificate Insurer or the Trustee during the process of
reviewing the Mortgage Files finds any document constituting a part of a
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the related Mortgage Loan Schedule, or does not
conform to the requirements of Section 2.03 or the description thereof as set
forth in the related Mortgage Loan Schedule, the Trustee or the Certificate
Insurer, as applicable, shall promptly so notify the Servicer, the Seller, the
Certificate Insurer and the Trustee. In performing any such review, the Trustee
may conclusively rely on the Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trustee's review of the Mortgage Files is limited solely to confirming that the
documents listed in Section 2.03 have been executed and received and relate to
the Mortgage Files identified in the related Mortgage Loan Schedule and such
documents conform to the standard set forth in clause (ii) of the paragraph
directly above. The Trustee shall 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 (i) substitute in lieu of such Mortgage Loan a
Qualified Substitute Mortgage Loan in the manner and subject to the conditions
set forth in Section 3.03 or (ii) purchase such Mortgage Loan on the next
succeeding Servicer Remittance Date (but not later than 90 days after the
discovery of such defect) at a purchase price equal to the actual stated
principal balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such principal balance computed at the Mortgage
Interest Rate, plus the amount of any unpaid Servicing Fees, unreimbursed
Periodic Advances and unreimbursed Servicing Advances made by the Servicer with
respect to such Mortgage Loan, which purchase price shall be deposited in the
Collection Account on the same Business Day, after deducting therefrom any
amounts received in respect of such repurchased Mortgage Loan or Loans and being
held in the Collection Account for
28
future distribution to the extent such amounts have not yet been applied to
principal or interest on such Mortgage Loan (the "Loan Repurchase Price"). It is
understood and agreed that the obligation of the Seller to so cure or purchase
any Mortgage Loan as to which a material defect in or omission of a constituent
document exists shall constitute the sole remedy respecting such defect or
omission available to Certificateholders or the Trustee on behalf of
Certificateholders. In addition, it is understood and agreed that the Depositor
has assigned to the Trustee all of its rights under the Purchase Agreement and
the right to enforce any remedy against the Seller as provided in Section 2.05
of the Purchase Agreement. For purposes of calculating the amount the Servicer
is required to remit on the Servicer Remittance Date following such repurchase
or substitution, any Loan Repurchase Price or Substitution Adjustment that is
paid and deposited in the related Collection Account as provided above shall be
deemed to have been deposited in the related Collection Account in the Due
Period preceding such Servicer Remittance Date.
(c) Upon receipt by the Trustee of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt of the related Mortgage File, and the deposit of the amounts
described above in the Collection Account (which certification shall be in the
form of Exhibit H hereto), the Trustee shall release to the Servicer for release
to the Seller the related Mortgage File and shall execute, without recourse, and
deliver such instruments of transfer furnished by the Seller as may be necessary
to transfer such Mortgage Loan to the Seller. The Trustee shall notify the
Certificate Insurer if the Seller fails to repurchase or substitute for a
Mortgage Loan in accordance with the foregoing.
Section 2.05 EXECUTION OF CERTIFICATES. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the delivery of the Mortgage Files
relating thereto to it and, concurrently with such delivery, has executed,
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Mortgage Loans, the Mortgage Files and the other assets included in the
definition of Trust Fund, Certificates duly authenticated by the Trustee in
Authorized Denominations evidencing the entire ownership of the Trust Fund.
Section 2.06 FURTHER ACTION EVIDENCING ASSIGNMENTS. (a) The Depositor
agrees that, from time to time, at the Seller's expense, the Depositor shall
cause the Seller promptly to execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Servicer or the Trustee may reasonably request, in order to perfect,
protect or more fully evidence the transfer of ownership of the Trust Fund or to
enable the Trustee to exercise or enforce any of its rights hereunder. Without
limiting the generality of the foregoing, the Depositor will, upon the request
of the Servicer or of the Trustee execute and file (or cause to be executed and
filed) such real estate filings, financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the Trustee powers
of attorney to execute all documents on its behalf under this Agreement and the
Purchase Agreement as may be necessary or desirable to effectuate the foregoing.
29
Section 2.07[RESERVED].
Section 2.08CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b) below in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Depositor of all or a portion of the balance of
funds in the Pre-Funding Account, the Depositor shall on any Subsequent Transfer
Date sell, transfer, assign, set over and convey without recourse to the Trust
Fund but subject to the other terms and provisions of this Agreement all of the
right, title and interest of the Depositor in and to (i) the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule attached to the related
Subsequent Transfer Instrument delivered by the Depositor on such Subsequent
Transfer Date, (ii) principal due and interest accruing on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date and (iii) all items
with respect to such Subsequent Mortgage Loans to be delivered pursuant to
Section 2.03 above and the other items in the related Mortgage Files; provided,
however, that the Depositor reserves and retains all right, title and interest
in and to principal received and interest accruing on the Subsequent Mortgage
Loans prior to the related Subsequent Cut-off Date. The transfer to the Trustee
by the Depositor of the Subsequent Mortgage Loans identified on the Mortgage
Loan Schedule shall be absolute and is intended by the Depositor, the Servicer,
the Trustee and the Certificateholders to constitute and to be treated as a sale
of the Subsequent Mortgage Loans by the Depositor to the Trust Fund. The
related Mortgage File for each Subsequent Mortgage Loan shall be delivered to
the Trustee two Business Days prior to the Subsequent Transfer Date.
The purchase price paid by the Trustee from amounts released from the
Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
principal balances of the Subsequent Mortgage Loans so transferred. This
Agreement shall constitute a fixed-price purchase contract in accordance with
Section 860G(a)(3)(A)(ii) of the Code.
(b) The Depositor shall transfer to the Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
Section 2.08 (a) above, and the Trustee shall release funds from the related
Pre-Funding Account, only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee and the Certificate
Insurer with a timely Addition Notice and shall have provided any
information reasonably requested by the Trustee or the Certificate Insurer
with respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the Trustee a duly executed
Subsequent Transfer Instrument, which shall include a Mortgage Loan
Schedule, listing the Subsequent Mortgage Loans;
(iii) as of each Subsequent Transfer Date, the Depositor shall not be
insolvent nor shall it have been made insolvent by such transfer nor shall
it be aware of any pending insolvency;
(iv) such sale and transfer shall not result in a material adverse tax
consequence to the Trust Fund or the Certificateholders;
30
(v) the Pre-Funding Period shall not have terminated;
(vi) the Depositor shall have delivered to the Trustee an Officer's
Certificate, substantially in the form of Exhibit N, confirming the
satisfaction of each condition precedent and representations specified in
this Section 2.08(b) and Section 2.08(c) following and in the related
Subsequent Transfer Instrument;
(vii) the Certificate Insurer shall have delivered to the Trustee an
Officer's Certificate confirming that the Subsequent Mortgage Loans conform
to the representations and warranties of Section 5.07 of the Insurance
Agreement;
(viii) the Depositor shall have delivered to the Trustee Opinions of
Counsel addressed to the Certificate Insurer, the Rating Agencies and the
Trustee with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel delivered to the
Certificate Insurer and the Trustee on the Closing Date regarding certain
bankruptcy, corporate and tax matters; and
(ix) the Trustee shall have delivered to the Certificate Insurer and
the Depositor an Opinion of Counsel addressed to the Depositor, the Rating
Agencies and the Certificate Insurer with respect to the Subsequent
Transfer Instrument substantially in the form of the Opinion of Counsel
delivered to the Certificate Insurer and the Depositor on the Closing Date
regarding certain corporate matters relating to the Trustee.
(c) The obligation of the Trust Fund to purchase a Subsequent Mortgage
Loan on any Subsequent Transfer Date is subject to the following representations
and warranties of the Depositor with respect to such Subsequent Mortgage Loan
being satisfied: (i) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-off Date; (ii) the
stated term to maturity of such Subsequent Mortgage Loan will not exceed 360
months; (iii) such Subsequent Mortgage Loan may not provide for negative
amortization; (iv) such Subsequent Mortgage Loan will be underwritten in
accordance with the Underwriting Guidelines; (v) such Subsequent Mortgage Loan
will not have a Loan-to-Value Ratio (or Combined Loan-to-Value Ratio in the case
of second lien Mortgage Loans) greater than 90%; (vi) such Subsequent Mortgage
Loans will have as of the end of the Pre-Funding Period, a weighted average term
since origination not in excess of six months; (vii) no such Subsequent Mortgage
Loan shall have a rate less than ___%. In addition, following the purchase of
any Subsequent Mortgage Loans by the Trust Fund, the Mortgage Loans (including
the related Subsequent Mortgage Loans) as of the end of the related Pre-Funding
Period will (a) have a weighted average original term to stated maturity of not
more than 360 months; (b) have a weighted average Loan-to-Value Ratio (or
weighted average Combined Loan-to-Value Ratio in the case of second lien
Mortgage Loans) of not more than ____%, each by aggregate principal balance of
the related Mortgage Loans; (c) have no Mortgage Loan with a principal balance
in excess of $______; and (d) not have a concentration of second lien Mortgage
Loans in excess of ____%, by aggregate principal balance of the related Mortgage
Loans. In the sole discretion of the Certificate Insurer, Subsequent Mortgage
Loans with characteristics varying from those set forth above may be purchased
by the Trust Fund; provided, however, that the addition of such Mortgage Loans
will not materially affect the aggregate characteristics of the Mortgage Loans.
31
(d) Within five Business Days after the end of the Pre-Funding Period,
the Depositor shall deliver to each Rating Agency a copy of the updated Mortgage
Loan Schedule including the Subsequent Mortgage Loans in electronic format.
32
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF THE SERVICER. The Servicer hereby
represents and warrants to the Trustee, the Depositor, the Certificate Insurer
and the Certificateholders as of the Closing Date:
(a) The Servicer is a ________ corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and is in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary to enable it to
perform its obligations under the terms of this Agreement; the Servicer has
the full corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement by the Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligation of
the Servicer; and all requisite corporate action has been taken by the
Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
(b) Neither the execution and delivery of this Agreement, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer's charter or by-laws or any legal
restriction or any agreement or instrument to which the Servicer is now a
party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Trustee (or the
Servicer as the agent of the Trustee) to realize on the Mortgage Loans, or
impair the value of the Mortgage Loans;
(c) The Servicer is an approved seller/servicer of conventional
residential mortgage loans for FNMA and FHLMC;
(d) There is no action, suit, proceeding or investigation pending or,
to the knowledge of the Servicer, threatened against the Servicer which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Servicer, or in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now
conducted, or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or which would materially
impair the ability of the Servicer to perform under the terms of this
Agreement;
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this
Agreement or the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been
obtained prior to the Closing Date; and
33
(f) Neither this Agreement nor any statement, report or other document
furnished by the Servicer pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement of
material fact regarding the Servicer or omits to state a material fact
necessary to make the statements regarding the Servicer contained herein or
therein not misleading.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive the delivery of the respective
Mortgage Files to the Trustee or to a custodian, as the case may be, and inure
to the benefit of the Trustee, the Certificateholders and the Certificate
Insurer.
Section 3.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR. The Depositor hereby represents, warrants and covenants to the
Trustee, the Certificateholders and the Certificate Insurer that as of the date
of this Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof
by the Servicer and the Trustee, constitutes or will constitute the legal,
valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally,
and by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any
of the transactions contemplated hereby, except as have been made on or
prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this
Agreement, (i) conflicts or will conflict with or results or will result in
a breach of, or constitutes or will constitute a default or results or will
result in an acceleration under (A) the charter or bylaws of the Depositor,
or (B) of any term, condition or provision of any material indenture, deed
of trust, contract or other agreement or instrument to which the Depositor
or any of its subsidiaries is a party or by which it or any of its
subsidiaries is bound; (ii) results or will result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the
Depositor of any court or governmental authority having jurisdiction
34
over the Depositor or its subsidiaries; or (iii) results in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans; (f) There are no actions, suits
or proceedings before or against or investigations of, the Depositor
pending, or to the knowledge of the Depositor, threatened, before any
court, administrative agency or other tribunal, and no notice of any such
action, which, in the Depositor's reasonable judgment, might materially and
adversely affect the performance by the Depositor of its obligations under
this Agreement, or the validity or enforceability of this Agreement; and
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency that would materially and adversely
affect its performance hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee, the Certificateholders and the
Certificate Insurer.
Section 3.03 PURCHASE AND SUBSTITUTION. (a) It is understood and
agreed that the representations and warranties set forth in Sections ____ and
____ of the Purchase Agreement shall survive delivery of the Certificates to the
Certificateholders. Pursuant to the Purchase Agreement, with respect to any
representation or warranty contained in Sections ____ and ____ of the Purchase
Agreement that is made to the best of the Seller's knowledge, if it is
discovered by the Servicer, the Trustee, the Certificate Insurer or any
Certificateholder that the substance of such representation and warranty was
inaccurate as of the Closing Date and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan, then notwithstanding the
Seller's lack of knowledge with respect to the inaccuracy at the time the
representation or warranty was made, such inaccuracy shall be deemed a breach of
the applicable representation or warranty. Upon discovery by the Seller, the
Servicer, the Trustee or the Certificate Insurer of a breach of any of such
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Certificateholders or the
Certificate Insurer, or which materially and adversely affects the interests of
the Certificate Insurer or the Certificateholders in the related Mortgage Loan
in the case of a representation and warranty relating to a particular Mortgage
Loan (notwithstanding that such representation and warranty was made to the
Seller's best knowledge), the party discovering such breach shall give prompt
written notice to the others. Subject to the last paragraph of this Section
3.03, within 60 days of the earlier of its discovery or its receipt of notice of
any breach of a representation or warranty, pursuant to the Purchase Agreement,
the Seller shall be required to (a) promptly cure such breach in all material
respects, or (b) purchase such Mortgage Loan on the next succeeding Servicer
Remittance Date, in the manner and at the price specified in Section 2.04(b), or
(c) remove such Mortgage Loan from the Trust Fund (in which case it shall become
a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans; provided, that, such substitution is effected not later than the
date which is two years after the Startup Day or at such later date, if the
Trustee and the Certificate Insurer receive an Opinion of Counsel to the effect
set forth below in this Section. Pursuant to the Purchase Agreement, any such
substitution shall be
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accompanied by payment by the Seller of the Substitution Adjustment, if any, to
be deposited in the Collection Account.
(b) As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall be required
pursuant to the Purchase Agreement to effect such substitution by delivering to
the Trustee a certification in the form attached hereto as Exhibit H, executed
by a Servicing Officer and the documents described in Sections 2.03(a)(i)-(vi)
for such Qualified Substitute Mortgage Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Mortgage Loans on or before the date of substitution will
be retained by the Seller. The Trust Fund will own all payments received on the
Deleted Mortgage Loan on or before the date of substitution, and the Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. The Servicer shall give written notice to
the Trustee and the Certificate Insurer that such substitution has taken place
and shall amend the Mortgage Loan Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of this Agreement and the substitution of
the Qualified Substitute Mortgage Loan. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(d) It is understood and agreed that the obligations of the Seller set
forth in Sections ____ and ____ of the Purchase Agreement to cure, purchase or
substitute for a defective Mortgage Loan as provided in Sections ____ and ____
constitute the sole remedies of the Trustee, the Certificate Insurer and the
Certificateholders respecting a breach of the representations and warranties of
the Seller set forth in Sections ____ and ____ of the Purchase Agreement. In
addition, it is understood and agreed that the Depositor has assigned to the
Trustee all of its rights under the Purchase Agreement and the right to enforce
any remedy against the Seller as provided in Section 3.04 of the Purchase
Agreement. The Trustee shall give prompt written notice to the Certificate
Insurer and the Rating Agencies of any repurchase or substitution made pursuant
to this Section 3.03 or Section 2.04(b).
(e) Upon discovery by the Servicer, the Trustee, the Certificate
Insurer or any Certificateholder that any Mortgage Loan does not constitute a
Qualified Mortgage, the party discovering such fact shall promptly (and in any
event within five days of the discovery) give written notice thereof to the
other parties. In connection therewith, pursuant to the Purchase Agreement, the
Seller shall be required to repurchase or substitute a Qualified Substitute
Mortgage Loan for the affected Mortgage Loan within 90 days of the earlier of
such discovery by any of the foregoing parties, or the Trustee's or the Seller's
receipt of notice, in the same manner as it would a Mortgage Loan for a breach
of representation or warranty contained in Section ____ or ____ of the Purchase
Agreement. The Trustee shall reconvey to the Seller the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section ____ or ____ of the Purchase
Agreement.
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ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES. The Certificates shall be substantially
in the forms annexed hereto as Exhibits B-1 and B-2. The Certificates shall be
issued in Authorized Denominations only. All Certificates shall be executed by
manual or facsimile signature on behalf of the Trustee by an authorized officer
and authenticated by the manual or facsimile signature of an authorized officer.
Certificates bearing the signatures of individuals who were at the time of the
execution of the Certificates the authorized officers of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the delivery of such Certificates or did not hold
such offices at the date of such Certificates. All Certificates issued hereunder
shall be dated the date of their authentication.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee, as registrar, shall cause to be kept a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Certificate Insurer shall be entitled to
inspect and verify the Certificate Register and the records of the Trustee
relating to the Certificates during normal business hours upon reasonable
notice.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust Fund and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any registration
of transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust Fund.
(e) It is intended that the Class A Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in the next paragraph, be initially issued in the form of a single fully
registered Class A Certificate of such Class with a denomination equal to the
Original Security Balance of such Class. Upon initial issuance, the ownership of
each such Class A Certificate shall be registered in the Certificate Register in
the name of Cede & Co., or any successor thereto, as nominee for the Depository.
The Depositor and the Trustee are hereby authorized to execute and deliver the
Representation Letter with the Depository. With
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respect to Class A Certificates registered in the Certificate Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Seller, the
Servicer, the Trustee and the Certificate Insurer shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Class A Certificates from time to time as a Depository.
Without limiting the immediately preceding sentence, the Depositor, the Seller,
the Servicer, the Trustee and the Certificate Insurer shall have no
responsibility or obligation with respect to (i) the accuracy of the records of
the Depository, Cede & Co., or any Direct or Indirect Participant with respect
to any Ownership Interest, (ii) the delivery to any Direct or Indirect
Participant or any other Person, other than a Certificateholder, of any notice
with respect to the Class A Certificates or (iii) the payment to any Direct or
Indirect Participant or any other Person, other than a Certificateholder, of any
amount with respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a Certificateholder shall receive a
certificate evidencing such Class A Certificate. Upon delivery by the Depository
to the Trustee of written notice to the effect that the Depository has
determined to substitute a new nominee in place of Cede & Co., and subject to
the provisions hereof with respect to the payment of interest by the mailing of
checks or drafts to the Certificateholders appearing as Certificateholders at
the close of business on a Record Date, the name "Cede & Co." in this Agreement
shall refer to such new nominee of the Depository.
(f) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Depositor or the Depository is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Certificate Register in the name
of Cede & Co. (or a successor nominee) as nominee of the Depository. At that
time, the Depositor may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Depositor, or such
depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
provided, however, that any such reregistration shall be at the expense of the
Depositor.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates as the case may be and all notices with respect to
such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(h) Except as provided in Section 4.02(i), no transfer, sale, pledge
or other disposition of a Class R Certificate shall be made unless such
transfer, sale, pledge or other disposition is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event that a transfer of a Class R Certificate is to be made under
this Section 4.02(h), (i) the Depositor may direct the Trustee to require an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Depositor that such transfer shall be made pursuant to an
exemption, describing the applicable exemption and the
38
basis therefor, from said Act and laws or is being made pursuant to said Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee, the
Depositor or the Servicer, provided that such Opinion of Counsel will not be
required in connection with the initial transfer of any such Certificate by the
Depositor or any affiliate thereof, to a non-affiliate of the Depositor and (ii)
the Trustee shall require the transferee to execute a representation letter,
substantially in the form of Exhibit O hereto, and the Trustee shall require the
transferor to execute a representation letter, substantially in the form of
Exhibit P hereto, each acceptable to and in form and substance satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which representation letters shall not be an
expense of the Trustee, the Depositor or the Servicer, provided that such
representation letter will not be required in connection with any transfer of
any such Certificate by the Depositor to an affiliate of the Depositor. Any such
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Depositor and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such applicable federal and state laws.
(i) Transfers of Certificates may be made in accordance with this
Section 4.02(i) if the prospective transferee of a Certificate provides the
Trustee and the Depositor with an investment letter substantially in the form of
Exhibit Q attached hereto, which investment letter shall not be an expense of
the Trustee, the Depositor or the Servicer, and which investment letter states
that, among other things, such transferee is a "qualified institutional buyer"
as defined under Rule 144A. Such transfers shall be deemed to have complied with
the requirements of Section 4.02(h) hereof; provided, however, that no Transfer
of any of the Certificates may be made pursuant to this Section 4.02(i) by the
Depositor. Any such Certificateholder desiring to effect such transfer shall,
and does hereby agree to, indemnify the Trustee, the Depositor and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such applicable federal and state laws.
(j) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (8) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(1) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(2) In connection with any proposed Transfer of any Ownership Interest
in a Class R Certificate, the Trustee shall require delivery to it, and shall
not register the Transfer of any Class R Certificate until its receipt of, an
affidavit and agreement (a "Transfer Affidavit and Agreement") attached hereto
as Exhibit I from the proposed Transferee, in form and substance satisfactory to
the Trustee, representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring its Ownership
39
Interest in the Class R Certificate that is the subject of the proposed Transfer
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in a Class R
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of this Section 4.02(j) and agrees to be bound by them.
(3) Notwithstanding the delivery of a Transfer Affidavit and Agreement
by a proposed Transferee under clause (2) above, if the Trustee has actual
knowledge that the proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Class R Certificate to such proposed
Transferee shall be effected.
(4) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
in a Class R Certificate and (y) not to transfer its Ownership Interest unless
it provides a certificate (attached hereto as Exhibit J) to the Trustee stating
that, among other things, it has no actual knowledge that such other Person is
not a Permitted Transferee.
(5) The Trustee will register the Transfer of any Class R Certificate
only if it shall have received the Transfer Affidavit and Agreement and all of
such other documents as shall have been reasonably required by the Trustee as a
condition to such registration. In addition, no Transfer of a Class R
Certificate shall be made unless the Trustee shall have received a
representation letter from the Transferee of such Certificate to the effect that
such Transferee is not a Disqualified Non-United States Person and is not a
Disqualified Organization. Transfers of the Class R Certificates to Disqualified
Non-United States Persons and Disqualified Organizations are prohibited.
(6) Any attempted or purported transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section 4.02 shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall become a Holder of a Class R Certificate in
violation of the provisions of this Section 4.02, then the last preceding
Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R Certificate.
The Trustee shall notify the Depositor upon receipt of written notice or
discovery by a Responsible Officer that the registration of transfer of a Class
R Certificate was not in fact permitted by this Section 4.02. Knowledge shall
not be imputed to the Trustee with respect to an impermissible transfer in the
absence of such a written notice or discovery by a Responsible Officer. The
Trustee shall be under no liability to any Person for any registration of
transfer of a Class R Certificate that is in fact not permitted by this Section
4.02 or for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered after receipt of the related
Transfer Affidavit and Transfer Certificate. The Trustee shall be entitled, but
not obligated to recover from any Holder of a Class R Certificate that was in
fact not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all payments
made on such Class R Certificate at and after either such time. Any such
payments so recovered by the Trustee shall be paid and delivered by the Trustee
to the last preceding Holder of such Certificate.
(k) The Trustee shall make available to the Internal Revenue Service
and those Persons specified by the REMIC Provisions, all information necessary
to compute any tax imposed (A) as a result of the transfer of an ownership
interest in a Class R Certificate to any
40
Person who is a Disqualified Organization, including the information regarding
"excess inclusions" of such Class R Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E- 2(a)(5), and (B) as a result of
any regulated investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in Section 1381 of
the Code that holds an Ownership Interest in a Class R Certificate having as
among its record holders at any time any Person who is a Disqualified
Organization. The Trustee may charge and shall be entitled to reasonable
compensation for providing such information as may be required from those
Persons which may have had a tax imposed upon them as specified in clauses (A)
and (B) of this paragraph for providing such information.
(l) No transfer of a Class R Certificate or any interest therein shall
be made to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan"), unless
the prospective transferee of such Class R Certificate provides the Servicer
and the Trustee with a certification of facts and, at the prospective
transferee's expense, an Opinion of Counsel which establish to the satisfaction
of the Servicer and the Trustee that such transfer will not result in a
violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or the Trustee to be deemed a fiduciary of such Plan or result in the
imposition of an excise tax under Section 4975 of the Code. In the absence of
their having received the certification of facts or Opinion of Counsel
contemplated by the preceding sentence, the Trustee and the Servicer shall
require the prospective transferee of any Class R Certificate to certify in the
form of Exhibit O or Exhibit Q that (A) it is neither (i) a Plan nor (ii) a
Person who is directly or indirectly purchasing a Class R Certificate on behalf
of, as named fiduciary of, as trustee of, or with assets, of a Plan and (B) all
funds used by such transferee to purchase such Certificates will be funds held
by it in its general account which it reasonably believes do not constitute
"plan assets" of any Plan.
(m) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon surrender
of the Certificates to be exchanged at such office. Whenever any Certificates
are so surrendered for exchange, the Trustee shall execute, authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled by the Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b)
41
there is delivered to the Trustee such security or indemnity as may reasonably
be required by each of them to save each of them harmless, then, in the absence
of notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest, but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate under
this Section 4.03, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and their fees and expenses connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
Section 4.04 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Depositor, the Seller, the
Certificate Insurer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.05 and for all other purposes
whatsoever, and the Servicer, the Depositor, the Seller, the Certificate Insurer
and the Trustee shall not be affected by notice to the contrary.
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ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 APPOINTMENT OF THE SERVICER. (a) ________ agrees to act
as the Servicer and to perform all servicing duties under this Agreement subject
to the terms hereof.
(b) The Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and shall have full power and authority, acting alone or
through one or more Subservicers, to do any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer may, and is
hereby authorized and empowered by the Trustee to, execute and deliver, on
behalf of itself, the Certificateholders and the Trustee or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge and all other comparable instruments, with respect to the Mortgage
Loans, the insurance policies and accounts related thereto and the properties
subject to the Mortgages. Upon the execution and delivery of this Agreement, and
from time to time as may be required thereafter, the Trustee shall execute for
the Servicer any powers of attorney and such other documents as may be necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures consistent with Accepted Servicing Practices and in a manner
consistent with recovery under any insurance policy required to be maintained by
the Servicer pursuant to this Agreement.
Costs incurred by the Servicer in effectuating the timely payment of
taxes and assessments on the property securing a Mortgage Note and foreclosure
costs may be added by the Servicer to the amount owing under such Mortgage Note
where the terms of such Mortgage Note so permit; provided, however, that the
addition of any such cost shall not be taken into account for purposes of
calculating the principal amount of the Mortgage Note and Mortgage Loan, the
Monthly Payments on the Mortgage Note and Mortgage Loan or distributions to be
made to Certificateholders. Such costs shall be recoverable by the Servicer
pursuant to Section 5.04.
(c) Subject to Section 5.12, the Servicer is hereby authorized and
empowered to execute and deliver on behalf of the Trustee and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, the Trustee shall execute any powers of
attorney furnished to the Trustee by the Servicer and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
(d) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 5.24, after
receipt by the Trustee and the Certificate Insurer of the Opinion of Counsel
required pursuant to Section 5.24, the Trustee or its
43
designee approved by the Certificate Insurer (which approval shall not be
unreasonably withheld) shall assume all of the rights and obligations of the
Servicer, subject to Section 7.02 hereof. The Servicer shall, upon request of
the Trustee but at the expense of the Servicer, deliver to the Trustee all
documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Servicer and otherwise use its best efforts to
effect the orderly and efficient transfer of servicing rights and obligations to
the assuming party.
(e) If the Mortgage relating to a Mortgage Loan did not have a lien
senior on the related Mortgaged Property as of the Cut-Off Date, then the
Servicer, in such capacity, may not consent to the placing of a lien senior to
that of the Mortgage on the related Mortgaged Property. If the Mortgage relating
to a Mortgage Loan had a lien senior to the Mortgage Loan on the related
Mortgaged Property as of the Cut-Off Date, then the Servicer, in such capacity,
may consent to the refinancing of such senior lien; provided that (i) the
resulting Combined Loan-to-Value Ratio of such Mortgage Loan is no higher than
the Combined Loan-to-Value Ratio prior to such refinancing and (ii) the interest
rate for the loan evidencing the refinanced senior lien on the date of such
refinancing is no higher than the interest rate on the loan evidencing the
existing senior lien immediately prior to the date of such refinancing.
(f) The Servicer shall deliver a list of Servicing Officers to the
Trustee and the Certificate Insurer by the Closing Date.
Section 5.02 [Reserved]
Section 5.03 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; COLLECTION
ACCOUNT. (a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and any
applicable primary mortgage insurance policy, follow such collection procedures
as shall constitute Accepted Servicing Practices. Consistent with the foregoing,
the Servicer may in its discretion (i) waive any prepayment charge, assumption
fee, late payment charge or other charge in connection with a Mortgage Loan, and
(ii) arrange a schedule, running for no more than 180 days after the Due Date
for payment of any installment on any Mortgage Note, for the liquidation of
delinquent items. Any provision of this agreement to the contrary
notwithstanding, the Servicer shall not agree to the modification or waiver of
any provision of a Mortgage Loan at a time when such Mortgage Loan is not in
default or such default is not reasonably foreseeable, if such modification or
waiver would be treated as a taxable exchange under Section 1001 of the Code,
unless such exchange would not be considered a "prohibited transaction" under
the REMIC Provisions.
The Servicer shall establish and maintain in the name of the Trustee
the Collection Account, in trust for the benefit of the Certificateholders and
the Certificate Insurer. The Collection Account shall be established and
maintained as an Eligible Account.
The Servicer shall deposit in the Collection Account (i) any amounts
representing Monthly Payments on the Mortgage Loans due or to be applied as of a
date after the Cut-off Date, with
44
respect to the Initial Mortgage Loans, or Subsequent Cut-off Date, with respect
to the Subsequent Mortgage Loans, (ii) any amounts representing Monthly Payments
on the Initial Mortgage Loans due or to be applied as of a date on or before the
Cut-off Date (except for any interest accrued prior to the Cut-off Date and
except for any principal received by the Depositor prior to the Cut-off Date the
receipt of which is reflected on the Mortgage Loan Schedule) and (iii)
thereafter, on a daily basis within two Business Days of receipt (except as
otherwise permitted herein), the following payments and collections received or
made by it (other than any amounts in respect of principal of or interest on the
Mortgage Loans which, under clauses (i) and (ii) above, are not required to be
deposited in the Collection Account):
(i) all payments received after the Cut-off Date or Subsequent
Cut-off Date, as applicable on account of principal on the Mortgage Loans
and all Principal Prepayments in Full, Curtailments and all Net REO
Proceeds collected after the Cut-off Date or Subsequent Cut-off Date, as
applicable;
(ii) all payments received after the Cut-off Date or Subsequent Cut-
off Date, as applicable on account of interest on the Mortgage Loans (other
than payments of interest that accrued on each Mortgage Loan up to and
including the Cut-off Date or Subsequent Cut-off Date, as applicable);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.04 and 3.03; and
(vii) any amount expressly required to be deposited in the Collection
Account in accordance with certain provisions of this Agreement, including,
without limitation Sections 2.04(b), 2.04(c), 3.03(a), 3.03(c), 5.06, 5.07
and 5.18 of this Agreement;
provided, however, that the Servicer shall be entitled, at its
election, either (a) to withhold and to pay to itself the applicable Servicing
Fee from any payment on account of interest or other recovery (including Net REO
Proceeds) as received and prior to deposit of such payments in the Collection
Account or (b) to withdraw the applicable Servicing Fee from the Collection
Account after the entire payment or recovery has been deposited therein;
provided, further, that with respect to any payment of interest received by the
Master Servicer in respect of a Mortgage Loan (whether paid by the Mortgagor or
received as Liquidation Proceeds, Insurance Proceeds or otherwise) which is less
than the full amount of interest then due with respect to such Mortgage Loan,
only that portion of such payment that bears the same relationship to the total
amount of such payment of interest as the rate used to determine the Servicing
Fee bears to the Mortgage Interest Rate borne by such Mortgage Loan shall be
allocated to the Servicing Fee with respect to such Mortgage Loan. All other
amounts shall be deposited in the Collection Account not later than the second
Business Day following the day of receipt and posting by the Servicer.
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The Servicer may invest the funds in the Collection Account only in
Permitted Investments. No Permitted Investment shall be sold or disposed of at a
gain prior to maturity unless the Servicer has obtained an Opinion of Counsel
(at the Servicer's expense) that such sale or disposition will not cause the
Trust Fund to be subject to the tax on income from prohibited transactions
imposed by Section 860F(a)(1) of the Code, otherwise subject the Trust Fund to
tax or cause the Trust Fund to fail to qualify as a REMIC. All income (other
than any gain from a sale or disposition of the type referred to in the
preceding sentence) realized from any such Permitted Investment shall be for the
benefit of the Servicer as additional servicing compensation. The amount of any
losses incurred in respect of any such investments shall be deposited in the
Collection Account by the Servicer out of its own funds immediately as realized.
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of those described in the
last paragraph of Section 5.14 and payments in the nature of prepayment charges,
late payment charges or assumption fees need not be deposited by the Servicer in
the Collection Account. If the Servicer deposits in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Collection Account, any provision herein to the contrary
notwithstanding. All funds deposited by the Servicer in the Collection Account
shall be held in the Collection Account for the account of the Trustee in trust
for the Certificateholders until disbursed in accordance with Section 6.01 or
withdrawn in accordance with Section 5.04.
(b) Prior to the time of their required deposit in the Collection
Account, all amounts required to be deposited therein may be deposited in an
account in the name of Servicer, provided that such account is an Eligible
Account. All such funds shall be held by the Servicer in trust for the benefit
of the Certificateholders and the Certificate Insurer pursuant to the terms
hereof.
(c) The Collection Account may, upon written notice by the Trustee to
the Certificate Insurer, be transferred to a different depository so long as
such transfer is to an Eligible Account.
Section 5.04 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT. The
Servicer may, from time to time, make withdrawals from the Collection Account
for the following purposes:
(a) to reimburse itself for any accrued unpaid Servicing Fees and for
unreimbursed Periodic Advances and Servicing Advances. The Servicer's right to
reimbursement for unpaid Servicing Fees and unreimbursed Servicing Advances
shall be limited to late collections on the related Mortgage Loan, including
Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds
and such other amounts as may be collected by the Master Servicer from the
related Mortgagor or otherwise relating to the Mortgage Loan in respect of which
such unreimbursed amounts are owed. The Servicer's right to reimbursement for
unreimbursed Periodic Advances shall be limited to late collections of interest
on any Mortgage Loan and to Liquidation Proceeds and Insurance Proceeds on
related Mortgage Loans;
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(b) to reimburse itself for any Periodic Advances or Servicing
Advances determined in good faith to have become Nonrecoverable Advances, such
reimbursement to be made from any funds in the Collection Account;
(c) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(d) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein;
(e) to pay itself Servicing Compensation pursuant to Section 5.14
hereof to the extent not retained or paid pursuant to Section 5.03, 5.04 or
5.14;
(f) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.04 or 3.03 or to pay to itself with respect to each
Mortgage Loan or property acquired in respect thereof that has been purchased
pursuant to Section 8.01 all amounts received thereon and not required to be
distributed as of the date on which the related repurchase or purchase price or
Principal Balance, as the case may be, was determined;
(g) to pay to the Seller with respect to each Mortgage Loan the amount
of interest accrued and unpaid on such Mortgage Loan on the Cut-off Date (with
respect to the Initial Mortgage Loans) or Subsequent Cut-off Date (with respect
to the Subsequent Mortgage Loans);
(h) to make deposits to the Certificate Accounts (which shall include
the Trustee Fee) in the amounts and in the manner provided for herein;
(i) to pay itself any interest earned on or investment income earned
with respect to funds in the Collection Account;
(j) to reimburse itself or the Depositor pursuant to Section 11.01;
and
(k) to clear and terminate the Collection Account upon the termination
of this Agreement.
The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the Collection
Account pursuant to subclause (a).
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting casualty insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the
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Mortgaged Property and the status of primary mortgage guaranty insurance
premiums, if any, and casualty insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination date
and at a time appropriate for securing maximum discounts allowable, employing
for such purpose deposits of the Mortgagor in any escrow account which shall
have been estimated and accumulated by the Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage. To the extent that a
Mortgage does not provide for escrow payments, the Servicer shall, if it has
received notice of a default or deficiency, monitor such payments to determine
if they are made by the Mortgagor.
Section 5.06 MAINTENANCE OF CASUALTY INSURANCE. The Servicer shall
cause to be maintained for each Mortgage Loan (at the expense of the borrower
or, if required by the terms of the Mortgage Loan and not paid for by the
borrower, at the expense of the Trust Fund) a casualty insurance policy with
extended coverage issued by a generally acceptable insurer in an amount which is
not less than the full insurable value of the Mortgaged Property securing such
Mortgage Loan or the unpaid principal balance of such Mortgage Loan, whichever
is less; provided, however, that such insurance may not be less than the minimum
amount required to fully compensate for any loss or damage on a replacement cost
basis. If, upon origination of the Mortgage Loan, the improvements on the
Mortgaged Property were in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Servicer will cause to be
maintained (at the expense of the borrower or, if required by the terms of the
Mortgage Loan and not paid for by the borrower, at the expense of the Trust
Fund) a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the unpaid principal balance of the Mortgage Loan, (ii) the full insurable
value and (iii) the maximum amount of insurance which was available under the
Flood Disaster Protection Act of 1973. The Servicer shall also maintain similar
fire insurance coverage and, if applicable, flood insurance on property acquired
upon foreclosure, or by deed in lieu of foreclosure, of any Mortgage Loan in an
amount which is at least equal to the lesser of (i) the full insurable value of
the improvements which are a part of such property and (ii) the principal
balance owing on such Mortgage Loan at the time of such foreclosure or grant of
deed in lieu of foreclosure; provided, however, that such insurance may not be
less than the minimum amount required to fully compensate for any loss or damage
on a replacement cost basis. It is understood and agreed that such insurance
shall be with insurers approved by the Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor, other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. Pursuant to Section 5.03, any amounts
collected by the Servicer under any insurance policies maintained pursuant to
this Section 5.06 (other than amounts to be applied to the restoration or repair
of the related Mortgaged Property or released to the Mortgagor in accordance
with Accepted Servicing Practices) shall be deposited into the Collection
Account, subject to withdrawal pursuant to Section 5.04 unless such insurance
was not required by the terms of the Mortgage Loan. Any cost incurred by the
Servicer in maintaining any such insurance shall be added to the amount owing
under the Mortgage Loan where the terms of the Mortgage Loan so permit;
provided, however, that the addition of any such cost shall not be taken into
account for purposes of calculating the principal amount of the Mortgage Note or
Mortgage Loan, the Monthly Payments on the
48
Mortgage Note or the distributions to be made to the Certificateholders. Such
costs shall be recoverable by the Servicer pursuant to Section 5.04. In the
event that the Servicer shall obtain and maintain a blanket policy issued by an
insurer that is acceptable to FNMA or FHLMC, insuring against hazard losses on
all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligation as set forth in the first sentence of this Section 5.06, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, in the event that there shall not have been maintained
on the related mortgaged or acquired property an insurance policy complying with
the first sentence of this Section 5.06 and there shall have been a loss which
would have been covered by such a policy had it been maintained, be required to
deposit from its own funds into the Collection Account the amount not otherwise
payable under the blanket policy because of such deductible clause.
Section 5.07 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY. In
the event that the Servicer shall obtain and maintain a blanket policy (the
"Mortgage Impairment Insurance Policy") with an insurer either (i) having a
General Policy rating of A:VIII or better in Best's Key Rating Guide or (ii)
approved in writing by the Certificate Insurer, such approval not to be
unreasonably withheld, insuring against fire and hazards of extended coverage on
all of the Mortgage Loans, then, to the extent such policy names the Servicer as
loss payee and provides coverage in an amount equal to the aggregate unpaid
principal balance on the Mortgage Loans without co-insurance, and otherwise
complies with the requirements of Section 5.06, the Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under Section 5.06, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 5.06, and there shall have
been a loss which would have been covered by such policy, deposit in the
Collection Account the difference, if any, between the amount that would have
been payable under a policy complying with Section 5.06 and the amount paid
under such blanket policy. Upon the request of the Certificate Insurer, the
Trustee or any Certificateholder, the Servicer shall cause to be delivered to
the Certificate Insurer, the Trustee or such Certificateholder, as the case may
be, a certified true copy of such policy. The Servicer agrees to prepare and
present, on behalf of itself, the Trustee, the Certificate Insurer and
Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
Section 5.08 FIDELITY BOND; ERRORS AND OMISSIONS POLICY. (a) The
Servicer shall maintain with a responsible company, and at its own expense, a
blanket fidelity bond (a "Fidelity Bond") and an errors and omissions insurance
policy (an "Errors and Omissions Policy"), in a minimum amount acceptable to
FNMA or FHLMC or, if _______is the Servicer or if the Trustee is the successor
Servicer, in an amount generally maintained by prudent mortgage loan servicers
having servicing portfolios of a similar size.
(b) The Servicer shall be deemed to have complied with this provision
if one of its respective Affiliates has such a Fidelity Bond and Errors and
Omissions Policy and, by the terms of such fidelity bond and errors and omission
policy, the coverage afforded thereunder extends to the Servicer. Any such
Fidelity Bond and Errors and Omissions Policy shall not be cancelled or modified
in a materially adverse manner without 10 days prior written notice to the
Certificate Insurer.
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Section 5.09 COLLECTION OF TAXES, ASSESSMENTS AND OTHER ITEMS;
SERVICING ACCOUNT. In addition to the Collection Account, the Servicer shall
establish and maintain a Servicing Account, which shall be an Eligible Account,
and shall deposit therein all payments by Mortgagors for taxes, assessments,
primary mortgage or hazard insurance premiums or comparable items. Withdrawals
from the Servicing Account may be made to effect payment of taxes, assessments,
primary mortgage or hazard insurance premiums or comparable items, to reimburse
the Servicer out of related collections for any advances made in the nature of
any of the foregoing, to refund to any Mortgagors any sums determined to be
overages, or to pay any interest owed to Mortgagors on such account to the
extent required by law or to clear and terminate the Servicing Account at the
termination of this Agreement upon the termination of the Trust Fund. The
Servicer shall advance the payments referred to in the first sentence of this
Section 5.09 that are not timely paid by the Mortgagors on the date when the
tax, premium or other cost for which such payment is intended is due, but the
Servicer shall be required to so advance only to the extent that such advances,
in the good faith judgment of the Servicer, will be recoverable by the Servicer
pursuant to Section 5.04 out of Liquidation Proceeds, Insurance Proceeds or
otherwise.
Section 5.10 PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION; ADDITIONAL INFORMATION. The Trustee shall prepare or cause to be
prepared for filing with the Commission any and all reports, statements and
information respecting the Trust Fund and/or the Certificates required to be
filed, and shall solicit any and all proxies of the Certificateholders whenever
such proxies are required to be solicited, pursuant to the Securities Exchange
Act of 1934, as amended. The Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
with, or other appropriate exemptive relief from, the Commission seeking the
usual and customary exemption from such reporting requirements granted to
issuers of securities similar to the Certificates. Fees and expenses incurred by
the Trustee in connection with the foregoing shall be reimbursed pursuant to
Section 9.05 and shall not be paid by the Trust Fund.
The Servicer and the Depositor each agree to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within their control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Securities and Exchange Commission.
Section 5.11 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
AGREEMENTS. In any case in which a Mortgaged Property is about to be conveyed by
the Mortgagor (whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable thereon) and the Servicer has
knowledge of such prospective conveyance, the Servicer shall effect assumptions
in accordance with the terms of any due-on-sale provision contained in the
related Mortgage Note or Mortgage. The Servicer shall enforce any due-on-sale
provision contained in such Mortgage Note or Mortgage to the extent the
requirements thereunder for an assumption of the Mortgage Loan have not been
satisfied to the extent permitted under the terms of the related Mortgage Note,
unless such provision is not exercisable under applicable law and governmental
regulations or in the Servicer's judgment, such exercise is reasonably likely to
result in legal action by the Mortgagor, or such conveyance is in connection
with a permitted assumption of the related
50
Mortgage Loan. Subject to the foregoing, the Servicer is authorized to take or
enter into an assumption agreement from or with the Person to whom such property
is about to be conveyed, pursuant to which such person becomes liable under the
related Mortgage Note and, unless prohibited by applicable state law, the
Mortgagor remains liable thereon. The Servicer is also authorized, to release
the original Mortgagor from liability upon the Mortgage Loan and substitute the
new Mortgagor as obligor thereon. In connection with such assumption or
substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual for mortgage loans
similar to the Mortgage Loans and as it applies to mortgage loans owned solely
by it. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related Mortgage File and shall, for all purposes,
be considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. In connection with any
such assumption or substitution agreement, the Mortgage Interest Rate of the
related Mortgage Note, the payment terms and other material terms shall not be
changed. Any fee collected by the Servicer for entering into an assumption or
substitution of liability agreement will be retained by the Servicer as
servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any conveyance by the
Mortgagor of the property subject to the Mortgage or any assumption of a
Mortgage Loan by operation of law which the Servicer in good faith determines it
may be restricted by law from preventing, for any reason whatsoever, or if the
exercise of such right would impair or threaten to impair any recovery under any
applicable insurance policy or, in the Servicer's judgment, be reasonably likely
to result in legal action by the Mortgagor.
Section 5.12 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) Except as provided in the last two paragraphs of this Section
5.12(a), the Servicer shall foreclose upon or otherwise comparably convert 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 5.03. In connection with
such foreclosure or other conversion, the Servicer shall follow Accepted
Servicing Practices. The foregoing is subject to the proviso that the Servicer
shall not be required to expend its own funds in connection with any foreclosure
or to restore any damaged property unless it shall determine that (i) such
foreclosure and/or restoration will increase the proceeds of liquidation of the
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses and (ii) such expenses will be recoverable to it through Liquidation
Proceeds (respecting which it shall have priority for purposes of withdrawal
from the Collection Account pursuant to Section 5.04) or otherwise. The Servicer
shall be entitled to reimbursement of the Servicing Fee and other amounts due
it, if any, to the extent, but only to the extent, that withdrawals from the
Collection Account with respect thereto are permitted under Section 5.04.
The Servicer may foreclose against the Mortgaged Property securing a
defaulted Mortgage Loan either by foreclosure, by sale or by strict foreclosure,
and in the event a
51
deficiency judgment is available against the Mortgagor or any other person, may
proceed for the deficiency.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be issued to the Servicer on behalf of the Trustee in
the name of the Trustee on behalf of the Certificateholders. The Servicer shall
administer the REO Property so that it qualifies at all times as "foreclosure
property," within the meaning of Section 860G(a)(8) of the Code, and shall not
permit any income to be earned with respect thereto that is "net income from
foreclosure property" within the meaning of Section 860G(d) of the Code or
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code. Notwithstanding any such acquisition of title and cancellation of
the related Mortgage Loan, such Mortgage Loan shall be considered to be a
Mortgage Loan held in the Trust Fund until such time as the related Mortgaged
Property shall be sold and such Mortgage Loan becomes a Liquidated Mortgage
Loan. Consistent with the foregoing, for purposes of all calculations hereunder,
so long as such Mortgage Loan shall be considered to be an Outstanding Mortgage
Loan:
(i) It shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Mortgage Note shall have been discharged, such
Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy
or similar proceeding or any moratorium or similar waiver or grace period)
remain in effect, except that such schedule shall be adjusted to reflect
the application of Net REO Proceeds received in any month pursuant to the
succeeding clause.
(ii) Net REO Proceeds received in any month shall be deemed to have been
received first in payment of the accrued interest that remained unpaid on
the date that such Mortgage Loan became an REO Mortgage Loan, with the
excess thereof, if any, being deemed to have been received in respect of
the delinquent principal installments that remained unpaid on such date.
Thereafter, Net REO Proceeds received in any month shall be applied to the
payment of installments of principal and accrued interest on such Mortgage
Loan deemed to be due and payable in accordance with the terms of such
Mortgage Note and such amortization schedule. If such Net REO Proceeds
exceed the then Unpaid REO Amortization, the excess shall be treated as a
Curtailment received in respect of such Mortgage Loan.
(iii) Only that portion of Net REO Proceeds allocable to interest that
bears the same relationship to the total amount of Net REO Proceeds
allocable to interest as the rate of the Servicing Fee bears to the
Mortgage Interest Rate borne by such Mortgage Loan shall be allocated to
the Servicing Fee with respect thereto.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or reasonably foreseeable
default on a Mortgage Loan, such Mortgaged Property shall be disposed of by or
on behalf of the Trust Fund within three years after its acquisition by the
Trust Fund unless (a) the Servicer shall have provided to the Trustee an Opinion
of Counsel (at the expense of the Trust Fund) to the effect that the
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holding by the Trust Fund of such Mortgaged Property subsequent to three years
after its acquisition (and specifying the period beyond such three-year period
for which the Mortgaged Property may be held) will not cause the Trust Fund to
be subject to the tax on prohibited transactions imposed by Section 860F(a)(1)
of the Code, otherwise subject the Trust Fund to tax or cause the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding, or
(b) the Servicer (at the Trust Fund's expense) shall have applied for, at least
60 days prior to the expiration of such three-year period, an extension of such
three-year period in the manner contemplated by Section 856(e)(3) of the Code,
in which case the three-year period shall be extended by the applicable period.
The Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Section
860G(a)(8) of the Code at all times, that the sale of such property does not
result in the receipt by the Trust Fund of any income from non-permitted assets
as described in Section 860F(a)(2)(B) of the Code, and that the Trust Fund does
not derive any "net income from foreclosure property" within the meaning of
Section 860G(c)(2) of the Code with respect to such property.
Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
In lieu of foreclosing upon any defaulted Mortgage Loan, the Servicer
may, in its discretion, permit the assumption of such Mortgage Loan if, in the
Servicer's judgment, such default is unlikely to be cured and if the assuming
borrower satisfies the Servicer's underwriting guidelines with respect to
mortgage loans owned by the Servicer. In connection with any such assumption,
the Mortgage Interest Rate of the related Mortgage Note and the payment terms
shall not be changed. Any fee collected by the Servicer for entering into an
assumption agreement will be retained by the Servicer as servicing compensation.
Alternatively, the Servicer may encourage the refinancing of any defaulted
Mortgage Loan by the Mortgagor.
Notwithstanding the foregoing, prior to instituting foreclosure
proceedings or accepting a deed-in-lieu of foreclosure with respect to any
Mortgaged Property, the Servicer shall make, or cause to be made, inspection of
the Mortgaged Property in accordance with the Accepted Servicing Practices and,
with respect to environmental hazards, such procedures are as required by the
provisions of the FNMA's selling and servicing guide applicable to single-family
homes and in effect on the date hereof. The Servicer shall be entitled to rely
upon the results of any such inspection made by others. In cases where the
inspection reveals that such Mortgaged Property is potentially contaminated with
or affected by hazardous wastes or hazardous substances, the Servicer shall
promptly give written notice of such fact to the Certificate Insurer, the
Trustee and each Class A Certificateholder. The Servicer shall not commence
foreclosure proceedings or accept a deed-in-lieu of foreclosure for Mortgaged
Property with respect to this paragraph without obtaining the written consent of
the Certificate Insurer.
(b) Promptly after the Closing Date, the Servicer shall, with respect
to each Mortgage Loan for which the Mortgage provides a second lien on the
related Mortgaged Property, cause to be recorded in the appropriate public
office for real property records, where permitted by applicable law and where
applicable law does not require that a second mortgagee be named as a party
defendant in foreclosure or comparable proceedings in order to foreclose
53
or otherwise preempt such mortgagee's equity of redemption, a request for notice
of any action by or on behalf of any mortgagee under a Senior Mortgage Loan. The
Servicer also shall promptly provide written notice to each mortgagee under a
Senior Mortgage Loan of the existence of the related Mortgage Loan and request
notification of any action taken or to be taken against the related Mortgagor or
Mortgaged Property by or on behalf of such mortgagee in respect of such Senior
Mortgage Loan.
(c) Upon becoming aware that a Senior Mortgage Loan has come into
default or of any action that the related mortgagee has taken or may take in
respect thereof, the Servicer shall, consistent with the REMIC Provisions, take
such actions as it shall deem necessary or advisable, as shall be normal and
usual in its general mortgage servicing activities and as shall be required or
permitted by Accepted Servicing Practices. The Servicer, however, shall not be
required to expend its own funds in connection therewith unless it shall
determine that such expense will be recoverable to it. All such expenses shall
be included as Liquidation Expenses pursuant to the definition thereof, and
shall be reimbursable from the related Liquidation Proceeds in accordance with
Section 5.04.
Section 5.13 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES. Upon the
payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall immediately notify the Trustee in the form of
a Request for Release in the form attached hereto as Exhibit H (which request
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Collection Account
pursuant to Section 5.03 have been or shall be so deposited) of a Servicing
Officer and shall request delivery to it of the Mortgage File. Upon receipt of
such Request for Release, the Trustee, or the Custodian on its behalf, shall
promptly release the related Mortgage File to the Servicer. Upon any such
payment in full, the Servicer is authorized to give, as agent for the Trustee
and the mortgagee under the Mortgage which secured the Mortgage Loan, an
instrument of satisfaction (or assignment of mortgage without recourse)
regarding the property subject to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of such payment, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In connection therewith, the Trustee shall
execute and return to the Servicer any required power of attorney provided to
the Trustee by the Servicer and other required documentation in accordance with
Section 5.01(c). From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with Accepted Servicing
Practices, the Trustee shall, upon request of the Servicer and delivery to the
Trustee of a Request for Release signed by a Servicing Officer, release, or
cause the Custodian to release, the related Mortgage File to the Servicer and
shall execute such documents as shall be necessary to the prosecution of any
such proceedings. Such Request for Release shall obligate the Servicer to return
the Mortgage File to the Trustee when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to the Request for
Release hereinabove specified, the Mortgage File shall be delivered by the to
the Servicer.
Section 5.14 SERVICING FEE; SERVICING COMPENSATION. The Servicer shall
be entitled, at its election, either (a) to pay itself the Servicing Fee out of
any Mortgagor
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payment on account of interest or Net REO Proceeds prior to the deposit of such
payment in the Collection Account or (b) to withdraw from the Collection Account
such Servicing Fee pursuant to Section 5.04. The Servicer shall also be
entitled, at its election, either (a) to pay itself the Servicing Fee in respect
of each delinquent Mortgage Loan out of Liquidation Proceeds in respect of such
Mortgage Loan or other recoveries with respect thereto to the extent permitted
in Section 5.03(a) to withdraw from the Collection Account the Servicing Fee in
respect of each such Mortgage Loan to the extent of such Liquidation Proceeds or
other recoveries, to the extent permitted by Section 5.04(a).
Servicing compensation in the form of Net Foreclosure Profits,
prepayment penalties, assumption fees, late payment charges, tax service fees,
fees for statement of account or payoff of the Mortgage Loan (to the extent
permitted by applicable law) or otherwise shall be retained by the Servicer and
are not required to be deposited in the Collection Account. The aggregate
Servicing Fee is reserved for the administration of the Trust Fund and, in the
event of replacement of the Master Servicer as servicer of the Mortgage Loans,
for the payment of other expenses related to such replacement. The aggregate
Servicing Fee shall be offset as provided in Section 5.20. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including maintenance of the hazard insurance required by
Section 5.05) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
Section 5.15 REPORTS TO THE TRUSTEE AND THE DEPOSITOR; COLLECTION
ACCOUNT STATEMENTS. Not later than 15 days after each Distribution Date, the
Servicer shall provide to the Trustee and the Depositor a statement, certified
by a Servicing Officer, setting forth the status of the Collection Account as of
the close of business on the last day of the immediately preceding calendar
month, stating that all distributions required by this Agreement to be made by
the Servicer on behalf of the Trustee have been made (or if any required
distribution has not been made by the Servicer, specifying the nature and status
thereof) and showing, for the period covered by such statement, the aggregate of
deposits into and withdrawals from the Collection Account for each category of
deposit specified in Section 5.03 and each category of withdrawal specified in
Section 5.04 and the aggregate of deposits into the Certificate Accounts as
specified in Section 6.01(c). Such statement shall also state the aggregate
unpaid principal balance of all the Mortgage Loans as of the close of business
on the last day of the month preceding the month in which such Distribution Date
occurs. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request.
Section 5.16 ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer will
deliver to the Trustee, the Certificate Insurer and the Rating Agencies on or
before ________ each year, beginning with _____, 199_, an Officers' Certificate
stating as to each signer thereof, that (i) a review of the activities of the
Servicer during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision, and (ii) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all 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 officer and the nature and status thereof. Such Officers'
Certificate shall be accompanied by the statement described in Section 5.17 of
this Agreement. Copies of such
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statement shall, upon request, be provided to any Certificateholder by the
Servicer, or by the Trustee at the Servicer's expense if the Servicer shall fail
to provide such copies.
Section 5.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before _________ of every year, beginning with _______, 199_, the
Servicer, at its expense, shall cause a firm of nationally recognized
independent public accountants to furnish a statement to the Trustee, the
Certificate Insurer and the Rating Agencies to the effect that, on the basis of
an examination of certain documents and records relating to the servicing of the
mortgage loans being serviced by the Servicer under pooling and servicing
agreements similar to this Agreement, conducted substantially in compliance with
the Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that such servicing has been conducted in compliance with this
Agreement. Copies of such statement shall, upon request, be provided to
Certificateholders by the Servicer, or by the Trustee at the Servicer's expense
if the Servicer shall fail to provide such copies. For purposes of such
statement, such firm may conclusively presume that any pooling and servicing
agreement which governs mortgage pass-through certificates offered by the
Depositor (or any predecessor or successor thereto) in a registration statement
under the Securities Act of 1933, as amended, is similar to this Agreement,
unless such other pooling and servicing agreement expressly states otherwise.
Section 5.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. Any
Affiliate of the Seller, in its sole discretion, shall have the right to elect
(by written notice sent to the Servicer, the Trustee and the Certificate
Insurer), but shall not be obligated, to purchase for its own account from the
Trust Fund any Mortgage Loan which is 90 days or more Delinquent in the manner
and at the price specified in Section 2.04(b). The purchase price for any
Mortgage Loan purchased hereunder shall be deposited in the Collection Account
and the Trustee, upon receipt of such deposit, shall release or cause to be
released to the purchaser of such Mortgage Loan the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan and
all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.
Section 5.19 REPORTS TO BE PROVIDED BY THE SERVICER. The Servicer
agrees to make available on a reasonable basis to the Certificate Insurer a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
to inspect the Servicer's servicing facilities during normal business hours for
the purpose of satisfying the Certificate Insurer that the Servicer has the
ability to service the Mortgage Loans in accordance with this Agreement.
Section 5.20 ADJUSTMENT OF SERVICING COMPENSATION IN RESPECT OF
PREPAID MORTGAGE LOANS. The aggregate amount of the Servicing Fees that the
Servicer shall be entitled to receive with respect to all of the Mortgage Loans
and each
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Distribution Date shall be offset on such Distribution Date by an amount equal
to the aggregate Prepayment Interest Shortfall with respect to all Mortgage
Loans which were subjects of Principal Prepayments in Full or Curtailments
during the month preceding the month of such Distribution Date. The amount of
any offset against the aggregate Servicing Fee with respect to any Distribution
Date under this Section 5.20 shall be limited to the aggregate amount of the
Servicing Fees otherwise payable to the Servicer (without adjustment on account
of Prepayment Interest Shortfalls) with respect to (i) scheduled payments having
the Due Date occurring in the month of such Distribution Date received by the
Servicer prior to the Servicer Remittance Date, and (ii) Principal Prepayments
in Full, Curtailments and Liquidation Proceeds received in the month preceding
the month in which such Distribution Date occurs, and the rights of the
Certificateholders to the offset of the aggregate Prepayment Interest Shortfalls
shall not be cumulative.
Section 5.21 PERIODIC ADVANCES. If, on any Servicer Remittance Date,
the Servicer determines that any Monthly Payments due on the Due Date
immediately preceding such Servicer Remittance Date have not been received as of
the close of business on the Business Day preceding such Servicer Remittance
Date, the Servicer shall determine the amount of any Periodic Advance required
to be made with respect to the related Distribution Date. The Servicer shall, on
the Servicer Remittance Date, deliver in a computer-readable form (including
electronic transmission) to the Trustee indicating the payment status of each
Mortgage Loan as of the Business Day prior to such Servicer Remittance Date. The
Servicer shall include in the amount to be deposited in the related Certificate
Account on such Servicer Remittance Date an amount equal to the Periodic
Advance, if any, which deposit may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Certificateholders and so used shall be replaced by
the Servicer from its own funds by deposit in the related Certificate Account on
or before the Business Day preceding any such future Servicer Remittance Date to
the extent that funds in the related Certificate Account on such Servicer
Remittance Date shall be less than payments to Certificateholders required to be
made on such date.
The Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such Periodic
Advance shall be deemed to have been made, such determination being conclusive
for purposes of withdrawals from the Collection Account pursuant to Section
5.04.
Section 5.22 THIRD PARTY CLAIMS. The Trustee shall reimburse the
Seller from amounts otherwise distributable on the Class R Certificates for all
amounts advanced by the Seller pursuant to the second sentence of Section
4.03(a)(ii) of the Purchase Agreement except when the relevant claim relates
directly to the failure of the Seller to perform its duties in compliance with
the terms of the Purchase Agreement.
Section 5.23 MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER
OR CONSOLIDATION OF THE SERVICER. (a) The Servicer will keep in full effect its
existence, rights and franchises as a corporation, will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement and will
otherwise operate its business so as to cause the
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representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Servicer, shall be an established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of at
least $15,000,000, and in all events shall be the successor of the Servicer
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. The
Servicer shall send notice of any such merger or consolidation to the Trustee
and the Certificate Insurer.
Section 5.24 ASSIGNMENT OF AGREEMENT BY SERVICER; SERVICER NOT TO
RESIGN. The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Certificate Insurer and the Trustee or upon the determination that the
Servicer's duties hereunder are no longer permissible under applicable law and
that such incapacity cannot be cured by the Servicer without incurring, in the
reasonable judgment of the Certificate Insurer, unreasonable expense. Any such
determination that the Servicer's duties hereunder are no longer permissible
under applicable law permitting the resignation of the Servicer shall be
evidenced by a written Opinion of Counsel (who may be counsel for the Servicer)
to such effect delivered to the Trustee, the Seller, the Depositor and the
Certificate Insurer. No such resignation shall become effective until the
Trustee or a successor appointed in accordance with the terms of this Agreement
has assumed the Servicer's responsibilities and obligations hereunder in
accordance with Section 7.02. The Servicer shall provide the Trustee, the Rating
Agencies and the Certificate Insurer with 30 days prior written notice of its
intention to resign pursuant to this Section 5.24.
Section 5.25 INFORMATION REPORTS TO BE FILED BY THE SERVICER. The
Servicer shall file information returns with respect to the receipt of mortgage
interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and cancellation of indebtedness income
with respect to any Mortgaged Property as required by Sections 6050H, 6050J and
6050P of the Code, respectively.
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ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS TO THE
CERTIFICATE ACCOUNTS. (a) The Trustee shall establish and maintain a Certificate
Account which shall be titled "Certificate Account, _____________________, as
trustee for the registered holders of ACE Securities Corp., Asset-Backed
Certificates, Series 199_-_, Class A-1, Class A-2, Class A-3, Class A-4, and
Class R" which shall be an Eligible Account.
(b) The Servicer may direct the Trustee in writing to invest the funds
in the Certificate Account only in Permitted Investments. No Permitted
Investment shall be sold or disposed of at a gain prior to maturity unless the
Servicer has delivered to the Trustee an Opinion of Counsel (at the Servicer's
expense) that such sale or disposition will not cause the Trust Fund to be
subject to the tax on income from prohibited transactions imposed by Section
860F(a)(1) of the Code, otherwise subject the Trust Fund to tax or cause the
Trust Fund to fail to qualify as a REMIC. All income (other than any gain from a
sale or disposition of the type referred to in the preceding sentence) realized
from any such Permitted Investment shall be for the benefit of the Servicer as
additional servicing compensation. The amount of any losses incurred in respect
of any such investments shall be deposited in the related Certificate Account by
the Servicer out of its own funds immediately as realized.
(c) On each Servicer Remittance Date, the Servicer shall cause to be
deposited in the Certificate Account, from funds on deposit in the Collection
Account, an amount equal to the Servicer Remittance Amount.
Section 6.02 PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT. The
Trustee shall withdraw or cause to be withdrawn funds from the Certificate
Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.04 or 3.03 or to pay to the Servicer with respect to each
Mortgage Loan or property acquired in respect thereof that has been purchased
all amounts received thereon and not required to be distributed as of the date
on which the related repurchase or purchase price or Principal Balance was
determined;
(c) to pay the Servicer any interest earned on or investment income
earned with respect to funds in the Certificate Accounts;
(d) to return to the Collection Account any amount deposited in the
Certificate Account that was not required to be deposited therein;
(e) to make reimbursements to itself in accordance with Section 9.05;
and
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(f) to clear and terminate the Certificate Accounts upon termination
of any of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)
through (f) listed above.
Section 6.03 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement, including (a) all payments due on the Mortgage Loans in accordance
with the respective terms and conditions of such Mortgage Loans and required to
be paid over to the Trustee by the Servicer and (b) Insured Payments. The
Trustee shall hold all such money and property received by it, as part of the
Trust Fund and shall apply it as provided in this Agreement.
Section 6.04 THE CERTIFICATE INSURANCE POLICY. (a) Within two Business
Days after each Servicer Remittance Date the Trustee shall determine with
respect to the immediately following Distribution Date the amount to be on
deposit in the Certificate Account on such Distribution Date as a result of the
Servicer's remittance of the Servicer Remittance Amount on the related Servicer
Remittance Date plus the amount of any amounts deposited into the Certificate
Account from the Pre-Funding Account pursuant to Section 6.12 and any
Capitalized Interest Amount to be deposited pursuant to Section 6.13 for such
Distribution Date less the amounts described in clauses (i) through (ii) of
Section 6.05(b) or (c) for the related Distribution Date, and not including the
amount of any Insured Payment which is required to be deposited in the
Certificate Account for such Distribution Date. The amounts described in the
preceding sentence, with respect to each Distribution Date are the "Available
Funds" for such Distribution Date.
(b) If on any Distribution Date there is an Available Funds Shortfall,
the Trustee shall complete a Notice in the form of Exhibit A to the related
Certificate Insurance Policy and submit such notice to the Certificate Insurer
no later than 12:00 noon New York City time on the second Policy Business Day
preceding such Distribution Date as a claim for an Insured Payment in an amount
equal to such Available Funds Shortfall.
(c) The Trustee shall establish a separate Eligible Account for the
benefit of Holders of the Certificates and the Certificate Insurer referred to
herein as the "Certificate Insurance Payments Account" over which the Trustee
shall have exclusive control and sole right of withdrawal. The Trustee shall
deposit upon receipt any amount paid under the Certificate Insurance Policy in
the Certificate Insurance Payments Account and distribute such amount only for
purposes of payment to Certificateholders of the Insured Distribution Amount for
which a claim was made and such amount may not be applied to satisfy any costs,
expenses or liabilities of the Servicer, the Trustee or the Trust Fund. Amounts
paid under the Certificate Insurance Policy, to the extent needed to pay the
Insured Distribution Amount shall be transferred by the Trustee from the
Certificate Insurance Payments Account to the Certificate Account on the related
Distribution Date and disbursed by the Trustee to Certificateholders in
accordance with Section 6.05. It shall not be necessary for payments made under
the Certificate Insurance Policy to be made by checks or wire transfers separate
from other amounts distributed pursuant to Section 6.05. However, the amount of
any payment of principal or of interest on the Certificates to be paid from
funds transferred from the
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Certificate Insurance Payments Account shall be noted as provided in paragraph
(d) below. Funds held in the Certificate Insurance Payments Account shall not be
invested. Any funds remaining in the Certificate Insurance Payments Account on
the first Policy Business Day following a Distribution Date shall be returned to
the Certificate Insurer pursuant to the written instructions of the Certificate
Insurer by the end of such Policy Business Day.
(d) The Trustee Remittance Report shall indicate the amount of
interest and principal paid in respect of the Class A Certificates from moneys
received under the Certificate Insurance Policy.
(e) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Insured Payment has been voided in whole
or in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Certificate Insurer, shall comply with the provisions of the
Certificate Insurance Policy to obtain payment by the Certificate Insurer of
such voided Insured Payment, and shall, at the time it provides notice to the
Certificate Insurer, notify, by mail to Certificateholders of the affected
Certificates that, in the event any Certificateholder's Insured Payment is so
recovered, such Certificateholder will be entitled to payment pursuant to the
Certificate Insurance Policy, a copy of which shall be made available through
the Trustee, the Certificate Insurer or the Certificate Insurer's fiscal agent,
if any, and the Trustee shall furnish to the Certificate Insurer or its fiscal
agent, if any, its records evidencing the payments which have been made by the
Trustee and subsequently recovered from Certificateholders, and dates on which
such payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Certificates.
Each Certificateholder, by its purchase of Certificates, the Servicer and the
Trustee agree that, the Certificate Insurer (so long as no Certificate Insurer
Default exists) may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim, including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Claim and (ii) the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Certificate Insurer shall be subrogated to, and
each Certificateholder, the Servicer and the Trustee hereby delegate and assign
to the Certificate Insurer, to the fullest extent permitted by law, the rights
of the Servicer, the Trustee and each Certificateholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
any adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
Section 6.05 DISTRIBUTIONS. (a) No later than 12:00 noon New York time
on each Servicer Remittance Date, the Servicer shall deliver to the Trustee a
report in computer-readable form (including electronic transmission, provided
that a portion of such report relating to certain delinquency information may be
delivered in hard copy form rather than computer-readable form) containing such
information as to each Mortgage Loan as of such date and such other information
as the Trustee shall reasonably require.
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(b) With respect to funds deposited in the Certificate Account, on
each Distribution Date, the Trustee shall make the following allocations,
disbursements and transfers in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having occurred only
after all preceding allocations, transfers and disbursements have occurred:
(i) to the Certificate Insurer, the Premium Amount;
(ii) to the Trustee, an amount equal to the Trustee's Fees;
(iii) to the Certificate Insurer the lesser of (x) an amount equal to
(i) the amount then on deposit in the Certificate Account remaining after
the foregoing distributions minus (ii) the Insured Distribution Amount for
such Distribution Date and (y) the outstanding Reimbursement Amounts, if
any, as of such Distribution Date;
(iv) from amounts then on deposit in the Certificate Account
(including any Insured Payments), to the Class A Certificateholders an
amount equal to the Class A Interest Distribution Amount;
(v) from amounts then on deposit in the Certificate Account (including
any Insured Payments), to the Class A Certificateholders an amount equal to
the lesser of (a) the Class A Principal Distribution Amount and (b) the
amount remaining in the Certificate Account after distributions pursuant to
clauses (i) through (iv) above; and;
(vi) from amounts then on deposit in the Certificate Account, to the
Holders of the Class R Certificates, the amount remaining on such
Distribution Date, if any.
Notwithstanding clause (v) above, the aggregate amounts distributed on
all Distribution Dates to the Holders of the Class A Certificates on account of
the Class A Principal Distribution Amount shall not exceed the aggregate
Original Security Balance for the Class A Certificates.
Distributions of the Class A Principal Distribution Amount shall be
allocated as follows: [describe distribution priority among Class A
Certificates].
Section 6.06 INVESTMENT OF ACCOUNTS. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account (other than the
Certificate Insurance Payments Account) held by the Trustee shall be invested
and reinvested by the Trustee, as directed in writing by the Servicer (with
respect to the Certificate Accounts) or the Depositor (with respect to the Pre-
Funding Account and the Interest Coverage Accounts) in one or more Permitted
Investments bearing interest or sold at a discount. If an Event of Default shall
have occurred and be continuing or if the Servicer does not provide investment
directions, the Trustee shall invest all Accounts in Permitted Investments
described in paragraph (d) of the definition of Permitted Investments. No such
investment in any Account shall mature later than the Business Day immediately
preceding the next Distribution Date (except that if such Permitted Investment
is an obligation of the Trustee, then such Permitted Investment shall mature not
later than such Distribution Date).
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(b) Subject to Section 9.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 6.06).
(c) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (excluding the Pre-Funding Account
and the Capitalized Interest Account) shall be for the benefit of the Servicer
as servicing compensation (in addition to the Servicing Fee). The Servicer shall
deposit in each Account (excluding the Pre-Funding Account and the Capitalized
Interest Account) and the Depositor shall deposit in each Pre-Funding Account
and Capitalized Interest Account, the amount of any loss incurred in respect of
any Permitted Investment held therein which is in excess of the income and gain
thereon immediately upon realization of such loss, without any right to
reimbursement therefor from its own funds.
Section 6.07 REPORTS BY TRUSTEE. (a) On each Distribution Date the
Trustee shall provide to each Holder, to the Servicer, to the Certificate
Insurer, to the Underwriters, to the Depositor and to the Rating Agencies a
written report (the "Trustee Remittance Report"), setting forth information
including, without limitation, the following information:
(i) the amount of the distribution with respect to each Class of the
Class A Certificates and Class R Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments in Full and
Curtailments or other unscheduled recoveries of principal included therein
and separately identifying any Subordination Increase Amounts;
(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Security Balance of each Class of the Class A Certificates as
of such Distribution Date after giving effect to any payment of principal
on such Distribution Date;
(v) the amount of any Insured Payment included in the amounts
distributed to the Class A Certificateholders on such Distribution Date;
(vi) the Required Subordinated Amount and the Subordinated Amount as
of such Distribution Date;
(vii) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution;
(viii) the amounts, if any, of any Liquidation Loan Losses for the
related Due Period and the cumulative amount of Liquidated Loan Losses from
the Closing Date;
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(ix) the number of Mortgage Loans and the aggregate Stated Principal
Balance of Mortgage Loans purchased pursuant to Section 5.18 for the
related Distribution Date and since the closing date the cumulative number
and Stated Principal Balance of Mortgage Loans purchased pursuant to
Section 5.18.
(x) the number of Mortgage Loans and the aggregate Principal Balance
of Mortgage Loans purchased or substituted for pursuant to Sections 3.03
and 2.04 for the related Distribution Date and, since the Closing Date, the
cumulative number and Principal Balance of Mortgage Loans purchased or
substituted for pursuant to Sections 3.03 and 2.04;
(xi) the Class A Pass-Through Rate for such Distribution Date;
(xii) the amount on deposit in the Pre-Funding Account and the
Capitalized Interest Account;
(xiii) for the Distribution Date occurring in ________ 199_, the
balance of the Pre-Funded Amount that has not been used to purchase
Subsequent Mortgage Loans and that is being distributed to the Class A
Certificateholders as a mandatory prepayment of principal, if any, on such
Distribution Date; and
(xii) the amount, if any, of the Capitalized Interest Amount included
in such distribution.
Items (i), (ii) and (iii) above shall, with respect to the Class A
Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by January 31 of each calendar year following any
year during which the Certificates are outstanding, the Trustee shall furnish a
report to each Holder of record if so requested in writing at any time during
each calendar year as to the aggregate of amounts reported pursuant to (i), (ii)
and (iii) with respect to the Certificates for such calendar year. Such
information shall be deemed to have been furnished if provided pursuant to the
requirements of the Code from time to time in force.
(b) All distributions made to each Class of Class A Certificate and
the Class R Certificate on each Distribution Date will be made on a pro rata
basis among the Certificateholders of such Class on the next preceding Record
Date based on the Percentage Interest represented by their respective
Certificates, and shall be made by wire transfer of immediately available funds
to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor, if, in the case of a Class A Certificateholder,
such Certificateholder shall own of record Certificates of the same Class which
have denominations aggregating at least $5,000,000 appearing in the Certificate
Register and shall have provided complete wiring instructions by the Record
Date, and otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register.
(c) In addition, on each Distribution Date the Trustee will distribute
to each Holder, to the Certificate Insurer, to the Servicer, to the Depositor
and to the Rating Agencies, together with the information described in
subsection (a) preceding, the following information with respect to the Mortgage
Loans as of the close of business on the last Business Day of the
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prior calendar month, which is hereby required to be prepared by the Servicer
and furnished to the Trustee for such purpose on or prior to the related
Servicer Remittance Date:
(i) the total number of Mortgage Loans and the aggregate Principal
Balances thereof, together with the number and aggregate principal balances
of such Mortgage Loans and the percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of such
Mortgage Loans to the aggregate Principal Balance of all Mortgage Loans (A)
30-59 days Delinquent, (B) 60-89 days Delinquent and (C) 90 or more days
Delinquent;
(ii) the number and aggregate Principal Balances of all Mortgage Loans
and percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of the aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans in foreclosure
proceedings and the number and aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of any such Mortgage Loans which are also included in any
of the statistics described in the foregoing clauses (i)(A), (i)(B) and
(i)(C);
(iii) the number and aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage Loans
to the aggregate Principal Balance of all Mortgage Loans relating to
Mortgagors in bankruptcy proceedings and the number and aggregate Principal
Balances of all Mortgage Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage Loans which
are also included in any of the statistics described in the foregoing
clauses (i)(A), (i)(B) and (i)(C);
(iv) the number and aggregate Principal Balances of all Mortgage Loans
and percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of the aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans relating to REO
Properties and the number and aggregate Principal Balances of all Mortgage
Loans and percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of any such Mortgage Loans which are also included in any
of the statistics described in the foregoing clause (i)(A), (i)(B) and
(i)(C);
(v) the weighted average Mortgage Interest Rate as of the Due Date
occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of all
Mortgage Loans;
(vii)the book value of any REO Property; and
(viii) the number and aggregate Principal Balance of all Subsequent
Mortgage Loans added during the preceding Due Period.
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Section 6.08 ADDITIONAL REPORTS BY TRUSTEE. (a) The Trustee shall
report to the Depositor, the Servicer and the Certificate Insurer with respect
to the amount then held in each Account (including investment earnings accrued
or scheduled to accrue) held by the Trustee and the identity of the investments
included therein, as the Depositor, the Servicer or the Certificate Insurer may
from time to time request in writing.
(b) From time to time, at the request of the Certificate Insurer, the
Trustee shall report to the Certificate Insurer with respect to its actual
knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
the Purchase Agreement or in Section 3.01 or 3.02 hereof.
Section 6.09 COMPENSATING INTEREST. Not later than the close of
business on the third Business Day prior to the Distribution Date, the Servicer
shall remit to the Trustee (without right or reimbursement therefor) for deposit
into the related Certificate Account an amount equal to the lesser of (a) the
aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting from Principal Prepayments in Full and Curtailments during the
related Due Period and (b) its aggregate Servicing Fees payable in the related
Due Period and shall not have the right to reimbursement therefor (the
"Compensating Interest").
Section 6.10 EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Class A Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Certificates from the Trust Fund. The
Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Certificate Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Class A Certificates to the Holders of such Certificates, the Certificate
Insurer will be fully subrogated to, and each Certificateholder, the Servicer
and the Trustee hereby delegate and assign to the Certificate Insurer, to the
fullest extent permitted by law, the rights of such Holders to receive such
principal and interest from the Trust Fund, including, without limitation, any
amounts due to the Certificateholders in respect of securities law violations
arising from the offer and sale of the Class A Certificates, and (b) the
Certificate Insurer shall be paid such amounts but only from the sources and in
the manner provided herein for the payment of such amounts. The Trustee and the
Servicer shall cooperate in all respects with any reasonable request by the
Certificate Insurer for action to preserve or enforce the Certificate Insurer's
rights or interests under this Agreement without limiting the rights or
affecting the interests of the Holders as otherwise set forth herein.
Section 6.11 ALLOCATION OF LIQUIDATED LOAN LOSSES. Prior to each
Distribution Date the Servicer shall determine the total amount of related
Liquidated Loan Losses, if any, that occurred during the related Due Period with
respect to the Loans. The amount of such Liquidated Loan Losses shall be
evidenced by an Officer's Certificate to be delivered to the Trustee not later
than the Servicer Remittance Date. On each Distribution Date, the principal
portion of all Liquidated Loan Losses on the Mortgage Loans shall increase the
Subordination Deficit in the manner described in this Agreement.
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Section 6.12 PRE-FUNDING ACCOUNT.
(a) No later than the Closing Date, the Trustee shall establish and
maintain with itself one or more segregated trust accounts that are Eligible
Accounts, which shall be titled "Pre-Funding Account, ____________________ as
trustee for the registered holders of ACE Securities Corp., Asset Backed
Certificates, Series 199__-__" (the "Pre-Funding Account"). The Trustee shall,
promptly upon receipt, deposit in the Pre-Funding Account and retain therein the
Original Pre-Funded Amount remitted on the Closing Date to the Trustee by the
Depositor. Funds deposited in the Pre-Funding Account shall be held in trust by
the Trustee for the Holders of the Class A Certificates and the Certificate
Insurer for the uses and purposes set forth herein. If the Trustee shall not
have received an investment direction from the Depositor, the Trustee will
invest funds deposited in the Pre-Funding Account in Permitted Investments of
the kind described in clause (d) of the definition of Permitted Investments with
a maturity date no later than the second Business Day preceding each
Distribution Date. For federal income tax purposes, the Depositor shall be the
owner of the Pre-Funding Account and shall report all items of income,
deduction, gain or loss arising therefrom. All income and gain realized from
investment of funds deposited in the Pre-Funding Account shall be transferred to
the Interest Coverage Account on the Business Day immediately preceding each
Distribution Date. The Depositor shall deposit in the related Pre-Funding
Account the amount of any net loss incurred in respect of any such Permitted
Investment immediately upon realization of such loss without any right of
reimbursement therefor.
(b) Amounts on deposit in the Pre-Funding Account shall be withdrawn
by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall withdraw from
the Pre-Funding Account and deposit into the Certificate Account an amount
equal to 100% of the Principal Balances of the Subsequent Mortgage Loans
transferred and assigned to the Trustee on such Subsequent Transfer Date
and pay such amount to or upon the order of the Depositor upon satisfaction
of the conditions set forth in Section 2.08(b) with respect to such
transfer and assignment; and
(ii) If the Pre-Funded Amount has not been reduced to zero during the
Pre-Funding Period, on the Servicer Remittance Date immediately prior to
the Distribution Date occurring in _______ 199__, the Trustee shall deposit
into the Certificate Account any amounts remaining in the Pre-Funding
Account.
Section 6.13 CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Trustee shall establish and
maintain with itself a separate, segregated trust account, which shall be an
Eligible Account, titled "Capitalized Interest Account,
_______________________________, as trustee for the registered holders of ACE
Securities Corp. Asset Backed Certificates, Series 199__-__" (the "Capitalized
Interest Account"). The Trustee shall, promptly upon receipt, deposit in the
Capitalized Interest Account and retain therein the Initial Capitalized Interest
Amount remitted on the Closing Date to the Trustee by the Depositor. In
addition, the Trustee shall deposit into the Capitalized Interest Account all
income and gain on investments in the Pre-Funding Account pursuant to Section
6.12. Funds deposited in the Capitalized Interest Account shall be
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held in trust by the Trustee for the Holders of the Class A Certificates and the
Certificate Insurer for the uses and purposes set forth herein. For federal
income tax purposes, the Depositor shall be the owner of the Capitalized
Interest Account and shall report all items of income, deduction, gain or loss
arising therefrom. The Depositor shall deposit in the Capitalized Interest
Account the amount of any net loss incurred in respect of any such Permitted
Investment immediately upon realization of such loss without any right of
reimbursement therefor.
(b) On each of the first ____ Distribution Dates, the Trustee shall
(a) withdraw from the Capitalized Interest Account and deposit in the
Certificate Account the Capitalized Interest Amount.
On each Distribution Date following the conveyance of a Subsequent
Mortgage Loan to the Trustee, funds on deposit in the Capitalized Interest
Account in an amount equal to 1/360 of the product of (i) the Principal Balance
of such Subsequent Mortgage Loan and (ii) the sum of (A) the weighted average
Class A Pass-Through Rate for such Distribution Date minus % (B) %, and
(iii) the number of days, up to a maximum of 30 per calendar month, from the
Subsequent Cut-off Date to ___________, 199__, shall be remitted, without
notice, immediately upon receipt thereof to the Depositor.
Upon the earliest of (i) the reduction of the Security Balance of the
Class A-4 Certificates to zero, (ii) the termination of the Trust Fund in
accordance with Section 8.01 and (iii) the first Business Day following the
first Distribution Date following the conveyance of the last Subsequent Mortgage
Loan to the Trustee, any amount remaining on deposit in the Capitalized Interest
Account after distributions pursuant to Sections 6.13(b) above shall be
withdrawn by the Trustee and paid to the Depositor.
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ARTICLE VII
DEFAULT
Section 7.01 EVENTS OF DEFAULT. (a)"Event of Default", wherever used
herein, means any one of the following events:
(i) any failure by the Servicer to remit to the Trustee any payment,
other than a Servicing Advance, required to be made by the Servicer under
the terms of this Agreement which continues unremedied for five Business
Days after the date upon which such payment was required to be made;
(ii) the failure by the Servicer to make any required Servicing
Advance which failure 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 Servicer by the Trustee or to the
Servicer and the Trustee by any Certificateholder or the Certificate
Insurer;
(iii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on
the part of the Servicer contained in this Agreement, or the failure of any
representation and warranty made pursuant to Section 3.01 to be true and
correct which continues unremedied for a period of 30 days (or 15 days in
the case of a failure to pay the premium for any insurance policy which is
required to be maintained under this Agreement) after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer, as the case may be, by the Depositor or
the Trustee or to the Servicer and the Trustee by any Certificateholder or
the Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property;
(vi) the Servicer shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations.
(b) If an Event of Default described in this Section shall occur,
then, and in each and every such case, so long as such Event of Default shall
not have been remedied the
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Trustee shall, but only at the direction of the Certificate Insurer or the
Majority Certificateholders and with the prior written consent of the
Certificate Insurer, by notice in writing to the Servicer and a Responsible
Officer of the Trustee, and in addition to whatever rights such
Certificateholders may have at law or equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, as servicer. Upon receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall, subject to Section 7.02, pass to and
be vested in the Trustee or its designee approved by the Certificate Insurer and
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, at the expense of the
Servicer, any and all documents and other instruments and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents. The
Servicer agrees to cooperate (and pay any related costs and expenses) with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee or
its designee for administration by it of all amounts which shall at the time be
credited by the Servicer to the Collection Account or thereafter received with
respect to the Mortgage Loans. The Trustee shall promptly notify the Certificate
Insurer and the Rating Agencies of the occurrence of an Event of Default.
Section 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) On and
after the time the Servicer receives a notice of termination pursuant to Section
7.01, or the Trustee receives the resignation of the Servicer evidenced by an
Opinion of Counsel pursuant to Section 5.24, or the Servicer is removed as
Servicer pursuant to Article VII, in which event the Trustee shall promptly
notify the Rating Agencies, except as otherwise provided in Section 7.01, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof
arising on or after the date of succession; provided, however, that the Trustee
shall not be liable for any actions or the representations and warranties of any
servicer prior to it and including, without limitation, the obligations of the
Servicer set forth in Sections 2.04 and 3.03. The Trustee, as successor
servicer, or any other successor servicer shall be obligated to pay Compensating
Interest pursuant to Section 6.09 in any event and to make advances pursuant to
Section 5.21 unless, and only to the extent the Trustee as successor servicer
determines reasonably and in good faith that such advances would not be
recoverable pursuant to Sections 5.04(b), 5.04(g) or 5.04(j), such determination
to be evidenced by a certification of a Responsible Officer of the Trustee, as
successor servicer delivered to the Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, appoint, pursuant to
the provisions set forth in paragraph (c) below, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $15,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder.
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(c) In the event the Trustee is the successor servicer, it shall be
entitled to Servicing Compensation (including the Servicing Fee as adjusted
pursuant to the definition thereof) and other funds pursuant to Section 5.14
hereof as the Servicer. In the event the Trustee is unable or unwilling to act
as successor servicer, the Trustee shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the aggregate Servicing Fees hereunder as servicing compensation,
together with the other Servicing Compensation. Within thirty days after any
such public announcement, the Trustee shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Trustee shall
deduct from any sum received by the Trustee from the successor to the Master
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances and Periodic Advances owed to the Trustee. After
such deductions, the remainder of such sum shall be paid by the Trustee to the
Master Servicer at the time of such sale, transfer and assignment to the
Servicer's successor.
(d) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The Servicer agrees to cooperate with the Trustee and any successor servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections received
by the Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. Neither the Trustee nor any other successor
servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. No appointment of a successor
to the Servicer hereunder shall be effective until the Trustee and the
Certificate Insurer shall have consented in writing thereto, and written notice
of such proposed appointment shall have been provided by the Trustee to the
Certificate Insurer and to each Certificateholder. The Trustee shall not resign
as servicer until a successor servicer reasonably acceptable to the Certificate
Insurer has been appointed.
(e) Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; PROVIDED, HOWEVER, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 5.14, together with
other Servicing Compensation. The Servicer, the Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
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Section 7.03 WAIVER OF DEFAULTS. The Majority Certificateholders may,
on behalf of all Certificateholders, and subject to the consent of the
Certificate Insurer, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII; provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution on
a Certificate without the consent of the holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trustee to
the Rating Agencies.
Section 7.04 MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR BENEFIT
OF THE CERTIFICATE INSURER. (a) The Trustee shall hold the Trust Fund and the
Mortgage Files for the benefit of the Certificateholders and the Certificate
Insurer and all references in this Agreement and in the Certificates to the
benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement and
the Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall service
the Mortgage Loans for the benefit of the Certificateholders and for the benefit
of the Certificate Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.
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ARTICLE VIII
TERMINATION
Section 8.01 TERMINATION. (a) Subject to Section 8.02, this Agreement
shall terminate upon notice to the Trustee of either: (i) the disposition of all
funds with respect to the last Mortgage Loan and the remittance of all funds due
hereunder and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (ii) mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing; provided, however, that in no
event shall the Trust Fund established by this Agreement terminate later than
twenty-one years after the death of the last surviving lineal descendant of
Joseph P. Kennedy, late Ambassador of the United States to the Court of St.
James, alive as of the date hereof.
(b) In addition, subject to Section 8.02, the Servicer may, at its
option and at its sole cost and expense, terminate this Agreement on any date on
which the related Pool Principal Balance is less than 10% of the sum of (x) the
aggregate of the Principal Balances of the Mortgage Loans on the Cut-off Date
plus (y) the aggregate of the Principal Balances of the Subsequent Mortgage
Loans on their respective Subsequent Cut-off Dates, by purchasing, on the next
succeeding Distribution Date, all of the outstanding Mortgage Loans and REO
Properties at a price (the "Termination Price") equal to the sum of (i) 100% of
the Principal Balance of each such outstanding Mortgage Loan and each REO
Property, (ii) the aggregate amount of accrued and unpaid interest on such
Mortgage Loans through the related due period and 30 days' interest on such
Mortgage Loans at a rate equal to the related Mortgage Interest Rate (net of the
Servicing Fee) with respect to such Mortgage Loan, (iii) any unreimbursed
amounts due to the Certificate Insurer under this Agreement or the Insurance
Agreement, (iv) the amount of any unreimbursed Servicing Advances made by the
Servicer with respect to the related Mortgage Loans and (v) any excess of the
actual stated principal balance of each such Mortgage Loan and REO Property over
the Principal Balance thereof, the aggregate amount of accrued and unpaid
interest on such excess through the related due period and 30 days' interest on
such excess at a rate equal to the related Mortgage Interest Rate with respect
to each related Mortgage Loan. Any such purchase shall be accomplished by
deposit into the Certificate Account of the Termination Price. From the
Termination Price so deposited, the Trustee shall reimburse the Servicer for the
amount of any unpaid Servicing Fees, unreimbursed Periodic Advances and
unreimbursed Servicing Advances made by the Servicer with respect to the related
Mortgage Loans. No such termination is permitted without the prior written
consent of the Certificate Insurer (i) if it would result in a draw on the
Certificate Insurance Policy or (ii) unless the Servicer shall have delivered to
the Certificate Insurer an opinion of counsel reasonably satisfactory to the
Certificate Insurer stating that no amounts paid hereunder are subject to
recapture as preferential transfers under the United States Bankruptcy Code, 11
U.S.C. ss.ss. 101 et seq., as amended.
(c) If on any Distribution Date, the Servicer determines that there
are no outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than funds in the related Certificate Account, the Servicer shall send a
final distribution notice promptly to the related Certificateholders in
accordance with paragraph (d) below.
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(d) Notice of any termination, specifying the Distribution Date upon
which the Trust Fund will terminate and that the Certificateholders shall
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Servicer by letter
to the Certificateholders mailed during the month of such final distribution
before the Master Servicer Remittance Date in such month, specifying (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified. The Servicer shall give such notice
to the Trustee therein specified. The Servicer shall give such notice to the
Trustee at the time such notice is given to the Certificateholders. The
obligations of the Certificate Insurer hereunder shall terminate upon the
deposit by the Servicer with the Trustee of a sum sufficient to purchase all of
the Mortgage Loans and REO Properties in the Trust Fund as set forth above and
when the aggregate Security Balance of the Certificates has been reduced to
zero.
(e) In the event that all Certificateholders do not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice all the Certificates shall
not have been surrendered for cancellation, the Class R Certificateholders shall
be entitled to all unclaimed funds and other assets which remain subject hereto
and the Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Certificateholders shall look only to such
Class R Certificateholders for payment. Such funds shall remain uninvested.
Section 8.02 ADDITIONAL TERMINATION REQUIREMENTS. (a) In the event
that the Servicer exercises its purchase option with respect to the Trust Fund
as provided in Section 8.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee has been
furnished with an Opinion of Counsel to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 8.02 will not (i) result in
the imposition of taxes on "prohibited transactions" of the Trust Fund as
defined in Section 860F of the Code or (ii) cause the Trust Fund to fail to
qualify as a REMIC at any time that any Class A Certificates are outstanding:
(i) The Trustee shall establish a 90-day liquidation period for the
Trust Fund and specify the first day of such period in a statement attached
to the Trust Fund's final Tax Return pursuant to Treasury Regulation
Section 1.860F-1. The Trustee shall satisfy all the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder;
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(ii) During such 90-day liquidation period, and at or prior to the
time of making of the final payment on the Certificates, the Trustee shall
sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Class R Certificates all
cash on hand in the Trust Fund (other than cash retained to meet claims),
and the REMIC shall terminate at that time.
(b) By their acceptance of the Class R Certificates, the Holders
thereof hereby agree to authorize the Trustee to specify the 90-day liquidation
period for the Trust Fund, which authorization shall be binding upon all
successor Class R Certificateholders.
Section 8.03 ACCOUNTING UPON TERMINATION OF SERVICER. Upon termination
of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all of the Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Servicer" under this
Agreement.
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ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01 DUTIES OF TRUSTEE. The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default occurs and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Master Servicer or the Seller hereunder. If any such
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall take action as it deems appropriate to have
the instrument corrected and will provide notice thereof to the Certificate
Insurer.
The Trustee shall sign on behalf of the Trust Fund any tax return that
the Trustee is required to sign pursuant to applicable federal, state or local
tax laws.
The Trustee covenants and agrees that it shall perform its obligations
hereunder in a manner so as to maintain the status of the Trust Fund as a REMIC
under the REMIC Provisions and to prevent the imposition of any federal, state
or local income, prohibited transaction, contribution or other tax on the Trust
Fund to the extent that maintaining such status and avoiding such taxes are
reasonably within the control of the Trustee and are reasonably within the scope
of its duties under this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
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(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 the Certificate Insurer relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement.
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 9.01:
(a) The Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, Opinion of Counsel, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance therewith;
(c) The Trustee shall be under no obligation to exercise any of the
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 or the Certificate Insurer,
pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer, as the case may be, 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 its exercise as
a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs;
(d) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(e) Prior to the occurrence of an Event of Default hereunder and after
the curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by the Certificate Insurer
or by at least a 25% Percentage Interest of any Class of Class A
Certificates; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such
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investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by such Certificateholders, the Trustee may require reasonable
indemnity against such expense, or liability from such Certificateholders
as a condition to taking any such action;
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys;
(g) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act; and
(h) The Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder.
Section 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates, other than the signature
of the Trustee on the Certificates and the certificate of authentication, shall
be taken as the statements of the Depositor or the Servicer, as the case may be,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations or warranties as to the validity or sufficiency of this
Agreement or of the Certificates or of any Mortgage Loan or related document,
other than the signature of the Trustee on the Certificates and the Certificate
of Authentication. The Trustee shall not be accountable for the use or
application by the Depositor or the Servicer of any of the Certificates or of
the proceeds of such Certificates, or for the use or application of any funds
paid to the Seller in respect of the Mortgage Loans or deposited in or withdrawn
from the Custodial Account or the Certificate Accounts or any other account by
or on behalf of the Depositor or the Servicer, other than any funds held by or
on behalf of the Trustee in accordance with Section 6.01.
Section 9.04 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee.
Section 9.05 PAYMENT OF TRUSTEE'S FEES. The Trustee shall withdraw
from the Certificate Account on each Distribution Date and pay to itself the
Trustee'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, or its performance under the Insurance Agreement, other than
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or under the
Insurance Agreement or by reason of reckless disregard of obligations and duties
hereunder or under the Insurance Agreement. All such amounts shall be payable
from funds in the Certificate Accounts as provided in Section 6.02(e). The
provisions of this Section 9.05 shall survive the termination of this Agreement
and the removal or resignation of the Trustee.
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The Servicer covenants and agrees to indemnify the Trustee and any
director, officer, employee or agent of the Trustee against any losses,
liabilities, damages, claims or expenses (including reasonable legal fees and
such related expenses) that may be sustained by the Trustee in connection with
this Agreement related to the willful misfeasance, bad faith or negligence in
the performance of the Servicer's duties hereunder.
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a corporation or a national banking association
organized and doing business under the laws of any state or the United States of
America or the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. In addition, the Trustee shall at all times be acceptable to the
Rating Agencies rating the Certificates. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 9.07.
The corporation or national banking association serving as Trustee may have
normal banking and trust relationships with the Seller and their affiliates or
the Servicer and its affiliates; provided, however, that such corporation
cannot be an affiliate of the Servicer other than the Trustee in its role as
successor to the Servicer.
Section 9.07 RESIGNATION AND REMOVAL OF THE TRUSTEE. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
notice thereof to the Depositor, the Certificate Insurer, the Servicer and to
all Certificateholders; provided, that such resignation shall not be effective
until a successor trustee is appointed and accepts appointment in accordance
with the following provisions. Upon receiving such notice of resignation, the
Servicer shall, with the written consent of the Certificate Insurer, promptly
appoint a successor trustee who meets the eligibility requirements of Section
9.06 by written instrument, in duplicate, which instrument shall be delivered to
the resigning Trustee and to the successor trustee. A copy of such instrument
shall be delivered to the Certificateholders, the Certificate Insurer and the
Servicer by the Depositor. If no successor trustee shall have been so appointed
and have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee; provided, however, that
the resigning Trustee shall not resign and be discharged from the trusts hereby
created until such time as 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 9.06 and shall fail to resign after written
request therefor by the Servicer or the Certificate Insurer, or if at any time
the Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the rating of the long-term debt obligations of the Trustee
is not acceptable to the Rating Agencies in respect of mortgage pass-through
certificates having a rating equal to the then current rating on the
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Certificates, then the Servicer, with the written consent of the Certificate
Insurer, may remove the Trustee and appoint a successor trustee who meets the
eligibility requirements of Section 9.06 by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Depositor by the Servicer.
The Majority Certificateholders, with the written consent of the
Certificate Insurer, may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by the
Certificate Insurer or such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Servicer, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Depositor by the Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
Section 9.08 SUCCESSOR TRUSTEE. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Servicer, the Certificate Insurer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all of the Mortgage Files and
related documents and statements held by it hereunder, and the Servicer and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to the Certificate Insurer and all Holders of Certificates at their
addresses as shown in the Certificate Register provided that the Servicer has
received such Certificate Register. If the Servicer fails to mail such notice
within ten days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Servicer.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the appointment of any successor trustee
pursuant to any provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer.
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Section 9.09 MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 9.06, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10, such powers, duties, obligations, rights and trusts as the Depositor and
the Trustee may consider necessary or desirable. If the Depositor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 9.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the 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 IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
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Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
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ARTICLE X
REMIC PROVISIONS
Section 10.01 REMIC ADMINISTRATION.
(a) The Trustee shall make an election to treat the Trust Fund
(exclusive of the Capitalized Interest Account and the Pre-Funding Account) as a
REMIC under the Code, and if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
purposes of the REMIC election in respect of the Trust Fund, (i) each Class of
Class A Certificates shall be designated as the "regular interests" and the
Class R Certificates shall be designated as the sole Class of "residual
interest" in the REMIC. The Trustee shall not permit the creation of any
"interests" in the Trust Fund (within the meaning of Section 860G of the Code)
other than the REMIC regular interests and the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the Startup Day of the
Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses relating to any tax audit of the Trust Fund
(including, but not limited to, any professional fees or any administrative or
judicial proceedings with respect thereto that involved the Internal Revenue
Service or state tax authorities), other than the expense of obtaining any tax
related Opinion of Counsel not obtained in connection with such an audit and
other than taxes, in either case except as specified herein; provided, however,
that if such audit resulted from the negligence of the Servicer or the
Depositor, then the Servicer or the Depositor, as the case may be, shall pay
such expenses. The Trustee, as agent for the tax matters person, shall (i) act
on behalf of the Trust Fund in relation to any tax matter or controversy
involving the Trust Fund and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The Holder of the largest Percentage
Interest in the Class R Certificates from time to time is hereby designated as
Tax Matters Person with respect to the Trust Fund and hereby irrevocably
appoints and authorizes the Trustee to act its agent to perform the duties of
the Tax Matters Person with respect to the Trust Fund. To the extent authorized
under the Code and the regulations promulgated thereunder, each Holder of a
Class R Certificate hereby irrevocably appoints and authorizes the Trustee to be
its attorney-in-fact for purposes of signing any Tax Returns required to be
filed on behalf of the Trust Fund.
(d) The Trustee shall prepare or cause to be prepared, sign and file
all of the Tax Returns in respect of the Trust Fund created hereunder, other
than Tax Returns required to be filed by the Servicer pursuant to Section 5.25.
The expenses of preparing and filing such returns shall be borne by the Trustee
without any right of reimbursement therefor.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the
83
REMIC Provisions or other such compliance guidance, the Trustee shall provide
(i) to any Transferor of a Class R Certificate and to the Internal Revenue
Service such information as is necessary for the application of any tax relating
to the transfer of a Class R Certificate to any Person who is not a Disqualified
Organization, (ii) to Certificateholders such information or reports as are
required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount and market discount or premium and (iii) to
the Internal Revenue Service the name, title, address and telephone number of
the person who will serve as the representative of the Trust Fund. In addition,
the Depositor shall provide or cause to be provided to the Trustee, within ten
(10) days after the Closing Date, all information or data that the Trustee
reasonably determines to be relevant for tax purposes as to the valuations and
issue prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause the Trust Fund
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reasonably requested by it). The
Trustee shall not take any action, cause the Trust Fund to take any action or
fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of the Trust Fund as a REMIC or (ii) result in the imposition of a tax
upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee received an Opinion of
Counsel (at the expense of the party seeking to take such action but in no event
shall such Opinion of Counsel be an expense of the Trustee) to the effect that
the contemplated action will not, with respect to the Trust Fund created
hereunder, endanger such status or result in the imposition of such a tax. The
Servicer shall not take or fail to take any action (whether or not authorized
hereunder) as to which the Trustee has advised it in writing that it has
received an Opinion of Counsel (which such Opinion of Counsel shall not be an
expense of the Trustee) to the effect that an Adverse REMIC Event could occur
with respect to such action. In addition, prior to taking any action with
respect to the Trust Fund or its assets, or causing the Trust Fund to take any
action which is not expressly permitted under the terms of this Agreement, the
Servicer will consult with the Trustee or its designee, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur with respect
to the Trust Fund, and the Servicer shall not take any such action or cause the
Trust Fund to take any such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement (but in no
event shall such cost be an expense of the Trustee). At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of the Trust Fund will consist of "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust Fund created hereunder as defined in Section 860F(a)(2) of the Code
on "net income from foreclosure property" of the Trust Fund as defined in
Section 860G(c) of the Code, on any contributions to the Trust Fund after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or
84
local tax laws, such tax shall be charged (i) to the Trustee pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Trustee
of any of its obligations under this Article X, (ii) to the Master Servicer
pursuant to Section 10.03 hereof, if such tax arises out of or results from a
breach by the Master Servicer of any of its obligations under Article V or this
Article X, or otherwise (iii) against amounts on deposit in the related
Certificate Account and shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing April 15,
1997, the Trustee shall deliver to the Servicer and each Rating Agency a
Certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article X.
(i) The Servicer and the Trustee shall, for federal income tax
purposes, maintain books and records with respect to the Trust Fund on a
calendar year and on an accrual basis.
(j) The Trustee shall not accept any contributions of assets to the
Trust Fund unless it shall have received an Opinion of Counsel (which such
Opinion of Counsel shall not be an expense of the Trustee) to the effect that
the inclusion of such assets in the Trust Fund will not cause the Trust Fund to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject the Trust Fund to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Servicer shall enter into any
arrangement by which the Trust Fund will receive a fee or other compensation for
services nor permit the Trust Fund to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(l) Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of
the Treasury Regulations, the "latest possible maturity date" of the Class A
Certificates is ___________ 25, 20__.
(m) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and each Form
1066Q.
Section 10.02 PROHIBITED TRANSACTIONS AND ACTIVITIES.
Neither the Depositor, the Servicer nor the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans, except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the termination of the
Trust Fund pursuant to Article VIII of this Agreement, or (iv) a purchase of
Mortgage Loans pursuant to Article II or III of this Agreement nor acquire any
assets for the Trust Fund, nor sell or dispose of any investments in the
Certificate Accounts for gain, nor accept any contributions to the Trust Fund
after the Closing Date unless it has received an Opinion of Counsel (at the
expense of the party seeking to cause such sale, disposition, substitution or
acquisition but in no event shall such Opinion of Counsel be an expense of the
Trustee) that such sale, disposition, substitution or acquisition will not (a)
affect adversely the status of the Trust Fund as a REMIC or (b) cause the Trust
Fund to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
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Section 10.03 SERVICER AND TRUSTEE INDEMNIFICATION.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor and
the Servicer for any taxes and costs including, without limitation, any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer, as a result of a breach of the Trustee's
covenants set forth in this Article X.
(b) The Servicer agrees to indemnify the Trust Fund, the Depositor and
the Trustee for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Depositor or the Trustee, as a result of a breach of the Servicer's covenants
set forth in this Article X or in Article V with respect to compliance with the
REMIC Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the Servicer pursuant to Section
5.25 that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 LIMITATION ON LIABILITY OF THE DEPOSITOR AND THE
SERVICER. Neither the Depositor, the Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Certificate Insurer, the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor or the
Servicer (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 Servicer or the Depositor pursuant to any other Section
hereof; and provided further that this provision shall not protect the
Depositor, the Servicer or any such person, against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the 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 Servicer's servicing obligations with respect to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) or related to the
Servicer's obligations under this Agreement, or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its respective duties under this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that the
Depositor or the Servicer may in its sole discretion undertake any such action
which it may deem necessary or desirable with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In the event the Depositor or the Servicer take
any action as described in the preceding sentence, the legal expenses and costs
of such action, if previously approved in writing by the Certificate Insurer,
which approval shall not be unreasonably withheld, and any liability resulting
therefrom will be expenses, costs and liabilities of the Trust Fund, and the
Servicer or the Depositor, as the case may be, will be entitled to be reimbursed
therefor out of funds in the Collection Account.
Section 11.02 ACTS OF CERTIFICATEHOLDERS. (a) Except as otherwise
specifically provided herein, whenever Certificateholder action, consent or
approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Certificateholders if the Majority Certificateholders or the
Certificate Insurer agrees to take such action or give such consent or approval.
87
(b) The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heir to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
Section 11.03 AMENDMENT. This Agreement may be amended from time to
time by the Depositor, the Servicer and the Trustee without the consent of any
of the Certificateholders, (i) to cure any ambiguity or mistake, (ii) to
correct, modify or supplement any provisions herein which may be inconsistent
with any other provisions herein, (iii) to make any other provisions with
respect to matters or questions arising under this Agreement which are not
materially inconsistent with the provisions hereof amend this Agreement in any
respect subject to the provisions below, or (iv) if such amendment, as evidenced
by an Opinion of Counsel (provided by the Person requesting such amendment)
delivered to the Trustee, is reasonably necessary to comply with any
requirements imposed by the Code or any successor or amendatory statute or any
temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any proposed such action which, if made effective, would apply
retroactively to the Trust Fund at least from the effective date of such
amendment; provided that in the case of clause (iii) such action shall not
adversely affect in any material respect the interests of any Certificateholder
(other than Certificateholders who shall consent to such amendment) or the
Certificate Insurer, as evidenced either by an Opinion of Counsel (provided by
the Person requesting such amendment) or written notification from each Rating
Agency to the effect that such amendment will not cause such Rating Agency to
lower or withdraw the then current ratings on the Certificates, delivered to the
Trustee and the Certificate Insurer.
This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee with the consent of the Certificate Insurer and the
Majority Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentage of Certificates the Holders
of which are required to consent to any such amendment, without the consent of
the Certificate Insurer and the Holders of all Certificates then outstanding.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 11.03, Certificates
registered in the name of the Depositor or the Servicer or any affiliate thereof
shall be entitled to voting rights with respect to matters described in (i),
(ii) and (iii) of this paragraph.
88
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Trust Fund pursuant to the REMIC Provisions or cause the Trust
Fund to fail to qualify as a REMIC at any time that any of the Certificates are
outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a statement describing the amendment to each Certificateholder, the
Certificate Insurer, and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 11.04 RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Master Servicer at the Certificateholders' expense on
direction and at the expense of Majority Certificateholders requesting such
recordation, but only when accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders or is necessary for the administration or servicing of the
Mortgage Loans.
Section 11.05 NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer,
__________________________________, Attention: ___________________, (ii) in the
case of ACE Securities Corp., 6707 Fairview Road, Suite D, Charlotte, North
Carolina 28210, Attention: Elizabeth S. Eldridge, (iii) in the case of the
Trustee, _____________________________________, Attention:
_____________________, (iv) in the case of the Certificateholders, as set forth
in the Certificate Register, (v) in the case of [Rating Agency],
_____________________, Attention: ____________________, and (vi) in the case of
the Certificate Insurer, _____________________, Attention: ____________________.
Any such notices shall be deemed to be effective with respect to any party
hereto upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 11.06 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed
89
severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
covenants, agreements, provisions or terms of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.07 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
Section 11.08 SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the Servicer, the Depositor, the Trustee and
the Certificateholders and their respective successors and permitted assigns.
Section 11.09 HEADINGS. The headings of the various articles and
sections of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be part of this Agreement.
Section 11.10 THE CERTIFICATE INSURER DEFAULT. Any right conferred to
the Certificate Insurer, including, without limitation, the right to receive the
Premium Amount pursuant to Section 6.05(b)(i) and 6.05(c)(i), shall be suspended
during any period in which a Certificate Insurer Default exists. At such time as
the Certificates are no longer outstanding hereunder, and no amounts owed to the
Certificate Insurer hereunder remain unpaid, the Certificate Insurer's rights
hereunder shall terminate.
Section 11.11 THIRD PARTY BENEFICIARY. The parties agree that each of
the Seller and the Certificate Insurer are intended and shall have all rights of
a third-party beneficiary of this Agreement.
Section 11.12 INTENT OF THE PARTIES. It is the intent of the Depositor
and Certificateholders that, for federal income taxes, state and local income or
franchise taxes and other taxes imposed on or measured by income, the
Certificates will be treated as evidencing beneficial ownership interests in a
REMIC. The parties to this Agreement and the holder of each Certificate, by
acceptance of its Certificate, and each beneficial owner thereof, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates in accordance with the preceding sentence for purposes of federal
income taxes, state and local income and franchise taxes and other taxes imposed
on or measured by income.
Section 11.13 NOTICE TO RATING AGENCIES AND CERTIFICATEHOLDER.
The Trustee shall use its best efforts to promptly provide notice to
the Rating Agencies and the Certificate Insurer 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;
90
3. The resignation or termination of the Servicer or the Trustee;
4. The repurchase of Mortgage Loans pursuant to Section 3.03;
5. The final payment to Certificateholders; and
6. Any change in the location of the Collection Account or the
Certificate Accounts.
In addition, the Trustee shall promptly furnish to the Rating Agencies
copies of the following:
1. Each report to Certificateholders described in Section 6.07; and
2. Each annual independent public accountants' servicing report
described in Section 5.17.
Any such notice pursuant to this Section 11.13 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service (except in the
case of notice to the Certificate Insurer which notice shall be given in
accordance with Section 11.05 hereof).
Section 11.14 GOVERNING LAW. (a) THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS
OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
91
IN WITNESS WHEREOF, the Servicer, the Trustee and the Depositor have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
ACE Securities Corp.,
as Depositor
By:--------------------------------------------
Name:
Title:
as Servicer
By:-------------------------------------------
Name:
Title:
as Trustee
By:-------------------------------------------
Name:
Title:
92
State of ____________ )
) ss.:
County of __________ )
On the ____ day of ________, 199__ before me, a Notary Public in and
for the State of _______________, personally appeared ____________________,
known to me to be a ___________________ of ACE Securities Corp., the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------------------
Notary Public
My Commission expires------------------------
[Notary Page]
State of ___________ )
) ss.:
County of __________ )
On the ____ day of ______, 199__ before me, a Notary Public in and for
the State of ____________, personally appeared _____________________, known to
me to be ____________________ of _____________________, the corporation that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
My Commission expires--------------------------
[Notary Page]
State of ___________ )
) ss.:
County of __________ )
On the __th day of _______, 199__, before me, a Notary Public in and
for the State of ________, personally appeared _______________, known to me to
be _______________ of ____________________, the corporation that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunder to set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------------
Notary Public
My Commission expires--------------------------
[Notary Page]
EXHIBIT A
Certificate Insurance Policy
EXHIBIT B-1
FORM OF CLASS [A-1][A-2][A-3][A-4] CERTIFICATE SOLELY FOR U.S. FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO
THIS CERTIFICATE. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF
PREPAYMENT, USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES, EQUAL TO A CONSTANT PREPAYMENT RATE OF ____% PER ANNUM (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$______________ OF OID PER $__________ OF SECURITY BALANCE, THE YIELD TO
MATURITY IS ______% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL
PERIOD IS NO MORE THAN $_________ PER $___________ OF SECURITY BALANCE, COMPUTED
USING THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
Certificate No. ___
____% Initial Pass-Through Rate
Date of Pooling and Servicing Agreement: Aggregate Security Balance of the
_______, 199__ Class [A-1][A-2][A-3][A-4] Certificates:
$__________
First Distribution Date: ____________, 199__ Initial Security Balance of this Certificate:
$______________
Percentage Interest: %
CUSIP:
ASSET BACKED CERTIFICATE
SERIES 199__-__
evidencing a percentage interest in the distributions allocable to the
Class [A- 1][A-2][A-3][A-4] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed rate first lien
and second lien residential mortgage loans sold by ACE Securities Corp.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to a Trust
Fund consisting primarily of a pool of conventional one- to four-family fixed
rate first lien and second lien mortgage loans (the "Mortgage Loans"), sold by
ACE Securities Corp. (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as specified above (the "Agreement") among
the Depositor, ______________, as servicer (the "Servicer"), and
_________________, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound.
This Certificate is payable solely from the assets of the Trust Fund
and the Certificate Insurance Policy (as defined below) and does not represent
an obligation of or interest in the Depositor, the Servicer, the Trustee
referred to below or any of their affiliates. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental agency
or instrumentality or by the Depositor, the Servicer, the Trustee or any of
their affiliates. None of the Depositor, the Servicer, or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
____________________ (the "Certificate Insurer") has issued a
certificate insurance policy (the "Certificate Insurance Policy") with respect
to the Class A Certificates, a copy of which is attached to the Agreement.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date (the "Record Date"),
from the Available Funds and in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any required to be distributed to holders of Class [A-1][A-2][A-
3][A-4] Certificates on such Distribution Date.
All distributions on this Certificate will be made or caused to be
made by the Trustee in immediately available funds either (i) by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register or (ii) by wire transfer to the account of
any Person entitled thereto if such Person shall have so notified the Trustee
and such Certificateholder is the registered holder of Class [A-1][A-2][A-3][A-
4] Certificates the aggregate Security Balance of which is not less than
$5,000,000.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose. The initial Security Balance of this
Certificate is set forth above. The Security Balance hereof will be reduced by
this Certificate's Percentage Interest of distributions of the Class A Principal
Distribution Amount allocated to the Class A [A-1][A-2][A-3][A-4] Certificates.
2
This Certificate is one of a duly authorized issue of Certificates
issued in __________ Classes designated as Asset Backed Certificates of the
Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event that Servicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Servicer, to the extent provided in the Agreement, from
related recoveries on such Mortgage Loan or from other cash that would have been
distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Collection Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Servicer from time to time for purposes other than distributions
to Certificateholders, such purposes including without limitation reimbursement
to the Depositor and the Master Servicer of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Certificate Insurer and the
Majority Certificateholders. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon the Certificate. The Agreement also permits the amendment thereof in
certain circumstances without the consent of the holders of any of the
Certificates and, in certain additional circumstances, without the consent of
the holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates in
Classes and in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same Class and aggregate Percentage Interest, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
3
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Servicer, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Servicer from the
Trust Fund of all remaining Mortgage Loans, thereby effecting early retirement
of the Class [A-1][A-2][A-3][A-4] Certificates. The Agreement permits, but does
not require, the Servicer to purchase at a price determined as provided in the
Agreement all remaining Mortgage Loans; provided, that any such option may only
be exercised if the Pool Principal Balance as of the Distribution Date upon
which the proceeds of any such purchase are distributed is less than 10% of the
Original Pool Principal Balance (net of any excess of the Original Pre-Funded
Amounts over the aggregate of the Principal Balances of the Subsequent Mortgage
Loans as of their respective Subsequent Cut-off Dates).
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 199__ ______________________________________,
as Trustee
By:-----------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-1][A-2][A-3][A-4] Certificates referred to
in the within-mentioned Agreement.
---------------------------------------,
as Certificate Registrar
By:------------------------------------
Authorized Signatory
5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ---------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset
Backed Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:------------------------
- ------------------------------------------------------------------------------
Dated:
------------------------------------------------
Signature by or on behalf of assignor
------------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
______________________________________________________________________________
for the account of _____________________________________account number
_____________________________________, or, if mailed by check, to
___________________________________________________________________. Applicable
statements should be mailed to _____________________________________. This
information is provided by ___________________________________________________,
the assignee named above, or _____________________________, as its agent.
EXHIBIT B-2
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT
PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF
THE CODE, UNLESS THE TRANSFEREE PROVIDES AN OPINION OF COUNSEL SATISFACTORY TO
THE MASTER SERVICER, THE DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS
CERTIFICATE BY, ON BEHALF OF OR WITH "PLAN ASSETS" OF SUCH PLAN IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION AND WILL NOT SUBJECT THE SERVICER, THE DEPOSITOR OR THE TRUSTEE TO
ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED STATES,
OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN
INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO
TAX AND, EXCEPT FOR THE FHLMC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT
SELECTED BY SUCH GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (C) ANY
ORGANIZATION (OTHER THAN CERTAIN FARMERS' COOPERATIVES DESCRIBED IN SECTION 521
OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
(INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS
TAXABLE INCOME), (D) RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN
SECTION 1381(A)(2)(C) OF THE CODE AND (E) ANY OTHER PERSON SO DESIGNATED BY THE
TRUSTEE BASED UPON AN OPINION OF COUNSEL THAT THE HOLDING OF AN OWNERSHIP
INTEREST IN A CLASS [R] CERTIFICATE BY SUCH PERSON MAY CAUSE THE TRUST FUND OR
ANY PERSON HAVING AN OWNERSHIP INTEREST IN ANY CLASS OF CERTIFICATES (OTHER THAN
SUCH PERSON) TO INCUR A LIABILITY FOR ANY FEDERAL TAX IMPOSED UNDER THE CODE
THAT WOULD NOT OTHERWISE BE IMPOSED BUT FOR THE TRANSFER OF AN OWNERSHIP
INTEREST IN A CLASS R CERTIFICATE TO SUCH PERSON (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C), (D) OR (E) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. THE
TERMS "UNITED STATES," "STATE" AND "INTERNATIONAL ORGANIZATION" SHALL HAVE THE
MEANINGS SET FORTH IN SECTION 7701 OF THE CODE OR SUCCESSOR PROVISIONS.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
2
Certificate No. ______
Date of Pooling and Servicing
Agreement:
_____________, 199__
First Distribution Date:
_____________, 199__
Percentage Interest: ___%
ASSET BACKED CERTIFICATE,
SERIES 199__-__
evidencing a percentage interest in any distributions allocable to the
Class R Certificates with respect to a Trust Fund consisting primarily
of a pool of conventional one- to four-family fixed rate first lien
and second lien residential mortgage loans sold by ACE Securities
Corp.
This certifies that ____________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to a Trust Fund consisting primarily of a pool of
conventional one- to four-family fixed rate first lien and second lien
residential mortgage loans (the "Mortgage Loans"), sold by ACE Securities Corp.
(the "Depositor"). The Trust Fund was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, ___________________________, as servicer (the "Servicer") and
_____________________________, as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
This Certificate is payable solely from the assets of the Trust Fund
and does not represent an obligation of or interest in the Depositor, the
Servicer, the Trustee referred to below or any of their affiliates. Neither this
Certificate nor the underlying Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality or by the Depositor, the Servicer, the
Trustee or any of their affiliates. None of the Depositor, the Servicer, or any
of their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day
3
immediately preceding the month of such Distribution Date (the "Record Date"),
from the Available Funds in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to Holders of Class [R]
Certificates on such Distribution Date.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Depositor will have the right, in
its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Depositor, which purchaser
may be the Depositor, or any affiliate of the Depositor, on such terms and
conditions as the Depositor may choose.
No transfer of any Class R Certificate shall be made unless that
transfer is made pursuant to an effective registration statement under the 1933
Act and effective registration or qualification under applicable state
securities laws, or is made in a transaction which does not require such
registration or qualification. In the event that a transfer is to be made
without such registration or qualification, (a) the Trustee and the Depositor
shall require the transferee to execute an investment letter, which investment
letter shall not be an expense of the Depositor, the Servicer or the Trustee and
(b) in the event that such a transfer is not made pursuant to Rule 144A under
the Act, the Trustee shall require an Opinion of Counsel satisfactory to the
Trustee and the Depositor that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be an expense
of the Depositor, the Trustee or the Servicer. Neither the Depositor nor the
Trustee is obligated to register or qualify any of the Class [R] Certificates
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor and the Servicer against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose. The Percentage Interest this Certificate is set
forth above. Notwithstanding the fact this Certificate has no Certificate
Principal Balance, this Certificate will remain outstanding under the Agreement
and the Holder hereof may have additional obligations with respect to this
Certificate, including tax liabilities, and may be entitled to certain
additional distributions hereon, in accordance with the terms and provisions of
the Agreement.
4
This Certificate is one of a duly authorized issue of Certificates
issued in ____ Classes designated as Asset Backed Certificates of the Series
specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event that Master
Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Collection Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Servicer from time to time for purposes other than distributions
to Certificateholders, such purposes including without limitation reimbursement
to the Depositor and the Servicer of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Depositor, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Certificate Insurer and the
Majority Certificateholders. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon the Certificate. The Agreement also permits the amendment thereof in
certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of
the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
5
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Master
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Servicer from the
Trust Fund of all remaining Mortgage Loans, thereby effecting early retirement
of the Class R Certificates. The Agreement permits, but does not require, such
Class R Certificateholder, the Servicer or the Certificate Insurer, as
applicable, to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans; provided, that any such option may only be exercised
if the Pool Principal Balance as of the Distribution Date upon which the
proceeds of any such purchase are distributed is less than 10% of the Original
Pool Principal Balance.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________, 1996 ______________________________________________,
as Trustee
By:__________________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R] Certificates referred to in the within-
mentioned Agreement.
--------------------------------------------
as Certificate Registrar
By:-----------------------------------------
Authorized Signatory
7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset
Backed Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
_______________________________________________________________________________.
Dated:
--------------------------------------------
Signature by or on behalf of assignor
--------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________________________________________
____________ ______________________________________________________________
account number ________________, or, if mailed by check, to
_______________________________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _______________________________________, the
assignee named above, or _____________________________, as its agent.
EXHIBIT C
Mortgage File
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items (copies to the extent the originals have been
delivered to the Trustee pursuant to Section 2.03 of the Agreement), all of
which shall be available for inspection by the Certificateholders, to the extent
required by applicable laws:
a. The original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsement, from the originator of such
Mortgage Loan to the Seller, endorsed by the Seller without recourse
in blank and signed in the name of the Seller by an authorized
officer;
b. The original Mortgage and any related power of attorney with evidence
of recording thereon;
c. An original assignment of the original Mortgage, in suitable form for
recordation in the jurisdiction in which the Mortgaged Property is
located, such assignment to be in blank and signed in the name of the
Seller by an authorized officer;
d. The original of all intervening assignments of the Mortgage showing a
complete chain of assignments from the originator of such Mortgage
Loan to the Seller with evidence of recording indicated thereon;
e. Any assumption, modification (with evidence of recording thereon),
consolidation or extension agreements; and
f. The original policy of title insurance (or a commitment for title
insurance is being held by the title insurance company pending
recordation of the Mortgage) and the certificate of primary mortgage
guaranty insurance, if any, issued with respect to the Mortgage Loan.
EXHIBIT D
Mortgage Loan Schedule
EXHIBIT E
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
___________, 199__
ACE Securities Corp.
6707 Fairview Road, Suite D
Charlotte, North Carolina 28210
[Servicer]
[Certificate Issuer]
Re: Pooling and Servicing Agreement, dated as of __________, 199__
among ACE Securities Corp., as Depositor, ______________________,
as Servicer, and ______________________, as Trustee, Asset Backed
Certificates, Series 199__-__,
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies: (1) except
as noted on the attachment hereto, if any (the "Loan Exception Report"), it has
received the original Mortgage Note (item (i) in Section 2.03(a)) with respect
to each Mortgage Loan listed in the Mortgage Loan Schedule and the documents
contained therein appear to bear original signatures or copies of originals if
the originals have not yet been delivered, and (2) it has received the
Certificate Insurance Policy.
The Trustee has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
------------------------------------------
as Trustee
By:---------------------------------------
Name:
Title:
EXHIBIT F
INITIAL CERTIFICATION OF TRUSTEE
___________________, 19__
ACE Securities Corp.
6707 Fairview Road, Suite D
Charlotte, North Carolina 28210
[Servicer]
[Certificate Issuer]
Re: Pooling and Servicing Agreement, dated as of __________, 1996
among ACE Securities Corp., as Depositor, _______________, as
Servicer, and _______________________, as Trustee, Asset Backed
Certificates, Series 199__-__
Ladies and Gentlemen:
In accordance with the provisions of Section 2.04 of the above-
referenced Pooling and Servicing Agreement, the undersigned, as Trustee, hereby
certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan listed on the
attachment hereto), it has reviewed the documents delivered to it pursuant to
Section 2.03 of the Pooling and Servicing Agreement and has determined that (i)
all documents required to be delivered to it pursuant to the above-referenced
Pooling and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, (iii) based on its examination and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule (described in
items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the definition of Mortgage
Loan Schedule) respecting such Mortgage Loan accurately reflects the information
set forth in the Trustee's Mortgage File and (iv) each Mortgage Note has been
endorsed as provided in Section 2.03 of the Pooling and Servicing Agreement. The
Trustee has made no independent examination of such documents beyond the review
specifically required in the above-referenced Pooling and Servicing Agreement.
The Trustee makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
-----------------------------------
as Trustee
By:--------------------------------
Name:
Title:
2
EXHIBIT G
FINAL CERTIFICATION OF THE TRUSTEE
_____________, 19__
ACE Securities Corp.
6707 Fairview Road, Suite D
Charlotte, North Carolina 28210
[Servicer]
[Certificate Issuer]
Re: Pooling and Servicing Agreement, dated as of ________, 199__
among ACE Securities Corp., as Depositor, _____________________,
as Servicer, and _____________________, as Trustee, Asset Backed
Certificates, Series 199__-__
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.03 of the Pooling and Servicing Agreement and has determined that (i)
all documents required to be delivered to it pursuant to the above-referenced
Pooling and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, and (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule (described in
items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the definition of Mortgage
Loan Schedule) respecting such Mortgage Loan accurately reflects the information
set forth in the Trustee's Mortgage File. The Trustee has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Mortgage Loans identified
on the Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
--------------------------------------
as Trustee
By:-----------------------------------
Name:
Title:
2
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
_____________, 19__
To: [Trustee]
Re: ACE Securities Corp., Asset Backed Certificates, series 199__-__
In connection with the administration of the pool of Mortgage Loans
held by you as Trustee for the Certificateholders, we request the release, and
acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for the
Mortgage Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
- ----------------------------
MORTGAGE LOAN NUMBER:
- ----------------------------
REASON FOR REQUESTING DOCUMENTS (check one)
_____ 1. Mortgage Loan Paid in Full (Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Collection Account.)
_____ 2. Mortgage Loan Liquidated (Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and credited to the Collection
Account.)
_____ 3. Mortgage Loan in Foreclosure _____ 4. Mortgage Loan Repurchased Pursuant to Section 5.18 of
the Pooling and Servicing Agreement.
_____ 5. Mortgage Loan Repurchased or Substituted pursuant to Article II or III of the Pooling and
Servicing Agreement (Servicer hereby certifies that the repurchase price or Substitution
Adjustment has been credited to the Certificate Account and that the substituted mortgage
loan is a Qualified Substitute Mortgage Loan.)
_____ 6. Other
(explain)-----------------------------------------
If box 1 or 2 above is checked, and if all or part of the
Trustee's Mortgage File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of
the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
By:------------------------------
Name:
Title:
Documents returned to Trustee:
- -------------------------------
Trustee
By:----------------------------
Date:--------------------------
2
EXHIBIT I
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
State of ___________ )
) ss.:
County of __________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Asset Backed Certificates, Series 199__-__, Class R (the
"Owner")), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of __________________] [the United States], on
behalf of which he makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class R Certificates, and (iii) is
acquiring the Class R Certificates for its own account or for the account of
another Owner from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class R Certificates to disqualified organizations under the Code,
that applies to all transfers of Class R Certificates after March 31, 1988; (ii)
that such tax would be on the transferor, or, if such transfer is through an
agent (which person includes a broker, nominee or middleman) for a disqualified
organization, on the agent; (iii) that the person otherwise liable for the tax
shall be relieved of liability for the tax if the transferee furnishes to such
person an affidavit that the transferee is not a disqualified organization and,
at the time of transfer, such person does not have actual knowledge that the
affidavit is false; and (iv) that the Class [R] Certificates may be "noneconomic
residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer was to impede the
assessment or collection of tax.
4. That the Owner is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the transferee's
agent, delivers to it an affidavit
and agreement, among other things, in substantially the same form as this
affidavit and agreement. The Owner expressly agrees that it will not consummate
any such transfer if it knows or believes that any of the representations
contained in such affidavit and agreement are false.
5. That the Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section 4.02(i) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clause (g) and (h) of Section 4.02(i) which authorize the Trustee to
deliver payments to a person other than the Owner in the event the Owner holds
such Certificates in violation of Section 4.02(i)). The Owner expressly agrees
to be bound by and to comply with such restrictions and provisions.
6. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
7. The Owner's Taxpayer Identification Number is ___________.
8. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.
9. That no purpose of the Owner relating to the transfer of any of the
Class R Certificates by the Owner is or will be to impede the assessment or
collection of any tax.
10. That the Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class R Certificate
that the Owner intends to pay taxes associated with holding such Class R
Certificate as they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificate.
11. That the Owner has no present knowledge or expectation that it
will become insolvent or subject to a bankruptcy proceeding for so long as any
of the Class R Certificates remain outstanding.
12. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
whose income is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary jurisdiction over the administration of such trust and one or more
persons described in this Paragraph 12 controls all substantial decisions of
such trust.
2
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:----------------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
- ---------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Owner, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Owner.
Subscribed and sworn before me this ____ day of ________________,
199__.
------------------------------------
NOTARY PUBLIC
COUNTY OF----------------------------
STATE OF-----------------------------
My Commission expires the ____ day of
_______________, 19__.
3
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
ACE Securities Corp.
6707 Fairview Road, Suite D
Charlotte, North Carolina 28210
[Trustee]
Attention: ACE Securities Corp. Series 199__-__
Re: ASSET BACKED CERTIFICATES, SERIES 199__-__
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_______________________________ (the "Seller") to ________________________
(the "Purchaser") of a ____% Percentage Interests of Asset Backed Certificates,
Series 199__-__, Class R Certificates (the "Certificates"), pursuant to
Section 4.02 of the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of __________, 199__, among ACE Securities
Corp., as seller (the "Depositor"), ______________________, as Servicer,
and ______________________, as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Seller hereby certifies, represents and warrants to,
and covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Servicer a transfer affidavit and agreement in the form attached
to the Pooling and Servicing Agreement as Exhibit I. The Seller does not know or
believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Seller has determined that the Purchaser has historically
paid its debts as they become due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Seller understands that the transfer of a Class R
Certificate may not be respected for United States income tax purposes (and the
Seller may continue to be liable for United States income taxes associated
therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Purchaser is
not both a United States Person and a Permitted Transferee.
Very truly yours,
--------------------------------------
(Seller)
By:-----------------------------------
Name:
Title:
2
EXHIBIT K
___________, 1996
[Trustee]
Re: ACE Securities Corp. Asset Backed Certificates, Series 199__-__,
Class R
This letter is delivered to you in connection with the transfer by
_______________________ (the "Seller") to __________________ (the "Purchaser")
of Asset Backed Certificates Series 199__-__, Class [R] (the "Certificates"),
pursuant to Section 4.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of _________, 199__ among ACE Securities
Corp. as depositor (the "Depositor"), _________________________, as Servicer,
and ______________________________, as Trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Purchaser hereby certifies, represents and
warrants to, and covenants with, the Depositor and the Trustee that:
The Purchaser is not an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or other
Internal Revenue Code of 1986, as amended (the "Code"), nor a Person
acting directly on behalf of any such plan.
Very truly yours,
--------------------------------------
(Purchaser)
By:-----------------------------------
Name:
Title:
EXHIBIT L
[RESERVED]
EXHIBIT M
CERTIFICATE RE: PREPAID LOANS
I, ______________, ________________ of ACE Securities Corp., as
Depositor, hereby certify that between the "Cut-Off Date" (as defined in the
Pooling and Servicing Agreement dated as of ___________, 199__ among ACE
Securities Corp., ___________________________, as servicer and
__________________________, as trustee) and the "Startup Day" the following
schedule of "Mortgage Loans" (each as defined in the Pooling and Servicing
Agreement) have been prepaid in full.
Dated:
By:---------------------------------
EXHIBIT N
SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument (the "Instrument"),
dated ___________, 199__, between ACE Securities Corp., as depositor (the
"Depositor"), and ___________________________, as Trustee of the ACE Securities
Corp. Asset Backed Certificates, Series 199__-__, as purchaser (the
"Purchaser"), and pursuant to the Pooling and Servicing Agreement, dated as of
_________, 199__, among the Depositor, ___________________, as Servicer, and the
Trustee (the "Pooling and Servicing Agreement"), the Depositor and the Purchaser
agree to the sale by the Depositor and the purchase by the Purchaser of the
Mortgage Loans listed on the attached Schedule of Mortgage Loans (the
"Subsequent Mortgage Loans").
Capitalized terms used and not defined herein have their respective
meanings as set forth in the Pooling and Servicing Agreement.
Section 1. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) The Depositor does hereby sell, transfer, assign, set over and
convey to the Purchaser, without recourse, all of its right, title and interest
in and to the Subsequent Mortgage Loans, and including all principal received
and interest accruing on the Subsequent Mortgage Loans on and after the related
Subsequent Cut-Off Date, and all items with respect to the Subsequent Mortgage
Loans to be delivered pursuant to Section 2.03 of the Pooling and Servicing
Agreement; provided, however, that the Depositor reserves and retains all right,
title and interest in and to principal (including Prepayments and Curtailments)
received and interest accruing on the Subsequent Mortgage Loans prior to the
related Subsequent Cut-off Date. The Depositor, contemporaneously with the
delivery of this Agreement, has delivered or caused to be delivered to the
Trustee each item set forth in Section 2.03 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Depositor of the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule shall be absolute and is
intended by the Depositor, the Master Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Depositor.
(b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Instrument and the Pooling and Servicing Agreement shall be
borne by the Depositor.
(c) Additional terms of the sale are set forth on Attachment A hereto.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT.
(a) The Depositor hereby affirms the representations and warranties
set forth in Section 3.03 of the Pooling and Servicing Agreement that relate to
the Subsequent Mortgage Loans as of the date hereof. The Depositor hereby
confirms that each of the conditions set forth in Section 2.08(b) of the Pooling
and Servicing Agreement are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement
are hereby ratified and confirmed; provided, however, that in the event of any
conflict the provisions of this Instrument shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. RECORDATION OF INSTRUMENT.
To the extent permitted by applicable law, this Instrument, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the properties
subject to the Mortgages are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Servicer
at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 4. GOVERNING LAW.
This Instrument shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 5. COUNTERPARTS.
This Instrument may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same instrument.
Section 6. SUCCESSORS AND ASSIGNS.
This Instrument shall inure to the benefit of and be binding upon the
Depositor and the Purchaser and their respective successors and assigns.
ACE SECURITIES CORP.
BY:---------------------------------
Name:
Title:
ACE SECURITIES CORP., ASSET BACKED CERTIFICATES,
SERIES 199__-__
BY:---------------------------------
as Trustee
2
BY:---------------------------------
Name:
Title:
ATTACHMENTS
A. Additional terms of the sale.
B. Schedule of Subsequent Mortgage Loans.
C. Opinions of Depositor's counsel (bankruptcy, corporate).
D. Depositor's Officer's certificate.
E. Trustee's Certificate.
F. Opinion of Trustee's Counsel.
3
ACE SECURITIES CORP.,
ASSET BACKED CERTIFICATES, SERIES 199__-__
ATTACHMENT A TO SUBSEQUENT TRANSFER INSTRUMENT
SERIES 199__-__
________, 199__
A.
1. Subsequent Cut-off Date:
1. Pricing Date:
2. Subsequent Transfer Date:
3. Aggregate Principal Balance of the Subsequent Mortgage Loans as of the
Subsequent Cut-off Date:
4. Purchase Price: 100.00%
B.
As to all the Subsequent Mortgage Loans the subject of this Instrument:
1. Longest stated term to maturity: _____ months
2. Minimum Mortgage Rate: _____ %
3. Maximum Mortgage Rate: _____ %
4. WAC of all Mortgage Loans: _____ %
5. WAM of all Mortgage Loans: _____ %
6. Balloon Loans: _____ %
7. Largest Principal Balance: $______
8. Non-owner occupied Mortgaged Properties: _____ %
9. California zip code concentration: _____ %
10. Condominiums: _____ %
11. Single-family: _____ %
12. Weighted average term since origination:
13. [199__] first payment date: _____ %
EXHIBIT O
FORM OF INVESTOR REPRESENTATION LETTER
____________, 1996
[Trustee]
Re: ACE Securities Corp. Asset Backed Certificates, Series 199__-__
Ladies and Gentlemen:
_______________________(the "Purchaser") intends to purchase from
____________________ (the "Seller"), a ____% Percentage Interest of Asset Backed
Certificates, Series 199__-__, Class _____ (the "Certificates"), issued pursuant
to the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of ____________, 199__ among ACE Securities Corp., as depositor (the
"Depositor"), ______________________________, as servicer, and
_________________________, as trustee (the "Trustee"). All terms used herein and
not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Purchaser hereby certifies, represents and warrants to,
and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
and will not be registered or qualified under the Securities Act of 1933,
as amended (the "Act") or any state securities law, (b) the Depositor is
not required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified pursuant to the
provisions of the Act or any state securities law, or if an exemption from
such registration and qualification is available, (d) the Pooling and
Servicing Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to the foregoing
effect.
2. The Purchaser is acquiring the Certificates for its own account for
investment only and not with a view to or for sale in connection with any
distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters, and, in particular, in such matters related to securities similar
to the Certificates, such that it is capable of evaluating the merits and
risks of investment in the Certificates, (b) able to bear the economic
risks of such an investment and (c) an "accredited investor" within the
meaning of Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity
to review a copy of the Pooling and Servicing Agreement and such other
information concerning the Certificates, the Mortgage Loans and the
Depositor as has been requested by the Purchaser from the Depositor or the
Seller and is relevant to the Purchaser's decision to purchase the
Certificates. The Purchaser has had any questions arising from such review
answered by the Depositor or the Seller to the satisfaction of the
Purchaser. If the Purchaser did not purchase the Certificates from the
Seller in connection with the initial distribution of the Certificates and
was provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale") of the
Certificates by the Depositor, the Purchaser acknowledges that such
Memorandum was provided to it by the Seller, that the Memorandum was
prepared by the Depositor solely for use in connection with the Original
Sale and the Depositor did not participate in or facilitate in any way the
purchase of the Certificates by the Purchaser from the Seller, and the
Purchaser agrees that it will look solely to the Seller and not to the
Depositor with respect to any damage, liability, claim or expense arising
out of, resulting from or in connection with (a) error or omission, or
alleged error or omission, contained in the Memorandum, or (b) any
information, development or event arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has it authorized or will it
authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any offer to buy
or to accept a pledge, disposition of other transfer of any Certificate,
any interest in any Certificate or any other similar security from any
person in any manner, (c) otherwise approach or negotiate with respect to
any Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general solicitation
by means of general advertising or in any other manner or (e) take any
other action, that (as to any of (a) through (e) above) would constitute a
distribution of any Certificate under the Act, that would render the
disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the Pooling
and Servicing Agreement.
6. The Purchaser is not any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the Internal Revenue Code of 1986, (the "Code"), nor a Person acting,
directly or indirectly, on behalf of any such plan, and understands that
registration of transfer of any Certificate to any such employee benefit
plan, or to any person acting on behalf of such plan, will not be made
unless such employee benefit plan delivers an opinion of its counsel,
addressed and satisfactory to the Trustee, the Depositor and the Master
Servicer, to the effect that the purchase and holding of a Certificate by
or on behalf of such employee benefit plan would not result in the assets
of the Trust Estate being deemed to be "plan assets" and subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of the Code (or comparable provisions of any
2
subsequent enactments), would not constitute or result in a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code, and
would not subject the Depositor, the Servicer or the Trustee to any
obligation or liability (including liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in the Pooling and Servicing
Agreement or any other liability. The Purchaser understands that under
current law such an opinion cannot be rendered.
Very truly yours,
By:--------------------------------
Name:
Title:
3
EXHIBIT P
Form of Transferor Representation Letter
___________, 199__
[Trustee]
Re: ACE Securities Corp., Asset Backed Certificates, Series 199__-__
Ladies and Gentlemen:
In connection with the sale by _____________ (the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Asset Backed Certificates, Series 199__-__, Class ___ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of __________, 199__ among ACE
Securities Corp., as company (the "Depositor"), _________________________, as
servicer, and ______________________________, as trustee (the "Trustee"). The
Seller hereby certifies, represents and warrants to, and covenants with, the
Depositor and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
---------------------------------------
(Seller)
By:------------------------------------
Name:
Title:
EXHIBIT Q
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
ACE Securities Corp.
Asset Backed Certificates
Series 199__-__, Class ___, No. ___
The undersigned seller, as registered holder (the "Transferor"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or which would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Transferor has not offered the Rule 144A
Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Transferor, the Trustee and the Servicer pursuant to Section 5.02 of the Pooling
and Servicing Agreement as follows:
a. The Buyer understands that the Rule 144A Securities have not
been registered under the 1933 Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding
the Rule 144A Securities that it has requested from the Transferor, the
Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or otherwise approached
or negotiated with respect to the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security with,
any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Rule 144A Securities under the 1933
Act or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize any
person to act, in such manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act. The Buyer is aware that the sale
to it is being made in reliance on Rule 144A. The Buyer is acquiring the
Rule 144A Securities for its own account or the account of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed to
be a qualified institutional buyer that purchases for its own account or
for the account of a qualified institutional buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule 144A,
or (ii) pursuant to another exemption from registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with, the
Transferor, the Servicer and the Depositor that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a plan
within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986
(the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the Buyer's
purchase of the Rule 144A Securities will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
4. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
2
IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
- ----------------------------- -------------------------------
Print Name of Transferor Print Name of Buyer
By:-------------------------- By:----------------------------
Name: Name:
Title Title
Taxpayer Identification: Taxpayer Identification:
No.------------------------- No.----------------------------
Date:----------------------- Date:--------------------------
3
EXHIBIT R
PREMIUM EXHIBIT
For the purposes of the Pooling and Servicing Agreement dated as of
___________, 199__ (the "Agreement") by and among ACE Securities Corp., as
company, _______________________________, as servicer, and
__________________________________ as trustee, "Premium Percentage" means, with
respect to any Mortgage Loan, ____%
Terms used in this exhibit and not defined in this exhibit have the
meanings ascribed thereto in the Agreement.