EXHIBIT 99.1
EXECUTION
SEQUOIA RESIDENTIAL FUNDING, INC.
Depositor
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Master Servicer and Securities Administrator
and
HSBC BANK USA
Trustee
---------------------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 2002
---------------------------
SEQUOIA MORTGAGE TRUST 12
Table of Contents
Page
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ARTICLE I DEFINITIONS............................................................................................4
Section 1.01. Definitions....................................................................................4
Section 1.02. Calculations Respecting Mortgage Loans........................................................33
ARTICLE II DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES.......................................................33
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans..........................33
Section 2.02. Acceptance of Trust Fund by Trustee; Review of Documentation for
Trust Fund....................................................................................36
Section 2.03. Representations and Warranties of the Depositor...............................................37
Section 2.04. Discovery of Breach; Repurchase or Substitution of Mortgage Loans.............................39
Section 2.05 [Reserved]....................................................................................41
Section 2.06. Grant Clause..................................................................................42
ARTICLE III THE CERTIFICATES....................................................................................43
Section 3.01. The Certificates..............................................................................43
Section 3.02. Registration..................................................................................43
Section 3.03. Transfer and Exchange of Certificates.........................................................44
Section 3.04. Cancellation of Certificates..................................................................47
Section 3.05. Replacement of Certificates...................................................................47
Section 3.06. Persons Deemed Owners.........................................................................48
Section 3.07. Temporary Certificates........................................................................48
Section 3.08. Appointment of Paying Agent...................................................................49
Section 3.09. Book-Entry Certificates.......................................................................49
ARTICLE IV ADMINISTRATION OF THE TRUST FUND.....................................................................50
Section 4.01. Custodial Accounts; Distribution Account......................................................50
Section 4.02 [Reserved]....................................................................................52
Section 4.03 [Reserved]....................................................................................52
Section 4.04 Reports to Trustee and Certificateholders.....................................................52
ARTICLE V DISTRIBUTIONS TO HOLDERS OF CERTIFICATES..............................................................55
Section 5.01. Distributions Generally.......................................................................55
Section 5.02. Distributions from the Certificate Account....................................................55
Section 5.03. Allocation of Losses..........................................................................57
Section 5.04. Advances by Master Servicer...................................................................58
Section 5.05. Compensating Interest Payments................................................................58
Section 5.06. Reserve Fund..................................................................................59
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ARTICLE VI CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR; EVENTS OF DEFAULT...........................60
Section 6.01. Duties of Trustee and the Securities Administrator............................................60
Section 6.02. Certain Matters Affecting the Trustee and the Securities Administrator........................63
Section 6.03. Trustee and Securities Administrator Not Liable for Certificates..............................64
Section 6.04. Trustee and the Securities Administrator May Own Certificates.................................65
Section 6.05. Eligibility Requirements for Trustee..........................................................65
Section 6.06. Resignation and Removal of Trustee and the Securities Administrator...........................65
Section 6.07. Successor Trustee and Successor Securities Administrator......................................66
Section 6.08. Merger or Consolidation of Trustee or the Securities Administrator............................67
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian......................................67
Section 6.10. Authenticating Agents.........................................................................69
Section 6.11. Indemnification of the Trustee and the Securities Administrator...............................69
Section 6.12. Fees and Expenses of the Securities Administrator and the Trustee.............................70
Section 6.13. Collection of Monies..........................................................................70
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor...................................70
Section 6.15. Additional Remedies of Trustee Upon Event of Default..........................................74
Section 6.16. Waiver of Defaults............................................................................74
Section 6.17. Notification to Holders.......................................................................75
Section 6.18. Directions by Certificateholders and Duties of Trustee During
Event of Default..............................................................................75
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon
Event of Default..............................................................................75
Section 6.20. Preparation of Tax Returns and Other Reports..................................................75
ARTICLE VII PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE TRUST FUND........................................77
Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase or Liquidation
of All Mortgage Loans........................................................................ 77
Section 7.02. Procedure Upon Termination of Trust Fund......................................................78
Section 7.03. Additional Trust Fund Termination Requirements................................................79
Section 7.04. Retention of Certificates by Holder of the Class LT-R Certificate.............................79
ARTICLE VIII RIGHTS OF CERTIFICATEHOLDERS.......................................................................80
Section 8.01. Limitation on Rights of Holders...............................................................80
Section 8.02. Access to List of Holders.....................................................................81
Section 8.03. Acts of Holders of Certificates...............................................................81
ARTICLE IX ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER................................82
Section 9.01. Duties of the Master Servicer; Enforcement of Servicer's and Master Servicer's Obligations....82
Section 9.02 Assumption of Master Servicing by Trustee.....................................................84
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Section 9.03. Representations and Warranties of the Master Servicer.........................................85
Section 9.04. Compensation to the Master Servicer...........................................................86
Section 9.05. Merger or Consolidation.......................................................................87
Section 9.06. Resignation of Master Servicer................................................................87
Section 9.07. Assignment or Delegation of Duties by the Master Servicer.....................................87
Section 9.08. Limitation on Liability of the Master Servicer and Others.....................................88
Section 9.09. Indemnification; Third-Party Claims...........................................................88
ARTICLE X REMIC ADMINISTRATION..................................................................................89
Section 10.01. REMIC Administration..........................................................................89
Section 10.02. Prohibited Transactions and Activities........................................................91
Section 10.03. Indemnification with Respect to Prohibited Transactions or Loss of REMIC Status...............91
Section 10.04. REO Property..................................................................................92
ARTICLE XI MISCELLANEOUS PROVISIONS.............................................................................93
Section 11.01. Binding Nature of Agreement; Assignment.......................................................93
Section 11.02. Entire Agreement..............................................................................93
Section 11.03. Amendment.....................................................................................93
Section 11.04. Voting Rights.................................................................................94
Section 11.05. Provision of Information......................................................................95
Section 11.06. Governing Law.................................................................................95
Section 11.07. Notices.......................................................................................95
Section 11.08. Severability of Provisions....................................................................96
Section 11.09. Indulgences; No Waivers.......................................................................96
Section 11.10. Headings Not To Affect Interpretation.........................................................96
Section 11.11. Benefits of Agreement.........................................................................96
Section 11.12. Special Notices to the Rating Agencies........................................................96
Section 11.13. Conflicts.....................................................................................98
Section 11.14. Counterparts..................................................................................98
Section 11.15 No Petitions..................................................................................98
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ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D Form of Custody Agreement
Exhibit E List of Servicing Agreements
Exhibit F List of Purchase Agreements
Exhibit G List of Limited Purpose Surety Bonds
Exhibit H Form of Rule 144A Transfer Certificate
Exhibit I Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit J Form of ERISA Transfer Affidavit
Exhibit K Form of Letter of Representations with the Depository Trust Company
Exhibit L Form of Cap Agreement
Exhibit M Form of Certification to be Provided to Depositor by the Securities Administrator
Schedule A Mortgage Loan Schedule
Schedule B Mortgage Loan Representations and Warranties of the Seller
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This POOLING AND SERVICING AGREEMENT, dated as of December 1, 2002 (the
"Agreement"), by and among SEQUOIA RESIDENTIAL FUNDING, INC., a Delaware
corporation, as depositor (the "Depositor"), HSBC Bank USA, a New York banking
corporation, as trustee (the "Trustee"), and WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, in its dual capacities as master servicer (the "Master
Servicer") and securities administrator (the "Securities Administrator") and
acknowledged by RWT HOLDINGS, INC., a Delaware corporation, as seller (the
"Seller"), for purposes of Section 2.04.
PRELIMINARY STATEMENT
The Depositor has acquired the Mortgage Loans from the Seller and at
the Closing Date is the owner of the Mortgage Loans and the other property being
conveyed by the Depositor to the Trustee hereunder for inclusion in the Trust
Fund. On the Closing Date, the Depositor will acquire the Certificates from the
Trustee as consideration for the Depositor's transfer to the Trust Fund of the
Mortgage Loans, and the other property constituting the Trust Fund. The
Depositor has duly authorized the execution and delivery of this Agreement to
provide for the conveyance to the Trustee of the Mortgage Loans and the other
property constituting the Trust Fund. All covenants and agreements made by the
Seller in the Mortgage Loan Purchase and Sale Agreement and in this Agreement
and by the Depositor, the Master Servicer, the Securities Administrator and the
Trustee herein with respect to the Mortgage Loans and the other property
constituting the Trust Fund are for the benefit of the Holders from time to time
of the Certificates. The Depositor, the Trustee, the Master Servicer and the
Securities Administrator are entering into this Agreement, and the Trustee is
accepting the Trust Fund created hereby, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund
(exclusive of the Additional Collateral, the assets held in the Reserve Fund,
the LIBOR Certificate Cap, and the Class X Cap) be treated for federal income
tax purposes as comprising two real estate mortgage investment conduits (each a
"REMIC" or, in the alternative, the "Lower Tier REMIC" and the "Upper Tier
REMIC," respectively). Each Certificate, other than the Class A-R Certificate
and the Class LT-R Certificate, shall represent ownership of a regular interest
in the Upper Tier REMIC. In addition, each of the LIBOR Certificates represents
a separate contractual right to receive payments in respect of Net WAC
Shortfalls and Unpaid Net WAC Shortfalls from the Reserve Fund as provided in
Section 5.06. In addition, the Interest Only Certificates represent separate
contractual rights to and beneficial ownership of the Reserve Fund, the LIBOR
Certificate Cap, and the Class X Cap. The Class A-R Certificate represents the
sole class of residual interest in the Upper Tier REMIC. The Class LT-R
Certificate represents the sole class of residual interest in the Lower Tier
REMIC.
The Lower Tier REMIC shall issue, in addition to the Class LT-R
Certificate, several classes of uncertificated Lower Tier Interests. The Upper
Tier REMIC shall hold as its assets the several classes of uncertificated Lower
Tier Interests in the Lower Tier REMIC and each such Lower Tier Interest is
hereby designated as a regular interest in the Lower Tier REMIC for purposes of
the REMIC Provisions. The Lower Tier REMIC shall hold as its assets the property
of the Trust Fund other than the uncertificated Lower Tier Interests, the
Additional Collateral, the Reserve Fund, the LIBOR Certificate Cap, and the
Class X Cap.
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THE LOWER TIER REMIC INTERESTS
The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and corresponding class of certificates
for each class of Lower Tier Interests:
INTEREST
CLASS DESIGNATION PRINCIPAL AMOUNT RATE CORRESPONDING CLASS OF CERTIFICATES
- -------------------- ---------------- -------- -----------------------------------
LTA-1 $245,933,305.20 (1) Class A, Class X-1 (5)
LTA-2 $834,142,694.80 (2) Class A, Class X-2 (6)
LTB1-A $ 3,828,775.50 (1) Class B-1, Class X-1 (5)
LTB1-B $ 12,986,224.50 (2) Class B-1, Class X-2 (6)
LTB2 $ 8,968,000.00 (3) Class B-2
LTB3 $ 6,165,000.00 (3) Class B-3
LTB4 $ 2,802,000.00 (3) Class B-4
LTB5 $ 1,681,000.00 (3) Class B-5
LTB6 $ 4,486,095.46 (3) Class B-6
LTAR $ 100.00 (3) Class AR
LT-R Certificate (4) (4) N/A
- ---------------
(1) The interest rate for the Class LTA-1 and Class LTB1-A Interests for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Net WAC of the One-Month LIBOR Loans.
(2) The interest rate for the Class LTA-2 and Class LTB1-B Interest for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Net WAC of the Six-Month LIBOR Loans.
(3) The interest rate for each of these Lower Tier Interests for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Net WAC.
(4) The Class LT-R Certificate is the sole class of residual interest in the
Lower Tier REMIC. It does not have an interest rate or a principal balance.
(5) On each Distribution Date, the Class X-1 Certificates shall be entitled to
a specified portion of the interest that accrues on the Class LTA-1 and the
Class LTB1-A Interests. Specifically, for each such Distribution Date, the
Class X-1 Certificate shall be entitled to interest accruals on the Class
LTA-1 and Class LTB1-A Interests at a per annum rate equal to the excess,
if any, of (i) the Net WAC of the One-Month LIBOR Loans over (ii) the
weighted average of the Certificate Interest Rates on the Class A
Certificates and the Class B-1 Certificates for such Distribution Date,
weighted on the basis of the Class Principal Amount of each such Class of
Certificates on the first day of the related accrual period (for the first
Distribution Date only, multiplied by a fraction, the numerator of which is
31 and the denominator of which is 30).
(6) On each Distribution Date, the Class X-2 Certificates shall be entitled to
a specified portion of the interest that accrues on the Class LTA-2 and
Class LTB1-B Interests. Specifically, for each such Distribution Date, the
Class X-2 Certificates shall be entitled to interest accruals on the Class
LTA-2 and the Class LTB1-B Interests at a per annum rate equal to the
excess, if any, of (i) the Net WAC of the Six-Month LIBOR Loans over (2)
the weighted average of the Certificate Interest Rates on the Class A and
Class B-1 Certificates for such Distribution Date weighted on the basis of
the Class Principal Amount of each such Class of Certificates on the first
day of the related accrual period (for the first Distribution Date only,
multiplied by a fraction, the numerator of which is 31 and the denominator
of which is 30).
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On each Distribution Date, the Securities Administrator, as Paying
Agent, shall first pay or charge as an expense of the Lower-Tier REMIC all
expenses of the Trust for such Distribution Date.
On each Distribution Date the Securities Administrator, as Paying
Agent, shall distribute interest and principal on, and shall allocate Realized
Losses among, the Lower Tier Interests in the same manner that such amounts are
distributed on and such losses are allocated among the Corresponding Classes of
Certificates; provided however, that in determining distributions and the
allocation of losses between the Class LTA-1 and Class LTA-2 Interests, and
between the Class LTB1-A and Class LTB1-B Interests, the Securities
Administrator shall make allocations to the Class LTA-1 and to the Class LTB1-A
Interest in accordance with the Class X-1 Percentage for such Distribution Date
and to the Class LTA-2 and to the Class LTB1-B Interest in accordance with the
Class X-2 Percentage for such Distribution Date.
THE CERTIFICATES
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount (or initial Class
Notional Amount), and minimum denomination for each Class of Certificates
comprising interests in the Trust Fund created hereunder.
INITIAL CLASS
PRINCIPAL AMOUNT OR CLASS MINIMUM
CLASS CERTIFICATE INTEREST NOTIONAL DENOMINATIONS OR
DESIGNATION RATE AMOUNT PERCENTAGE INTEREST
- --------------- -------------------- ------------------------- -------------------
Class A (1) $1,080,076,000.00 $ 25,000.00
Class X-1 (2) (6) 100%
Class X-2 (3) (7) 100%
Class A-R (4) $ 100 100%
Class B-1 (5) $ 16,815,000.00 $ 25,000.00
Class B-2 (4) $ 8,968,000.00 $ 25,000.00
Class B-3 (4) $ 6,165,000.00 $ 25,000.00
Class B-4 (4) $ 2,802,000.00 $100,000.00
Class B-5 (4) $ 1,681,000.00 $100,000.00
Class B-6 (4) $ 4,486,095.46 $100,000.00
- -----------
(1) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A Certificates will be the least
of (i) LIBOR plus 0.45%; (ii) the Net WAC and (iii) 12.50%; provided,
however, if the Mortgage Loans and related property are not purchased
pursuant to Section 7.01(c) on the Initial Optional Purchase Date, then
with respect to each subsequent Distribution Date the per annum rate
calculated pursuant to clause (i) above with respect to the Class A
Certificates will be LIBOR plus 0.90%.
(2) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-1 Certificates will equal the
excess of the Net WAC of the One-Month LIBOR Loans over the weighted
average of the Certificate Interest Rates on the Class A and Class B-1
Certificates (for the first Distribution Date only, multiplied by a
fraction, the numerator of which is 31 and the denominator of which is 30).
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(3) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-2 Certificates will equal the
excess of the Net WAC of Six-Month LIBOR Loans over the weighted average of
the Certificate Interest Rates on the Class A and Class B-1 Certificates
(for the first Distribution Date only, multiplied by a fraction, the
numerator of which is 31 and the denominator of which is 30).
(4) The Certificate Interest Rates with respect to any Distribution Date (and
the related Accrual Period) for the Class A-R, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates will equal the Net WAC.
(5) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class B-1 Certificates will be the
least of (i) LIBOR plus 0.85%; (ii) the Net WAC and (iii) 12.50%; provided,
however, if the Mortgage Loans and related property are not purchased
pursuant to Section 7.01(c) on the Initial Optional Purchase Date, then
with respect to each subsequent Distribution Date the per annum rate
calculated pursuant to clause (i) above with respect to the Class B-1
Certificates will be LIBOR plus 1.275%.
(6) The Class X-1 Certificate is an interest-only Class and for any
Distribution Date the Class X-1 Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to the product of (i) the aggregate Class Principal Amount of the Class A
and Class B-1 Certificates immediately before such Distribution Date and
(ii) the Class X-1 Percentage for such Distribution Date. The initial Class
Notional Amount of the Class X-1 Certificates is $249,714,339.
(7) The Class X-2 Certificate is an interest-only Class and for any
Distribution Date the Class X-2 Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to the product of (i) the aggregate Class Principal Amount of the Class A
and Class B-1 Certificates immediately before such Distribution Date and
(ii) the Class X-2 Percentage for such Distribution Date. The initial Class
Notional Amount of the Class X-2 Certificates is $847,176,660.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Securities Administrator and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accountant: A Person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accrual Period: With respect to any Distribution Date and any Class of
LIBOR Certificates, the period commencing on the 20th day of the month preceding
the month in which the Distribution Date occurs and ending on the 19th day of
the month in which the Distribution Date occurs; provided, however, that the
first Accrual Period with respect to the LIBOR Certificates shall be the period
beginning on the Closing Date and ending on January 19, 2003. The Accrual Period
applicable to the Class X-1, Class X-2, Class A-R, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates and to each Class of Lower-Tier
Interests shall be the calendar month immediately preceding the month in which
the related Distribution Date occurs. Interest shall accrue on all Classes of
Certificates and on all Lower-Tier Interests on the basis of a 360-day year
consisting of twelve 30-day months.
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Acknowledgements: The Assignment, Assumption and Recognition
Agreements, each dated December 19, 2002, assigning rights under the Purchase
Agreements and the Servicing Agreements from the Seller to the Depositor and
from the Depositor to the Trustee for the benefit of Certificateholders.
Act: The Securities Act of 1933, as amended.
Additional Collateral: With respect to any Additional Collateral
Mortgage Loan, the marketable securities and other acceptable collateral pledged
as collateral pursuant to the related pledge agreements.
Additional Collateral Mortgage Loan: Each Mortgage Loan identified as
such in the Mortgage Loan Schedule.
Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts in accordance with the terms of the related Mortgage Note.
Advance: With respect to a Mortgage Loan, the payments required to be
made by the Master Servicer or the applicable Servicer with respect to any
Distribution Date pursuant to this Agreement or the Servicing Agreements, as
applicable, the amount of any such payment being equal to the aggregate of the
payments of principal and interest (net of the Master Servicing Fee and/or the
applicable Servicing Fee and net of any net income in the case of any REO
Property) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date, less the
aggregate amount of any such delinquent payments that the Master Servicer or the
Servicers have determined would constitute Nonrecoverable Advances if advanced.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under 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.
Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans included in
the Mortgage Pool which were outstanding on the Due Date in the month preceding
the month of such Distribution Date.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Pooling and Servicing Agreement and all amendments and
supplements hereto.
Allocable Share: With respect to each Class of Subordinated
Certificates and any Distribution Date, the percentage equivalent of a fraction,
the numerator of which is the Class
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Principal Amount of such Class and the denominator of which is the aggregate of
the Class Principal Amounts of each Class of Subordinate Certificates.
Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Percentages of all
Classes of Certificates that rank lower in priority than such Class.
Appraised Value: With respect to any Mortgage Loan, the Appraised Value
of the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.
Assignment of Mortgage: 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
the sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10 until any successor authenticating agent for the
Certificates is named, and thereafter "Authenticating Agent" shall mean any such
successor. The Authenticating Agent shall be Wells Fargo Bank Minnesota,
National Association for so long as it is acting as Securities Administrator
under this Agreement.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Available Distribution Amount: With respect to any Distribution Date,
the total amount of all cash received by the Master Servicer on the Mortgage
Loans from each Servicer or otherwise through the Distribution Account Deposit
Date for deposit into the Distribution Account in respect of such Distribution
Date, including (1) all scheduled installments of interest (net of the related
Servicing Fees and the Master Servicing Fees) and principal collected on the
Mortgage Loans and due during the Due Period related to such Distribution Date,
together with any Advances in respect thereof, (2) all Insurance Proceeds,
Liquidation Proceeds and the proceeds of any Additional Collateral from the
Mortgage Loans, in each case for such Distribution Date, (3) all partial or full
Principal Prepayments, together with any accrued interest thereon, identified as
having been received from the Mortgage Loans during the related Prepayment
Period, (4) any amounts paid by the Master Servicer and/or received from the
Servicers in respect of Prepayment Interest Shortfalls with respect to the
Mortgage Loans and (5) the aggregate Purchase Price of all Defective Mortgage
Loans purchased from the Trust Fund during the related Prepayment Period, minus:
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(A) all related charges and other amounts payable or
reimbursable to the Master Servicer, the Securities
Administrator or the Trustee under this Agreement, up to an
aggregate maximum amount of $300,000 annually, or to the
Servicers under the Servicing Agreements;
(B) in the case of (2), (3), (4) and (5) above, any related
unreimbursed expenses incurred by the related Servicers in
connection with a liquidation or foreclosure and any
unreimbursed Advances or Servicing Advances due to the Master
Servicer or the related Servicers;
(C) any related unreimbursed Nonrecoverable Advances due to
the Master Servicer or the Servicers; and
(D) in the case of (1) through (4) above, any related amounts
collected which are determined to be attributable to a
subsequent Due Period or Prepayment Period.
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee, receiver
or liquidator, dissolution, or termination, as the case may be, of such Person
pursuant to the provisions of either the Bankruptcy Code or any other similar
state laws.
Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.
Bankruptcy Loss: With respect to any Mortgage Loan, losses that are
incurred as a result of a Deficient Valuation or Debt Service Reduction as
reported by the related Servicer to the Master Servicer.
Bankruptcy Loss Coverage Amount: As of any Distribution Date, the
Initial Bankruptcy Loss Coverage Amount as reduced by the aggregate amount of
Bankruptcy Losses allocated to the Certificates since the Cut-off Date;
provided, however, that the Bankruptcy Loss Coverage Amount may also be reduced
pursuant to a letter from each Rating Agency to the Trustee to the effect that
any such reduction shall not result in a downgrading of the then current ratings
assigned by such Rating Agency to the Senior Certificates.
Bankruptcy Loss Coverage Termination Date: The date on which the
Bankruptcy Loss Coverage Amount is reduced to zero.
BBA: The British Banker's Association.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
and Certificate Registrar to the effect that any proposed transfer will not (i)
cause the assets of the Trust Fund to be regarded as plan assets for purposes of
the Plan Asset Regulations or (ii) give rise to any fiduciary duty on the part
of the Depositor or the Trustee.
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Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a Clearing
Agency as described in Section 3.09; provided, that after the occurrence of a
Book-Entry Termination whereupon book-entry registration and transfer are no
longer permitted and Definitive Certificates are to be issued to Certificate
Owners, such Book-Entry Certificates shall no longer be "Book-Entry
Certificates." As of the Closing Date, the following Classes of Certificates
constitute Book-Entry Certificates: the Class A, Class X-1, Class X-2, Class
B-1, Class B-2 and Class B-3.
Book-Entry Termination: The occurrence of any of the following events:
(i) the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Trustee is located, or
the States of Maryland or Minnesota, are authorized or obligated by law or
executive order to be closed.
Cap Agreement: The interest rate cap agreement entered into pursuant to
that certain Confirmation regarding Cap Transaction MSCS Ref. No. KQAH4, dated
as of November 18, 2002, entered into between the Trustee, on behalf of the
Trust Fund (with respect to that portion of the Cap Agreement represented by the
LIBOR Certificate Cap), and on behalf of the Interest Only Certificateholders
(with respect to that portion of the Cap Agreement represented by the Class X
Cap), and the Cap Provider, which agreement provides for the monthly payment by
the Cap Provider specified therein, to the extent required, but subject to the
conditions set forth therein, together with the confirmation and schedules
relating thereto, in the form of Exhibit L hereto.
Cap Provider: Morgan Stanley Capital Services Inc.
Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Securities Administrator as Authenticating Agent in
substantially the forms attached hereto as Exhibit A.
Certificate Interest Rate: With respect to each Class of Certificates
and any Distribution Date, the applicable per annum rate described in the
Preliminary Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate (other
than a Notional Certificate), at the time of determination, the maximum
specified dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the initial
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principal amount set forth on the face of such Certificate, less (i) the amount
of all principal distributions previously made with respect to such Certificate;
(ii) all Realized Losses allocated to such Certificate; and (iii) in the case of
a Subordinate Certificate, any Subordinate Certificate Writedown Amount
allocated to such Certificates. For purposes of Article V hereof, unless
specifically provided to the contrary, Certificate Principal Amounts shall be
determined as of the close of business of the immediately preceding Distribution
Date, after giving effect to all distributions made on such date. Notional
Certificates are issued without Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02. Wells Fargo National Bank
Minnesota, National Association will act as Certificate Registrar for so long as
it is the Securities Administrator under this Agreement.
Certificateholder: The meaning provided in the definition of "Holder."
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
Class: Collectively, Certificates bearing the same class designation.
In the case of the Lower-Tier REMIC, the term "Class" refers to all Lower-Tier
Interests having the same alphanumeric designation.
Class Notional Amount: With respect to any Class of Notional
Certificates, the applicable class notional amount calculated as provided in the
Preliminary Statement hereto.
Class Principal Amount: With respect to each Class of Certificates
(other than a Notional Certificate) the aggregate of the Certificate Principal
Amounts of all Certificates of such Class at the date of determination.
Class Subordination Percentage: With respect to each Class of
Subordinate Certificates, for each Distribution Date, the percentage obtained by
dividing the Class Principal Amount of such Class immediately prior to such
Distribution Date by the sum of the Class Principal Amounts of all Classes of
Certificates immediately prior to such Distribution Date.
Class A-R Certificate: The Class A-R Certificate executed by the
Trustee, and authenticated and delivered by the Authenticating Agent,
substantially in the form annexed hereto as Exhibit A, and evidencing the
ownership of the residual interest in the Upper Tier REMIC.
Class LT-R Certificate: The Class LT-R Certificate executed by the
Trustee and authenticated and delivered by the Authenticating Agent,
substantially in the form annexed as Exhibit A and evidencing ownership of the
residual interest in the Lower-Tier REMIC.
Class X Cap: The portion of the Cap Agreement, which the Securities
Administrator shall account for as a discrete cap agreement pursuant to Section
5.06 of this Agreement, having a notional amount equal at any time to the
excess, if any, of (i) the stated notional amount of the Cap Agreement, over
(ii) the notional amount of the LIBOR Certificate Cap.
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Class X-1 Percentage: For any Distribution Date, the percentage
equivalent of a fraction the numerator of which is the Stated Principal Balances
of the One-Month LIBOR Loans and the denominator of which is the Stated
Principal Balances of the Mortgage Loans. For purposes of determining the Class
X-1 Percentage for any Distribution Date, the Stated Principal Balances of the
Mortgage Loans shall be determined as of the Due Date of the month preceding the
month in which such Distribution Date occurs.
Class X-2 Percentage: For any Distribution Date, the percentage
equivalent of a fraction the numerator of which is the Stated Principal Balances
of the Six-Month LIBOR Loans and the denominator of which is the Stated
Principal Balances of the Mortgage Loans. For purposes of determining the Class
X-2 Percentage for any Distribution Date, the Stated Principal Balances of the
Mortgage Loans shall be determined as of the Due Date of the month preceding the
month in which such Distribution Date occurs.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: December 19, 2002.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Compensating Interest Payment: As to any Distribution Date, the lesser
of (1) the Master Servicing Fee for such date and (2) any Prepayment Interest
Shortfall for such date.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Corporate Trust Office: With respect to the Trustee, the principal
corporate trust office of the Trustee located at 452 Fifth Avenue, New York, New
York 10018, Attention: Trustee
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Sequoia Mortgage Trust 12, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor, the Master
Servicer and the Securities Administrator or the principal corporate trust
office of any successor Trustee. With respect to the Certificate Registrar and
presentment of Certificates for registration of transfer, exchange or final
payment, Wells Fargo Bank Minnesota, National Association, 6th Avenue and
Marquette, Minneapolis, Minnesota 55479, Attention: Corporate Trust, Sequoia
Mortgage Trust 12.
Corresponding Classes Of Certificates: With respect to each Lower-Tier
Regular Interest, the Class or Classes of Certificates appearing opposite such
Lower-Tier Regular Interest as described in the Preliminary Statement.
Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amount of the Subordinate Certificates
have been reduced to zero.
Current Interest: With respect to each Class of Certificates and any
Distribution Date, the aggregate amount of interest accrued at the applicable
Certificate Interest Rate during the related Accrual Period on the Class
Principal Amount (or Class Notional Amount) of such Class immediately prior to
such Distribution Date.
Custodial Accounts: Each custodial account (other than an Escrow
Account) established and maintained by a Servicer pursuant to a Servicing
Agreement.
Custodian: A Person who is at anytime appointed by the Trustee and the
Depositor as a custodian of the Mortgage Documents and the Trustee Mortgage
Files. The initial Custodian is Deutsche Bank National Trust Company.
Custody Agreement: The Custody Agreement, dated as of December 1, 2002,
among the Depositor, the Seller, the Trustee and Deutsche Bank National Trust
Company, as Custodian.
Cut-off Date: December 1, 2002.
Cut-off Date Balance: With respect to the Mortgage Loans in the Trust
Fund on the Closing Date, the Aggregate Stated Principal Balance as of the
Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan which became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any reduction that results in a permanent forgiveness of principal.
Defective Mortgage Loan: The meaning specified in Section 2.04.
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 indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of
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principal, which valuation or reduction results from an order of such court
which is final and non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificate: A Certificate of any Class issued in
definitive, fully registered, certificated form.
Deleted Mortgage Loan: As defined in the applicable Purchase Agreement.
Delinquent: Any Mortgage Loan with respect to which the Scheduled
Payment due on a Due Date is not received.
Depositor: Sequoia Residential Funding, Inc., a Delaware corporation,
having its principal place of business in California or its successors in
interest.
Determination Date: With respect to each Distribution Date, the 10th
day of the month in which such Distribution Date occurs, or, if such 10th day is
not a Business Day, the next succeeding Business Day.
Disqualified Organization: A "disqualified organization" as defined in
Section 860(e)(5) of the Code.
Distribution Account: The separate Eligible Account created and
maintained by the Securities Administrator, on behalf of the Trustee, pursuant
to Section 4.01 in the name of the Trustee for the benefit of the
Certificateholders and designated "Wells Fargo Bank Minnesota, National
Association, in trust for registered holders of Sequoia Mortgage Trust 12,
Mortgage Pass-Through Certificates." Funds in the Distribution Account
(exclusive of any earnings on investments made with funds deposited in the
Distribution Account) shall be held in trust for the Trustee and the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in January
2003.
Distribution Date: The 20th day of each month or, if such 20th day is
not a Business Day, the next succeeding Business Day, commencing in January
2003.
Due Date: With respect to any Mortgage Loan, the date on which a
Scheduled Payment is due under the related Mortgage Note as indicated in the
applicable Servicing Agreement.
Due Period: As to any Distribution Date, the period beginning on the
second day of the month preceding the month of such Distribution Date, and
ending on the first day of the month of such Distribution Date.
Effective Loan-to-Value Ratio: A fraction, expressed as a percentage,
the numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of Additional Collateral required to secure such Mortgage
Loan at the time of origination, if any,
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and the denominator of which is the Appraised Value of the related Mortgage
Property at such date.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders have
a claim with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the trust department of a federal or state chartered depository institution or
trust company, acting in its fiduciary capacity or (iv) any other account
acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee, the Paying Agent, the Securities Administrator or the Master
Servicer.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of an
Underwriter's Exemption.
ERISA-Restricted Certificate: The Class A-R, Class LT-R, Class B-4,
Class B-5 or Class B-6 Certificates.
Escrow Account: As defined in Section 1 of each Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 6.14.
Excess Loss: With respect to any Mortgage Loan, the amount of any (i)
Fraud Loss realized after the Fraud Loss Coverage Termination Date, (ii) Special
Hazard Loss realized after the Special Hazard Loss Coverage Termination Date or
(iii) Bankruptcy Loss realized after the Bankruptcy Loss Coverage Termination
Date.
Fannie Mae: The entity formerly known as the Federal National Mortgage
Association, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
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FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Trust Receipt: As defined in the Custody Agreement.
Fitch Ratings: Fitch, Inc., or any successor in interest.
Fraud Loss Coverage Amount: As of the Closing Date, $33,629,796,
subject to reduction from time to time by the amount of any Fraud Losses
allocated to the Certificates. In addition, on each anniversary of the Cut-Off
Date, the Fraud Loss Coverage Amount shall be reduced as follows: (a) on the
first anniversary of the Cut-Off Date, to an amount equal to the lesser of (i)
2.00% of the then current Aggregate Stated Principal Balance and (ii) the excess
of the Fraud Loss Coverage Amount as of the Cut-Off Date over the cumulative
amount of Fraud Losses allocated to the Certificates since the Cut-Off Date; (b)
on the second, third and fourth anniversaries of the Cut-Off Date, to an amount
equal to the lesser of (i) 1.00% of the then current Aggregate Stated Principal
Balance and (ii) the excess of the Fraud Loss Coverage Amount as of the
immediately preceding anniversary of the Cut-Off Date, over the cumulative
amount of Fraud Losses allocated to the Certificates since such preceding
anniversary; and (c) on the fifth anniversary of the Cut-Off Date, to zero;
provided, however, that the Fraud Loss Coverage Amount may also be reduced
pursuant to a letter from each Rating Agency to the Trustee to the effect that
any such reduction shall not result in the downgrading of the then current
ratings assigned by such Rating Agency to the Classes of Senior Certificates.
Fraud Loss Coverage Termination Date: The date on which the Fraud Loss
Coverage Amount is reduced to zero.
Fraud Losses: Realized Losses on any Mortgage Loan sustained by reason
of a default arising from fraud, dishonesty or misrepresentation in connection
with that Mortgage Loan, as reported by the related Servicer to the Master
Servicer.
Global Securities: The global certificates representing the Book-Entry
Certificates.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee, the Master
Servicer, the Securities Administrator and any Servicer, or any Affiliate
thereof shall be deemed not to be outstanding in determining whether the
requisite percentage necessary to effect any such consent has been obtained,
except that, in determining whether the Trustee shall be protected in relying
upon any such consent, only Certificates which a Responsible Officer of the
Trustee knows to be so owned shall be disregarded. The Trustee may request and
conclusively rely on certifications by the Depositor, the Master Servicer, the
Securities Administrator or any Servicer in determining whether any Certificates
are registered to an Affiliate of the Depositor, the Master Servicer, the
Securities Administrator or any Servicer.
HUD: The United States Department of Housing and Urban Development, or
any successor thereto.
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Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
Index: As to each Mortgage Loan, the index from time to time in effect
for adjustment of the Mortgage Rate as set forth as such on the related Mortgage
Note.
Initial Bankruptcy Loss Coverage Amount: $218,860.
Initial LIBOR Rate: 1.42000%.
Initial Optional Purchase Date: The first Distribution Date following
the date on which the Aggregate Stated Principal Balance is less than 10.00% of
the Cut-off Date Balance.
Initial Trust Receipt. As defined in the Custody Agreement.
Insurance Policy: With respect to any Mortgage Loan, any insurance
policy, including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the Mortgagor), in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses and
the proceeds from any Limited Purpose Surety Bond.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Distribution Amount: For each Class of Certificates, on any
Distribution Date, the Current Interest for such Class, as reduced by such
Class's share of Net Prepayment Interest Shortfalls, Relief Act Reductions and
the interest portion of Excess Losses. Any such shortfalls and losses shall be
allocated among all Classes of Certificates proportionately on the basis of the
Interest Distribution Amount otherwise payable thereon.
Interest-Only Certificates: Any of the Class X-1 and Class X-2
Certificates.
Interest Shortfall: As to any Class of Certificates and any
Distribution Date, (i) the amount by which the Interest Distribution Amount (as
reduced by any Net WAC Shortfalls) for such Class on such Distribution Date and
all prior Distribution Dates exceeds (ii) amounts distributed in respect thereof
to such Class on prior Distribution Dates.
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Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.
Latest Possible Maturity Date: December 2032.
LIBOR: With respect to the first Accrual Period, the Initial LIBOR
Rate. With respect to each subsequent Accrual Period, a per annum rate
determined on the LIBOR Determination Date in the following manner by the
Securities Administrator on the basis of the "Interest Settlement Rate" set by
the BBA for one-month United States dollar deposits, as such rates appear on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination
Date.
(a) If on such a LIBOR Determination Date, the BBA's Interest
Settlement Rate does not appear on the Telerate Page 3750 as of 11:00 a.m.
(London time), or if the Telerate Page 3750 is not available on such date, the
Securities Administrator will obtain such rate from Reuters' "page LIBOR 01" or
Bloomberg's page "BBAM." If such rate is not published for such LIBOR
Determination Date, LIBOR for such date will be the most recently published
Interest Settlement Rate. In the event that the BBA no longer sets an Interest
Settlement Rate, the Securities Administrator will designate an alternative
index that has performed, or that the Securities Administrator expects to
perform, in a manner substantially similar to the BBA's Interest Settlement
Rate. The Securities Administrator will select a particular index as the
alternative index only if it receives an Opinion of Counsel, which opinion shall
be an expense reimbursed from the Distribution Account, that the selection of
such index will not cause any of the REMICs to lose their classification as
REMICs for federal income tax purposes.
(b) The establishment of LIBOR by the Securities Administrator and the
Securities Administrator's subsequent calculation of the Certificate Interest
Rate applicable to the LIBOR Certificates for the relevant Accrual Period, in
the absence of manifest error, will be final and binding.
LIBOR Business Day: Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
LIBOR Certificate: Any Class A and Class B-1 Certificate.
LIBOR Certificate Cap: That portion of the Cap Agreement, which the
Securities Administrator shall account for as a discrete cap agreement pursuant
to Section 5.06 of this Agreement, having a notional amount equal at any time to
the lesser of (i) the aggregate of the Class Principal Amounts of the LIBOR
Certificates at such time, and (ii) the notional amount of the Cap Agreement at
such time.
LIBOR Determination Date: The second LIBOR Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit G.
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Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
related Servicer has certified (in accordance with its Servicing Agreement) that
it has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan including the final disposition of an REO
Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property.
Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any
date of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Lower Tier Interest: As described in the Preliminary Statement.
Lower Tier REMIC: As described in the Preliminary Statement.
Margin: As to each Mortgage Loan, the percentage amount set forth on
the related Mortgage Note added to the Index in calculating the Mortgage Rate
thereon.
Master Servicer: Wells Fargo Bank Minnesota, National Association, a
national banking association organized under the laws of the United States in
its capacity as Master Servicer and any Person succeeding as Master Servicer
hereunder or any successor in interest, or if any successor master servicer
shall be appointed as herein provided, then such successor master servicer.
Master Servicing Fee: With respect to any Distribution Date, all
investment earnings derived from funds on deposit in the Distribution Account
during the period from and including the Distribution Account Deposit Date in
the calendar month immediately preceding the month in which such Distribution
Date occurs, to but excluding the Distribution Account Deposit Date relating to
such Distribution Date.
Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on
the related Mortgage Note at which interest can accrue on such Mortgage Loan.
Moody's: Moody's Investors Service, Inc., or any successor in interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a
fee simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Custodian pursuant to the Custody
Agreement.
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Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 (including any
Replacement Loan and REO Property), including without limitation, each Mortgage
Loan listed on the Mortgage Loan Schedule, as amended from time to time.
Mortgage Loan Purchase and Sale Agreement: The Mortgage Loan Purchase
and Sale Agreement, dated as of December 1, 2002 between the Seller and
Depositor.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from,
the Trust Fund. Such schedule shall, among other things (i) designate the
Servicer servicing such Mortgage Loan and the applicable Servicing Fee Rate;
(ii) separately identify One-Month LIBOR Loans and Six-Month LIBOR Loans; and
(iii) separately identify Additional Collateral Mortgage Loans.
Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans.
Mortgaged Property: The underlying property, including any Additional
Collateral, securing a Mortgage Loan which, with respect to a Cooperative Loan,
is the related Cooperative Shares and Property Lease.
Mortgage Rate: As to any Mortgage Loan, the annual rate of interest
borne by the related Mortgage Notes.
Mortgagor: The obligor on a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan
or any other disposition of related Mortgaged Property, the related Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees and any
other accrued and unpaid servicing fees received and retained in connection with
the liquidation of such Mortgage Loan or Mortgaged Property.
Net Mortgage Rate: With respect to any Mortgage Loan and any
Distribution Date, the related Mortgage Rate as of the Due Date in the month
preceding the month of such Distribution Date reduced by the applicable
Servicing Fee Rate for such Mortgage Loan.
Net Prepayment Interest Shortfall: With respect to any Mortgage Loan
and any Distribution Date, the amount by which any Prepayment Interest Shortfall
for such date exceeds the amount payable by the Master Servicer and/or the
related Servicers in respect of such shortfall.
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Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the Due Date of the month preceding
the month of such Distribution Date, weighted on the basis of their outstanding
Stated Principal Balances (after giving effect to the Scheduled Payments due on
or before such Due Date and Principal Prepayments received prior to such Due
Date) at such time. When the term "Net WAC" is used herein with reference to
only the One-Month LIBOR Loans or only the Six-Month LIBOR Loans, such weighted
average shall be computed with reference solely to the Mortgage Loans in the
relevant group.
Net WAC Shortfall: With respect to any Distribution Date and any Class
of LIBOR Certificates, the sum of (i) the excess, if any, of (a) the amount of
Current Interest that would have been payable on such Class for such
Distribution Date if the Certificate Interest Rate for such Class as set forth
in the Preliminary Statement hereto were determined without regard to clause
(ii) in the definition thereof, over (b) the actual Current Interest payable on
such Class for such Distribution Date; (ii) any excess described in clause (i)
remaining unpaid from prior Distribution Dates; and (iii) interest for the
applicable Accrual Period on the amount described in clause (ii) above based on
the applicable Certificate Interest Rate (determined without regard to clause
(ii) in the definition thereof).
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Master Servicer and/or a Servicer
(as certified in an Officer's Certificate of the Servicer), which in the good
faith judgment of such party, shall not be ultimately recoverable by such party
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Non-U.S. Person: Any person other than a "United States person" within
the meaning of Section 7701(a)(30) of the Code.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Class Notional
Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: Any Class X-1 and Class X-2 Certificate.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by two Authorized Officers
of the Depositor or the Chairman of the Board, any Vice Chairman, the President,
any Vice President or any Assistant Vice President of the Master Servicer or the
Securities Administrator, and in each case delivered to the Trustee.
Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the
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Assistant Treasurers or Assistant Secretaries of a Servicer, or (ii) if provided
for herein, signed by a Servicing Officer, as the case may be, and delivered to
the Trustee or the Master Servicer, as required hereby.
One-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for one-month U.S. dollar deposits.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Trustee, the Securities Administrator or the Master
Servicer, as required hereby, and who may be in-house or outside counsel to the
Depositor, the Master Servicer, the Securities Administrator or the Trustee but
which must be Independent outside counsel with respect to any such opinion of
counsel concerning the transfer of any Residual Certificate or concerning
certain matters with respect to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the taxation, or the federal income tax status,
of each REMIC.
Original Applicable Credit Support Percentage: With respect to each
Class of Subordinate Certificates, the corresponding percentage set forth
opposite its Class designation: Class B-1 - 3.65%; Class B-2 - 2.15%; Class B-3
- - 1.35%; Class B-4 - 0.80%; Class B-5 - 0.55%; and Class B-6 - 0.40%.
Original Subordinate Principal Amount: The aggregate of the initial
Class Principal Amounts of the Classes of Subordinated Certificates.
Paying Agent: Any paying agent appointed pursuant to Section 3.08. The
initial Paying Agent shall be Wells Fargo Bank Minnesota, National Association,
for so long as it is acting as Securities Administrator under this Agreement.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than a Notional Certificate or the Class A-R
Certificate, the Percentage Interest evidenced thereby shall equal the initial
Certificate Principal Amount thereof divided by the initial Class Principal
Amount of all Certificates of the same Class. With respect to the Class A-R
Certificate, the Percentage Interest evidenced thereby shall be as specified on
the face thereof, or otherwise, be equal to 100%. With respect to any Notional
Certificate, the Percentage Interest evidenced thereby shall equal its initial
Notional Amount as set forth on the face thereof divided by the initial Class
Notional Amount of such Class.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided that such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as shall not result in the downgrading or withdrawal
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of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each Rating
Agency;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each Rating Agency rating such paper, or such lower rating as shall not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company,
but only if Moody's is not the applicable Rating Agency) are then rated
one of the two highest long-term and the highest short-term ratings of
each Rating Agency for such securities, or such lower ratings as shall
not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by the Rating Agencies, as evidenced by a
signed writing delivered by each Rating Agency;
(v) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating
Agencies at the time of the issuance of such agreements, as evidenced
by a signed writing delivered by each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (iv) above;
(viii) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the
two highest ratings of each Rating Agency (except if the Rating Agency
is Moody's, such rating shall be the highest commercial paper rating of
Moody's for any such series), or such lower rating as shall not result
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
(ix) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the
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highest applicable rating by each Rating Agency rating such fund or
such lower rating as shall not result in a change in the rating then
assigned to the Certificates by each Rating Agency including funds for
which the Trustee, the Master Servicer, the Securities Administrator or
any of its Affiliates is investment manager or adviser;
(x) short-term investment funds sponsored by any trust company
or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each applicable Rating Agency in their respective highest
applicable rating category or such lower rating as shall not result in
a change in the rating then specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency as
shall not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by the Rating Agencies; and
(xi) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to the Rating
Agencies as shall not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies;
provided, that no such instrument shall be a Permitted Investment if (i) such
instrument evidences the right to receive interest only payments with respect to
the obligations underlying such instrument or (ii) such instrument would require
the Depositor to register as an investment company under the Investment Company
Act of 1940, as amended.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan Assets Regulation: The Department of Labor regulation set forth in
29 C.F.R. 2510.3-101.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.
Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan.
Principal Distribution Amount: With respect to any Distribution Date,
the sum of (a) each Scheduled Payment of principal collected or advanced on the
Mortgage Loans (before taking into account any Deficient Valuations or Debt
Service Reductions) and due during the related Due Period, (b) that portion of
the Purchase Price representing principal of any Mortgage Loans purchased in
accordance with Section 2.04 hereof and received during the related
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Prepayment Period, (c) the principal portion of any Substitution Amount received
during the related Prepayment Period, (d) the principal portion of all Insurance
Proceeds received during the related Prepayment Period with respect to Mortgage
Loans that are not yet Liquidated Mortgage Loans, (e) the principal portion of
all Net Liquidation Proceeds received during the related Prepayment Period with
respect to Liquidated Mortgage Loans, (f) the principal portion of the proceeds
of any Additional Collateral with respect to the Mortgage Loans, (g) the
principal portion of all partial and full principal prepayments of Mortgage
Loans applied by the Servicers during the related Prepayment Period and (h) on
the Distribution Date on which the Trust Fund is to be terminated pursuant to
Article X hereof, the Redemption Price in respect of principal for the Mortgage
Pool.
Principal Prepayment: Any Mortgagor payment of principal or other
recovery of principal on a Mortgage Loan that is recognized as having been
received or recovered in advance of its scheduled Due Date and applied to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or the Servicing Agreement.
Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.
Pro Rata Senior Percentage: With respect to each Distribution Date, the
percentage equivalent of a fraction the numerator of which is the aggregate
Class Principal Amount of the Class or Classes of Senior Certificates
immediately prior to such Distribution Date and the denominator of which is the
Aggregate Stated Principal Balance for such Distribution Date.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Property, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated December 16, 2002, together
with the accompanying prospectus dated October 21, 2002, relating to the initial
sale of the Class A, Class B-1, Class B-2, Class B-3, Class X-1, Class X-2 and
Class A-R Certificates.
Purchase Agreements: Any mortgage purchase agreements listed in Exhibit
F hereto, as each such agreement may be amended or supplemented from time to
time as permitted hereunder.
Purchase Price: With respect to any Mortgage Loan required or permitted
to be purchased by the Seller or Depositor pursuant to this Agreement, by the
Servicers pursuant to the Servicing Agreements, or by the Seller pursuant to the
Purchase Agreements, an amount equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage Loan on the date of such purchase, and (ii)
accrued interest thereon at the applicable Net Mortgage Rate from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to Certificateholders, or
such other amount as may be specified in the related Servicing Agreement or
Purchase Agreement.
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Rating Agency: Each of Moody's, S&P and Fitch Ratings.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Liquidation Proceeds and the proceeds of any
Additional Collateral, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to
each Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation.
Record Date: As to any Distribution Date (i) with respect to the LIBOR
Certificates, the last Business Day preceding such Distribution Date (or the
Closing Date, in the case of the first Distribution Date) unless such
Certificates shall no longer be Book-Entry Certificates, in which case the
Record Date shall be the last Business Day of the month preceding the month of
such Distribution Date and (ii) in the case of all other Certificates (including
LIBOR Certificates that are subsequently reissued as Definitive Certificates),
the last Business Day of the month preceding the month of each Distribution
Date.
Redemption Date: Any Distribution Date on which Certificates may be
redeemed.
Redemption Price: With respect to any Class of Certificates to be
redeemed, an amount equal to 100% of the related Class Principal Amount of the
Certificates to be so redeemed, together with interest on such amount at the
applicable Certificate Interest Rate through the related Accrual Period (as
increased by any Interest Shortfalls but excluding any Unpaid Net WAC
Shortfalls), and including, in the case of the Redemption Price payable in
connection with the redemption and retirement of all of the Certificates, the
payment of all amounts (including, without limitation, all previously
unreimbursed Advances and Servicing Advances and accrued and unpaid Servicing
Fees) payable or reimbursable to the Trustee, the Master Servicer and the
Servicers pursuant to this Agreement and the Servicing Agreements, or to the
Custodian under the Custody Agreement (to the extent such amounts are not paid
to the Custodian by the Seller).
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Civil Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
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REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.
REMIC Provisions: The 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 regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Replacement Mortgage Loan: A mortgage loan substituted by the Seller
for a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form attached to the
Custody Agreement, (i) have a Stated Principal Balance, after deduction of the
principal portion of the Scheduled Payment due in the month of substitution, not
in excess of, and not more than 10% less than, the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) have a Maximum Rate not less than (and not more
than two percentage points greater than) the Maximum Rate of the Deleted
Mortgage Loan; (iii) have a gross margin not less than that of the Deleted
Mortgage Loan and, if Mortgage Loans equal to 1% or more of the balance of the
Mortgage Pool as of the Cut-off Date have become Deleted Mortgage Loans, not
more than two percentage points more than that of the Deleted Mortgage Loan;
(iv) have an Effective Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan; (v) have Adjustment Dates that are no more or less frequent than
the Deleted Mortgage Loan; (vi) have a remaining term to maturity no greater
than (and not more than one year less than that of) the Deleted Mortgage Loan;
(vii) not permit conversion of the related Mortgage Rate to a permanent fixed
Mortgage Rate; (viii) not be a Cooperative Loan unless the Deleted Mortgage Loan
was a Cooperative Loan; (ix) have the same or better FICO credit score; (x) have
an initial interest adjustment date no earlier than five months before (and no
later than five months after) the initial adjustment date of the Deleted
Mortgage Loan, (xi) comply with each representation and warranty set forth in
Article III of each Purchase Agreement; and (xii) shall be accompanied by an
Opinion of Counsel that such Replacement Mortgage Loan would not adversely
affect the REMIC status of the Trust Estate or would not otherwise be prohibited
by this Indenture.
Required Reserve Fund Deposit: For any Distribution Date, an amount
equal to the lesser of (i) the Current Interest for the Class X-1 and Class X-2
Certificates for such Distribution Date, and (ii) the amount required to
maintain the balance on deposit in the Reserve Fund in an amount equal to the
sum of (a) the Net WAC Shortfalls for such Distribution Date with respect to the
Class A and Class B-1 Certificates and (b) $10,000. For any Distribution Date
for which the Required Reserve Fund Deposit is less than the sum of the Current
Interest for the Class X-1 and Class X-2 Certificates for such Distribution
Date, the Class X-1 and Class X-2 Certificates shall each fund a portion of the
Required Reserve Fund Deposit in proportion to the relative amounts of Current
Interest for each such Class and such Distribution Date.
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Reserve Fund: A fund created as part of the Trust Fund pursuant to
Section 5.06 of this Agreement but which is not an asset of any of the REMICs.
Residual Certificate: The Class A-R and Class LT-R Certificate.
Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class B4, Class B5, Class B6 or Class LT-R
Certificate.
Restricted Global Security: As defined in Section 3.01(c).
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
SAIF: The Saving's Association Insurance Fund, or any successor
thereto.
Schedule of Exceptions: As defined in the Custody Agreement.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified in the Servicing Agreements, shall give effect
to any related Debt Service Reduction and any Deficient Valuation that affects
the amount of the monthly payment due on such Mortgage Loan.
Seller: RWT Holdings, Inc., a Delaware corporation.
Senior Certificate: Any one of the Class A, Class X-1, Class X-2 or
Class A-R Certificates.
Securities Administrator: Wells Fargo Bank Minnesota, National
Association, not in its individual capacity but solely as Securities
Administrator, or any successor in interest, or if any successor Securities
Administrator shall be appointed as herein provided, then such successor
Securities Administrator.
Senior Percentage: Except as provided in this definition, with respect
to any Distribution Date before January 2013, 100%. The Senior Percentage for
any Distribution Date occurring (i) before the Distribution Date in January 2013
but in or after January 2006 on which the Two Times Test is satisfied, or (ii)
in or after January 2013, is the Pro Rata Senior Percentage. If the Two Times
Test is satisfied with respect to any Distribution Date prior to the
Distribution Date in January 2006, the Senior Percentage is the Pro Rata Senior
Percentage plus 50% of an amount equal to 100% minus the Pro Rata Senior
Percentage. With respect to any Distribution Date after the Senior Termination
Date, the Senior Percentage will equal zero. If on any Distribution Date the
allocation to the Senior Certificates then entitled to distributions of
principal of full and
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partial principal prepayments and other amounts in the percentage required above
would reduce the sum of the Class Principal Amounts of those Certificates to
below zero, the Senior Percentage for such Distribution Date shall be limited to
the percentage necessary to reduce that Class Principal Amount to zero.
Senior Prepayment Percentage: With respect to any Distribution Date
during the ten years beginning on the first Distribution Date, 100%. Except as
provided herein, the Senior Prepayment Percentage for each Distribution Date
occurring on or after the tenth anniversary of the first Distribution Date shall
be as follows: (i) from January 2013 through December 2013, the Senior
Percentage plus 70% of the Subordinate Percentage for that Distribution Date;
(ii) from January 2014 through December 2014, the Senior Percentage plus 60% of
the Subordinate Percentage for that Distribution Date; (iii) from January 2015
through December 2015, the Senior Percentage plus 40% of the Subordinate
Percentage for that Distribution Date; (iv) from January 2016 through December
2016, the Senior Percentage plus 20% of the Subordinate Percentage for that
Distribution Date; and (v) from and after January 2017, the Senior Percentage
for that Distribution Date; provided, however, that there shall be no reduction
in the Senior Prepayment Percentage unless both Step Down Conditions are
satisfied; and provided, further, that if on any such Distribution Date the Pro
Rata Senior Percentage exceeds the initial Pro Rata Senior Percentage, the
Senior Prepayment Percentage for that Distribution Date shall again equal 100%.
Notwithstanding the above, if on any Distribution Date the Two Times
Test is satisfied, the Senior Prepayment Percentage shall equal the Senior
Percentage for such Distribution Date. In addition, if on any Distribution Date
the allocation to the Senior Certificates then entitled to distributions of
principal of full and partial principal prepayments and other amounts in the
percentage required above would reduce the sum of the Class Principal Amounts of
those Certificates to below zero, the Senior Prepayment Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce that
Class Principal Amount to zero.
Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of:
(1) the Senior Percentage of all amounts described in clauses
(a) through (d) of the definition of "Principal Distribution Amount"
for that Distribution Date;
(2) with respect to each Mortgage Loan which became a
Liquidated Mortgage Loan during the related Prepayment Period, the
lesser of
(x) the Senior Percentage of the Stated Principal
Balance of that Mortgage Loan and
either
(y) the Senior Prepayment Percentage of the amount of
the Net Liquidation Proceeds allocable to principal received
with respect to that Mortgage Loan.
or
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(z) if an Excess Loss was sustained with respect to
such Liquidated Mortgage Loan during such related Prepayment
Period, the Senior Percentage of the amount of Net Liquidation
Proceeds allocable to principal received with respect to that
Mortgage Loan; and
(3) the Senior Prepayment Percentage of the amounts described
in clause (g) of the definition of "Principal Distribution Amount;"
provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan, the
Senior Principal Distribution Amount shall be reduced on such Distribution Date
by the Senior Percentage of the principal portion of such Bankruptcy Loss.
Senior Termination Date: The Distribution Date when the aggregate of
the Class Certificate Principal Balances of the Senior Certificates has been
reduced to zero.
Servicers: Each Servicer under a Servicing Agreement.
Servicer Advance: A "Servicing Advance" as defined in the applicable
Servicing Agreement.
Servicing Agreement: The agreements listed in Exhibit E, as each such
agreement has been modified by the related Acknowledgement and as it may be
amended or supplemented from time to time as permitted thereby.
Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.
Servicing Fee Rate: With respect to each Mortgage Loan and any
Distribution Date, the rate specified in the related Servicing Agreement.
Servicing Officer: Any officer of the Servicers involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Master Servicer by the Servicers on the Closing Date pursuant to the
Servicing Agreements, as such list may from time to time be amended.
Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property
on account of direct physical loss, as reported by the related Servicer to the
Master Servicer, but not including (i) any loss of a type covered by a hazard
insurance policy or a flood insurance policy required to be maintained with
respect to such Mortgaged Property to the extent of the amount of such loss
covered thereby, or (ii) any loss caused by or resulting from:
(a) normal wear and tear;
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(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Master Servicer, a Servicer or any of their
agents or employees (without regard to any portion of the loss
not covered by any errors and omissions policy);
(c) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues
and then only for the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled
or uncontrolled, and whether such loss be direct or indirect,
proximate or remote or be in whole or in part caused by,
contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual,
impending or expected attack:
1. by any government or sovereign power, de jure or de
facto, or by any authority maintaining or using
military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority
or forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power
or action taken by governmental authority in hindering,
combating or defending against such an occurrence, seizure or
destruction under quarantine or customs regulations,
confiscation by order of any government or public authority or
risks of contraband or illegal transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $11,209,932. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the Stated Principal Balances, (ii) twice the Stated Principal
Balance of the largest Mortgage Loan and (iii) the aggregate of the Stated
Principal Balances of the Mortgage Loans secured by Mortgaged Properties located
in the single five-digit ZIP code area in the State of California having the
highest aggregate Stated Principal Balance of any such ZIP code area and (b) the
Special Hazard Loss Coverage Amount as of the Closing Date less the amount, if
any, of Special Hazard Losses allocated to the Certificates since the Closing
Date; provided, however, that the Special Hazard Loss Coverage Amount may also
be reduced pursuant to a letter from each Rating Agency to the Trustee and the
Securities Administrator to the effect that any such reduction shall not result
in the downgrading of the then current ratings assigned by such Rating Agency to
the Classes of Senior Certificates. All Stated Principal Balances for the
purpose of the definition will be calculated as of the first day of the calendar
month preceding the month of such Distribution Date after giving effect to
Scheduled Payments on the Mortgage Loans then due, whether paid or not.
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Special Hazard Loss Coverage Termination Date: The date on which the
Special Hazard Loss Coverage Amount is reduced to zero.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous partial Principal Prepayments
and Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Mortgage Loan) and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related Mortgagor.
Step Down Conditions: As of the first Distribution Date as to which any
decrease in any Senior Prepayment Percentage applies, (i) the outstanding Stated
Principal Balance of all Mortgage Loans 60 days or more Delinquent (including
Mortgage Loans in REO and foreclosure) (averaged over the preceding six month
period), as a percentage of the aggregate of the Class Principal Amounts of the
Classes of Subordinate Certificates on such Distribution Date, does not equal or
exceed 50% and (ii) cumulative Realized Losses with respect to the Mortgage
Loans do not exceed (a) with respect to each Distribution Date from January 2013
through December 2013, 30% of the Original Subordinate Principal Amount, (b)
with respect to each Distribution Date from January 2014 through December 2014,
35% of the Original Subordinate Principal Amount, (c) with respect to each
Distribution Date from January 2015 through December 2015, 40% of the Original
Subordinate Principal Amount, (d) with respect to each Distribution Date from
January 2016 through December 2016, 45% of the Original Subordinate Principal
Amount and (e) with respect to each Distribution Date from and after January
2017, 50% of the Original Subordinate Principal Amount.
Subordinate Certificate: Any of the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 or Class B-6 Certificates.
Subordinate Certificate Writedown Amount: The amount described in
Section 5.03(b)(iii).
Subordinate Class Percentage: As to any Distribution Date and any Class
of Subordinate Certificates, a fraction, expressed as a percentage, the
numerator of which is the Class Principal Amount of such Class on such date, and
the denominator of which is the aggregate Class Principal Amount of all Classes
of Subordinate Certificates on such date.
Subordinate Percentage: With respect to each Distribution Date, the
difference between 100% and the Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date, the difference between 100% and the Senior Prepayment Percentage for such
Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the sum of:
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(1) the Subordinate Percentage of all amounts described in
clauses (a) through (d) of the definition of "Principal Distribution
Amount" for that Distribution Date;
(2) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the related Prepayment Period the
amount of the Net Liquidation Proceeds allocated to principal received
with respect thereto remaining after application thereof pursuant to
clause (2) of the definition of "Senior Principal Distribution Amount"
for that Distribution Date, up to the Subordinate Percentage of the
Stated Principal Balance of such Mortgage Loan; and
(3) the Subordinate Prepayment Percentage of all amounts
described in clause (g) of the definition of "Principal Distribution
Amount" for that Distribution Date;
provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan
Payment, the Subordinate Principal Distribution Amount shall be reduced on such
Distribution Date by the Subordinate Percentage of the principal portion of such
Bankruptcy Loss.
Substitution Amount: As defined in the second paragraph of Section
2.04(b).
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Holder of the Class LT-R Certificate.
Telerate Page 3750: The display currently so designated as "Page 3750"
on the Bridge Telerate Service (or such other page selected by the Securities
Administrator as may replace Page 3750 on that service for the purpose of
displaying daily comparable rates on prices).
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans and all interest and principal received thereon
on or after the Cut-off Date (other than Scheduled Payments due on or prior to
the Cut-off Date), the Depositor's rights assigned to the Trustee under the
Purchase Agreements and the Servicing Agreements, as modified by the
Acknowledgements and the Mortgage Loan Purchase and Sale Agreement, the
Insurance Policies relating to the Mortgage Loans, the Cap Agreement, all cash,
instruments or property held or required to be held in the Custodial Accounts
and the Distribution Account, property that secured a Mortgage Loan, the pledge,
control and guaranty agreements and Limited Purpose Surety Bond relating to the
Additional Collateral Mortgage Loans and the Reserve Fund.
Trustee: HSBC Bank USA, a New York banking corporation organized and
existing under the laws of the State of New York and any Person succeeding the
Trustee hereunder, or if any successor trustee or any co-trustee shall be
appointed as herein provided, then such successor trustee and such co-trustee,
as the case may be.
Trustee Mortgage Files: With respect to each Mortgage Loan, the
Mortgage Documents to be retained in the custody and possession of the Trustee
or Custodian on behalf of the Trustee.
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Two Times Test: As to any Distribution Date, (i) the Subordinate
Percentage is at least two times the Subordinate Percentage as of the Closing
Date; (ii) the aggregate of the Stated Principal Balances of all Mortgage Loans
Delinquent 60 days or more (including Mortgage Loans in REO and foreclosure)
(averaged over the preceding six-month period), as a percentage of the aggregate
of the Class Principal Amount of the Subordinate Certificates on such
Distribution Date, does not equal or exceed 50%; and (iii) on or prior to the
Distribution Date in December 2005, cumulative Realized Losses with respect to
the Mortgage Loans do not exceed 20% of the Original Subordinate Principal
Amount or, on or after the Distribution Date in January 2006, cumulative
Realized Losses with respect to the Mortgage Loans do not exceed 30% of the
Original Subordinate Principal Amount.
UCC: The Uniform Commercial Code as enacted in the relevant
jurisdiction.
Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-59
(Exemption Application No. D-8374), as amended by PTE 97-34 (Exemption
Application No. D-10245 and D-10246), as amended by PTE 2000-58 (Exemption
Application No. D-10829), as amended by PTE 2002-41 (Exemption Application No.
D-11077, 67 Fed. Reg. 54487 (2002)), or any substantially similar administrative
exemption granted by the U.S. Department of Labor to the Underwriters.
Underwriters: Greenwich Capital Markets, Inc., Morgan Stanley & Co.
Incorporated, Bear, Stearns and Co. Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
Underwriting Agreement: The Underwriting Agreement, dated December 16,
2002, among the Seller, the Depositor and the Underwriters.
Uniform Commercial Code: The Uniform Commercial Code as in effect in
any applicable jurisdiction from time to time.
Unpaid Net WAC Shortfall: With respect to any Distribution Date and any
Class of LIBOR Certificates, the aggregate of all Net WAC Shortfalls with
respect to such Certificate remaining unpaid from previous Distribution Dates,
plus interest accrued thereon at the applicable Certificate Interest Rate
determined without regard to clause (ii) of the definition therefor to the
extent not paid on prior Distribution Dates.
Upper Tier REMIC: As described in the Preliminary Statement.
Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
98.00% of all Voting Interests shall be allocated to the Class A, Class A-R,
Class B1, Class B2, Class B3, Class B4, Class B5 and Class B6 Certificates.
Voting Interests shall be allocated among such Certificates (other than the
Class A-R Certificates) based on the product of (i) 98% and (ii) the fraction,
expressed as a percentage, the numerator of which is the aggregate Class
Principal Amounts for each Class then outstanding and the denominator of which
is the Aggregate Stated Principal Balance outstanding, and the remainder of such
percentage of Voting Interests shall be allocated to the Class A-R Certificates.
At all times during the term of this Agreement, 2.00% of all Voting Interests
shall be allocated among the
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Class X-1 and Class X-2 Certificates, while they remain outstanding in
proportion to their relative Class Notional Amounts. Voting Interests shall be
allocated among the Certificates within each such Class in proportion to their
Certificate Principal Amounts or Percentage Interests.
Section 1.02 Calculations Respecting Mortgage Loans.
Calculations required to be made pursuant to this Agreement with
respect to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans and payments to be made to
the Securities Administrator as supplied to the Securities Administrator by the
Master Servicer. The Securities Administrator shall not be required to
recompute, verify or recalculate the information supplied to it by the Master
Servicer or any Servicer.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01 Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby transfer, assign, set over, deposit with and otherwise
convey to the Trustee, without recourse, subject to Sections 2.02 and 2.04, in
trust, all the right, title and interest of the Depositor in and to the Trust
Fund. Such conveyance includes, without limitation, (i) the Mortgage Loans,
including the right to all payments of principal and interest received on or
with respect to the Mortgage Loans on and after the Cut-off Date (other than
Scheduled Payments due on or before such date), and all such payments due after
such date but received prior to such date and intended by the related Mortgagors
to be applied after such date; (ii) all of the Depositor's right, title and
interest in and to all amounts from time to time credited to and the proceeds of
the Distribution Account, any Custodial Accounts or any Escrow Account
established with respect to the Mortgage Loans; (iii) all of the Depositor's
rights under the Purchase Agreements and the Servicing Agreements as modified by
the Acknowledgements and the Mortgage Loan Purchase and Sale Agreement; (iv) all
of the Depositor's right, title or interest in REO Property and the proceeds
thereof; (v) all of the Depositor's rights under any Insurance Policies related
to the Mortgage Loans; (vi) the Cap Agreement; and (vii) the Depositor's
security interest in any collateral pledged to secure the Mortgage Loans,
including the Mortgaged Properties and any Additional Collateral relating to the
Additional Collateral Mortgage Loans, including, but not limited to, the pledge,
control and guaranty agreements and the Limited Purpose Surety Bond and any
proceeds of the foregoing, to have and to hold, in trust; and the Trustee
declares that, subject to the review provided for in Section 2.02, it has
received and shall hold the Trust Fund, as trustee, in trust, for the benefit
and use of the Holders of the Certificates and for the purposes and subject to
the terms and conditions set forth in this Agreement, and, concurrently with
such receipt, has caused to be executed, authenticated and delivered to or upon
the order of the
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Depositor, in exchange for the Trust Fund, Certificates in the authorized
denominations evidencing the entire ownership of the Trust Fund.
The foregoing sale, transfer, assignment, set-over, deposit and
conveyance does not and is not intended to result in the creation or assumption
by the Trustee of any obligation of the Depositor, the Seller or any other
Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto except as specifically set forth therein.
The Depositor hereby directs the Trustee, solely in its capacity as
Trustee hereunder, to execute and deliver, concurrently with the execution and
delivery of this Agreement, the Cap Agreement. The Trustee shall have no duty to
determine the adequacy of the Cap Agreement and it shall have no duty or
responsibility to enter into any other interest rate cap agreement upon the
expiration or termination of the Cap Agreement.
In connection with such transfer and assignment of the Mortgage Loans,
the Depositor does hereby deliver to, and deposit with, or cause to be delivered
to and deposited with, the Custodian acting on the Trustee's behalf, the
following documents or instruments with respect to each Mortgage Loan (each a
"Trustee Mortgage File") so transferred and assigned:
(i) with respect to each Mortgage Loan, the original Mortgage
Note endorsed without recourse in proper form to the order of the
Trustee, or in blank (in each case, with all necessary intervening
endorsements, as applicable);
(ii) with respect to each Mortgage Loan (other than a
Cooperative Loan), the original mortgage, deed of trust or other
instrument creating a first lien on the underlying property securing
the Mortgage Loan and bearing evidence that such instrument has been
recorded in the appropriate jurisdiction where the Mortgaged Property
is located (or, in lieu of the original of the Mortgage, a true copy of
the Mortgage certified by the originator, or a duplicate or conformed
copy of the Mortgage, together with a certificate of either the closing
attorney or an officer of the title insurer that issued the related
title insurance policy, certifying that such copy represents a true and
correct copy of the original and that such original has been or is
currently submitted to be recorded in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is
located);
(iii) with respect to each Mortgage Loan (other than a
Cooperative Loan), the Assignment of Mortgage in form and substance
acceptable for recording in the relevant jurisdiction, such assignment
being either (A) in blank, without recourse, or (B) or endorsed to
"HSBC Bank USA, as Trustee of the Sequoia Mortgage Trust 12, Mortgage
Pass-Through Certificates, without recourse."
(iv) with respect to each Mortgage Loan (other than a
Cooperative Loan), the originals or certified copies of all Intervening
Assignments of the Mortgage, if any, with evidence of recording
thereon, showing a complete chain of title to the last endorsee,
including any warehousing assignment;
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(v) with respect to each Mortgage Loan (other than a
Cooperative Loan), any assumption, modification, written assurance,
substitution, consolidation, extension or guaranty agreement, if
applicable;
(vi) with respect to each Mortgage Loan (other than a
Cooperative Loan), the original policy of title insurance (or a true
copy thereof) with respect to any such Mortgage Loan, or, if such
policy has not yet been delivered by the insurer, the title commitment
or title binder to issue same; and
(vii) if the Mortgage Note or Mortgage or any other material
document or instrument relating to the Mortgage Loan has been signed by
a person on behalf of the Mortgagor, the original power of attorney or
other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so
required, in the appropriate jurisdiction where the Mortgaged Property
is located (or, in lieu thereof, a duplicate or conformed copy of such
instrument, together with a certificate of receipt from the recording
office, certifying that such copy represents a true and complete copy
of the original and that such original has been or is currently
submitted to be recorded in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located).
(viii) with respect to each Mortgage Loan which constitutes a
Cooperative Mortgage Loan:
(a) the original loan and security agreement;
(b) the original Cooperative Shares;
(c) a stock power executed in blank by the person in
whose name the Cooperative Shares are issued;
(d) the Proprietary Lease or occupancy agreement
accompanied by an assignment in blank of such proprietary
lease;
(e) the recognition agreement executed by the
Cooperative Corporation, which requires the Cooperative
Corporation to recognize the rights of the lender and its
successors in interest and assigns, under the cooperative;
(f) UCC-1 financing statements with recording
information thereon from the appropriate governmental
recording offices if necessary to perfect the security
interest of the Cooperative Mortgage Loan under the Uniform
Commercial Code in the jurisdiction in which the cooperative
project is located, accompanied by UCC-3 financing statements
executed in blank for recordation of the change in the secured
party thereunder.
(g) the original policy of title insurance or with
respect to any such Cooperative Mortgage Loan, if such policy
has not yet been delivered by the insurer, the title
commitment or title binder to issue same; and
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(h) Any guarantees, if applicable.
(b) The Depositor shall cause Assignments of Mortgage with respect to
each Mortgage Loan other than a Cooperative Mortgage Loan to be completed in the
form specified in Section 2.01(a)(iii) above within 30 days of the Closing Date
for purpose of their recording; provided, however, that such Assignments need
not be recorded if, on or prior to the Closing Date, the Depositor delivers, at
its own expense, an Opinion of Counsel (which must be Independent counsel)
acceptable to the Trustee, and the Rating Agencies, to the effect that recording
in such states is not required to protect the Trustee's interest in the related
Mortgage Loans. Subject to the preceding sentence, as soon as practicable after
the Closing Date (but in no event more than 270 days thereafter except to the
extent delays are caused by the applicable recording office), the Depositor at
its own expense and with the cooperation of the applicable Servicer, shall cause
to be properly recorded by each Servicer in each public recording office where
the related Mortgages are recorded each Assignment of Mortgage endorsed in the
form described in Section 2.01(a)(iii) above with respect to each such Mortgage
Loan.
(c) In instances where a title insurance policy is required to be
delivered to the Trustee or the Custodian on behalf of the Trustee under
Sections 2.01(a)(vi) or 2.01(a)(viii)(g) above and is not so delivered, the
Depositor will provide a copy of such title insurance policy to the Trustee, or
to the Custodian on behalf of the Trustee, as promptly as practicable after the
execution and delivery hereof, but in any case within 180 days of the Closing
Date.
(d) For Mortgage Loans (if any) that have been prepaid in full after
the Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, herewith delivers to the Trustee, or to the
Custodian on behalf of the Trustee, an Officer's Certificate which shall include
a statement to the effect that all amounts received in connection with such
prepayment that are required to be deposited in the Distribution Account
pursuant to Section 4.01 have been so deposited. All original documents that are
not delivered to the Trustee or to the Custodian on behalf of the Trustee shall
be held by the Master Servicer or the applicable Servicer in trust for the
benefit of the Trustee and the Certificateholders.
Section 2.02 Acceptance of Trust Fund by Trustee; Review of
Documentation for Trust Fund.
(a) The Trustee, by execution and delivery hereof, acknowledges receipt
by it or by the Custodian on its behalf of the Trustee Mortgage Files pertaining
to the Mortgage Loans listed on the Mortgage Loan Schedule, subject to review
thereof by the Custodian on behalf of the Trustee in accordance with Section
4(a) of the Custody Agreement (a form of which is attached hereto as Exhibit D).
The Custodian on behalf of the Trustee, will execute and deliver to the Trustee
and the Depositor an Initial Trust Receipt and Schedule of Exceptions, on the
Closing Date in the forms required by the Custody Agreement.
(b) Within 270 days after the Closing Date, the Custodian on behalf of
the Trustee, will, for the benefit of Holders of the Certificates, review each
related Trustee Mortgage File to ascertain that all required documents set forth
in Section 2.01 have been received and appear on their face to conform with the
requirements set forth in Section 4(a) and 4(b) of the Custody Agreement.
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(c) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee, the Custodian or the
Certificateholders of any unsatisfied duty, claim or other liability on any
Mortgage Loan or to any Mortgagor.
(d) Each of the parties hereto acknowledges that the Custodian shall
perform the applicable review of the Mortgage Loans and respective
certifications as provided in the Custody Agreement.
(e) Upon execution of this Agreement, the Depositor hereby delivers to
the Trustee and the Trustee acknowledges receipt of the Acknowledgements,
together with the related Purchase Agreement and the Servicing Agreements.
Section 2.03 Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Trustee, for
the benefit of the Certificateholders and to the Master Servicer and the
Securities Administrator as of the Closing Date or such other date as is
specified, that:
(i) the Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and has full corporate power and authority to own its
property, to carry on its business as presently conducted, to enter
into and perform its obligations under this Agreement, and to create
the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Depositor; neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on the Depositor or its properties or the
certificate of incorporation or bylaws of the Depositor;
(iii) the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency,
except such as has been obtained, given, effected or taken prior to the
date hereof;
(iv) this Agreement has been duly executed and delivered by
the Depositor and, assuming due authorization, execution and delivery
by the Trustee, the Master Servicer and the Securities Administrator,
constitutes a valid and binding obligation of the Depositor enforceable
against it in accordance with its terms except as such enforceability
may be subject to (A) applicable bankruptcy and insolvency laws and
other similar laws affecting the enforcement of the rights of creditors
generally and (B) general principles of equity regardless of whether
such enforcement is considered in a proceeding in equity or at law;
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(v) there are no actions, suits or proceedings pending or, to
the knowledge of the Depositor, threatened or likely to be asserted
against or affecting the Depositor, before or by any court,
administrative agency, arbitrator or governmental body (A) with respect
to any of the transactions contemplated by this Agreement or (B) with
respect to any other matter which in the judgment of the Depositor will
be determined adversely to the Depositor and will if determined
adversely to the Depositor materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or
adversely affect its ability to perform its obligations under this
Agreement;
(vi) immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Depositor was the sole owner of
record and holder of each Mortgage Loan, and the Depositor had good and
marketable title thereto, and had full right to transfer and sell each
Mortgage Loan to the Trustee free and clear, subject only to (1) liens
of current real property taxes and assessments not yet due and payable
and, if the related Mortgaged Property is a condominium unit, any lien
for common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related
Mortgaged Property is located and specifically referred to in the
lender's title insurance policy or attorney's opinion of title and
abstract of title delivered to the originator of such Mortgage Loan,
and (3) such other matters to which like properties are commonly
subject which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by
the Mortgage, of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest, and had full right and
authority, subject to no interest or participation of, or agreement
with, any other party, to sell and assign each Mortgage Loan pursuant
to this Agreement;
(vii) This Agreement creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code (the
"UCC"), in the Mortgage Loans in favor of the Trustee, which security
interest is prior to all other liens, and is enforceable as such
against creditors of and purchasers from the Depositor;
(viii) The Mortgage Loans constitute "instruments" within the
meaning of the applicable UCC;
(ix) All original executed copies of each Mortgage Note that
constitute or evidence the Mortgage Loans have been delivered to the
Custodian;
(x) Other than the security interest granted to the Trustee
pursuant to this Agreement, the Depositor has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the
Mortgage Loans. The Depositor has not authorized the filing of and is
not aware of any financing statement against the Depositor that
includes a description of the collateral covering the Mortgage Loans
other than a financing statement relating to the security interest
granted to the Trustee hereunder or that has been terminated. The
Depositor is not aware of any judgment or tax lien filings against the
Depositor;
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(xi) None of the Mortgage Loans have any marks or notations
indicating that such Mortgage Loans have been pledged, assigned or
otherwise conveyed to any Person other than the Trustee; and
(xii) The Depositor has received all consents and approvals
required by the terms of the Mortgage Loans to convey the Mortgage
Loans hereunder to the Trustee.
The foregoing representations made in this Section 2.03 shall survive
the termination of this Agreement and shall not be waived by any party hereto
Section 2.04 Discovery of Breach; Repurchase or Substitution of
Mortgage Loans.
(a) Pursuant to Sections 2(b) and 2(d) of the Mortgage Loan Purchase
and Sale Agreement, the Seller has made certain representations and warranties
as to the characteristics of the Mortgage Loans (set forth in Schedule B of this
Agreement) as of the Closing Date and the conveyance thereof from the Seller to
the Depositor, for the benefit of the Trustee and the Certificateholders and the
Seller has agreed to comply with the provisions of this Section 2.04 in respect
of a breach of any of such representations and warranties.
It is understood and agreed that such representations and warranties
set forth in Section 2(b) and 2(d) of the Mortgage Loan Purchase and Sale
Agreement shall survive delivery of the Trustee Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement. Upon discovery by the Depositor or
receipt of written notice of any materially defective document in, or, following
the date of delivery to the Trustee of a Custodian's Final Trust Receipt as
required under the Custody Agreement, that a document is missing from, a Trustee
Mortgage File, or discovery by the Depositor or the Seller of the breach by the
Seller of any representation or warranty under the Mortgage Loan Purchase and
Sale Agreement in respect of any Mortgage Loan which materially adversely
affects the value of that Mortgage Loan or the interest therein of the
Certificateholders (a "Defective Mortgage Loan") (each of such parties hereby
agreeing to give written notice thereof to the Trustee and the other of such
parties), the Trustee, or its designee, shall promptly notify the Depositor in
writing of such defective or missing document or breach and request that the
Depositor deliver such missing document or cure or cause the cure of such defect
or breach within 90 days from the date that the Depositor discovered or was
notified of such missing document, defect or breach, and if the Depositor does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the Trustee shall enforce the Seller's obligation
under the Mortgage Loan Purchase and Sale Agreement and cause the Seller to
repurchase that Mortgage Loan from the Trust Fund at the Purchase Price on or
prior to the Determination Date following the expiration of such 90-day period
(subject to Section 2.04(b) below); provided, however, that, in connection with
any such breach that could not reasonably have been cured within such 90-day
period, if the Seller shall have commenced to cure such breach within such
90-day period, the Seller shall be permitted to proceed thereafter diligently
and expeditiously to cure the same within an additional 90-day period. The
Purchase Price for the repurchased Mortgage Loan shall be deposited in the
related Distribution Account, and the Trustee, or its designee, upon receipt of
written certification from the Securities Administrator of such deposit, shall
release to the Seller the related Trustee Mortgage File and shall execute and
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deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranties, as either party shall furnish to it and
as shall be necessary to vest in such party any Mortgage Loan released pursuant
hereto and the Trustee, or its designee, shall have no further responsibility
with regard to such Trustee Mortgage File (it being understood that the Trustee
shall have no responsibility for determining the sufficiency of such assignment
for its intended purpose). In lieu of repurchasing any such Mortgage Loan as
provided above, either party may cause such Mortgage Loan to be removed from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Replacement Mortgage Loans in the manner and subject to
the limitations set forth in Section 2.04(b) below. It is understood and agreed
that the obligation of the Seller to cure or to repurchase (or to substitute
for) any Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy against the such party respecting
such omission, defect or breach available to the Trustee on behalf of the
Certificateholders.
(b) Any substitution of Replacement Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.04(a) above must be effected prior to the last
Business Day that is within two years after the Closing Date. As to any Deleted
Mortgage Loan for which the Seller substitutes a Replacement Mortgage Loan or
Loans, such substitution shall be effected by delivering to the Custodian, on
behalf of the Trustee, for such Replacement Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, together with an Officers'
Certificate stating that each such Replacement Mortgage Loan satisfies the
definition thereof and specifying the Substitution Amount (as described below),
if any, in connection with such substitution. The Custodian shall acknowledge
receipt for such Replacement Mortgage Loan and, within 45 days thereafter, shall
review such Mortgage Documents as specified in the Custody Agreement and deliver
to the Trustee and the Depositor, with respect to such Replacement Mortgage
Loans, a certification substantially in the form of a revised Trust Receipt,
with any exceptions noted thereon. Within one year of the date of substitution,
the Custodian shall deliver to the Trustee and the Depositor a certification
substantially in the form of a revised Final Trust Receipt, with respect to such
Replacement Mortgage Loans for which it acts as Custodian, with any exceptions
noted thereon. Monthly Payments due with respect to Replacement Mortgage Loans
in the month of substitution shall not be included as part of the Trust Fund and
shall be retained by the Seller. For the month of substitution, distributions to
Certificateholders shall reflect the collections and recoveries in respect of
such Deleted Mortgage in the Due Period preceding the month of substitution and
the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. Upon such substitution, such
Replacement Mortgage Loan shall constitute part of the Trust Fund and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase and Sale Agreement, including all representations and warranties
thereof included in the Mortgage Loan Purchase and Sale Agreement, in each case
as of the date of substitution.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the related Servicer
shall determine the excess (each, a "Substitution Amount"), if any, by which the
aggregate Purchase Price of all such Deleted Mortgage Loans exceeds the
aggregate Stated Principal Balance of the Replacement Mortgage
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Loans replacing such Deleted Mortgage Loans, together with one month's interest
on such excess amount at the applicable Net Mortgage Rate. On the date of such
substitution, the Seller shall deliver or cause to be delivered to the Servicer
for deposit in the Custodial Account an amount equal to the related Substitution
Amount, if any, and the Custodian, on behalf of the Trustee, upon receipt of the
related Replacement Mortgage Loan or Loans and certification by the Servicer of
such deposit, shall release to the Seller the related Trustee Mortgage File or
Files and shall execute and deliver such instruments of transfer or assignment,
in each case without recourse, as the Seller shall deliver to it and as shall be
necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the Securities Administrator an Opinion of Counsel to the effect
that such substitution (either specifically or as a class of transactions) shall
not cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) either REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding. If such
Opinion of Counsel can not be delivered, then such substitution may only be
effected at such time as the required Opinion of Counsel can be given.
(c) Upon discovery by the Seller, the Depositor or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties. In connection
therewith, the applicable party shall repurchase or, subject to the limitations
set forth in Section 2.04(b), substitute one or more Replacement Mortgage Loans
for the affected Mortgage Loan within 90 days of the earlier of discovery or
receipt of such notice with respect to such affected Mortgage Loan. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 2.04(a) above. The Trustee shall re-convey 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.
(d) The Seller indemnifies and holds the Trust Fund, the Master
Servicer, the Securities Administrator, the Trustee, the Depositor and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Master
Servicer, the Securities Administrator, the Depositor and any Certificateholder
may sustain in connection with any actions of such party relating to a
repurchase of a Mortgage Loan other than in compliance with the terms of this
Section 2.04 and the Mortgage Loan Purchase and Sale Agreement, to the extent
that any such action causes (i) any federal or state tax to be imposed on the
Trust Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (ii) any REMIC formed
hereby to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
Section 2.05 [Reserved]
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Section 2.06 Grant Clause.
(a) It is intended that the conveyance of the Depositor's right, title
and interest in and to property constituting the Trust Fund pursuant to this
Agreement shall constitute, and shall be construed as, a sale of such property
and not a grant of a security interest to secure a loan. However, if such
conveyance is deemed to be in respect of a loan, it is intended that: (1) the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement; (2) the Depositor hereby grants to the Trustee for the
benefit of the Holders of the Certificates a first priority security interest in
all of the Depositor's right, title and interest in, to and under, whether now
owned or hereafter acquired, the Trust Fund and all proceeds of any and all
property constituting the Trust Fund to secure payment of the Certificates; and
(3) this Agreement shall constitute a security agreement under applicable law.
If such conveyance is deemed to be in respect of a loan and the trust created by
this Agreement terminates prior to the satisfaction of the claims of any Person
holding any Certificate, the security interest created hereby shall continue in
full force and effect and the Trustee shall be deemed to be the collateral agent
for the benefit of such Person, and all proceeds shall be distributed as herein
provided.
(b) The Depositor shall, to the extent consistent with this Agreement,
take such reasonable actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans and
the other property described above, 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 this Agreement. The Depositor will, at
its own expense, make all initial filings on or about the Closing Date and shall
forward a copy of such filing or filings to the Trustee. Without limiting the
generality of the foregoing, the Depositor shall prepare and forward for filing,
or shall cause to be forwarded for filing, at the expense of the Depositor, all
filings necessary to maintain the effectiveness of any original filings
necessary under the relevant UCC to perfect the Trustee's security interest in
or lien on the Mortgage Loans, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of the Seller, the Depositor or the Trustee, (2) any change of location
of the place of business or the chief executive office of the Seller or the
Depositor, (3) any transfer of any interest of the Seller or the Depositor in
any Mortgage Loan or (4) any change under the relevant UCC or other applicable
laws. Neither the Seller nor the Depositor shall organize under the law of any
jurisdiction other than the State under which each is organized as of the
Closing Date (whether changing its jurisdiction of organization or organizing
under an additional jurisdiction) without giving 30 days prior written notice of
such action to its immediate and intermediate transferee, including the Trustee.
Before effecting such change, the Seller or the Depositor proposing to change
its jurisdiction of organization shall prepare and file in the appropriate
filing office any financing statements or other statements necessary to continue
the perfection of the interests of its immediate and mediate transferees,
including the Trustee, in the Mortgage Loans. In connection with the
transactions contemplated by this Agreement, each of the Seller and the
Depositor authorizes its immediate or mediate transferee to file in any filing
office any initial financing statements, any amendments to financing statements,
any continuation statements, or any other statements or filings described in
this paragraph (b).
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ARTICLE III
THE CERTIFICATES
Section 3.01 The Certificates.
(a) The Certificates shall be issuable in registered form only and
shall be securities governed by Article 8 of the New York Uniform Commercial
Code. The Book-Entry Certificates will be evidenced by one or more certificates,
beneficial ownership of which will be held in the dollar denominations in
Certificate Principal Amount, or Notional Amount, as applicable, or in the
Percentage Interests, specified herein. Each Class of Book-Entry Certificates
will be issued in the minimum denominations in Certificate Principal Amount (or
Notional Amount) specified in the Preliminary Statement hereto and in integral
multiples of $1 in excess thereof. Each Class of Non-Book-Entry Certificates
other than the Residual Certificates shall be issued in definitive, fully
registered form in the minimum denominations in Certificate Principal Amount
specified in the Preliminary Statement hereto and in integral multiples of $1 in
excess thereof. The Residual Certificates shall be issued as single Certificates
and maintained in definitive, fully registered form in a denomination equal to
100% of the Percentage Interest of each such Class. The Class X-1 and Class X-2
Certificates shall be issued as single Certificates in a denomination equal to
100% of the Percentage Interest of each such Class.
(b) The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Authenticating Agent upon the order of
the Depositor upon receipt by the Trustee of the Trustee Mortgage Files
described in Section 2.01. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Authenticating Agent, by
manual signature, and such certification upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. At any time and from time to time after the execution
and delivery of this Agreement, the Depositor may deliver Certificates executed
by the Trustee to the Authenticating Agent for authentication and the
Authenticating Agent shall authenticate and deliver such Certificates as in this
Agreement provided and not otherwise.
(c) The Class B-4, Class B-5, Class B-6, Class A-R and Class LT-R
Certificates offered and sold in reliance on the exemption from registration
under Rule 144A under the Act shall be issued initially in the form of one or
more permanent global Certificates in definitive, fully registered form without
interest coupons with the applicable legends set forth in Exhibit A added to the
forms of such Certificates (each, a "Restricted Global Security").
Section 3.02 Registration.
The Securities Administrator is hereby appointed, and the Securities
Administrator hereby accepts its appointment as, initial Certificate Registrar
in respect of the Certificates and shall maintain books for the registration and
for the transfer of Certificates (the "Certificate
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Register"). The Trustee may appoint a bank or trust company to act as successor
Certificate Registrar. A registration book shall be maintained for the
Certificates collectively. The Certificate Registrar may resign or be discharged
or removed and a new successor may be appointed in accordance with the
procedures and requirements set forth in Sections 6.06 and 6.07 hereof with
respect to the resignation, discharge or removal of the Securities Administrator
and the appointment of a successor Securities Administrator. The Certificate
Registrar may appoint, by a written instrument delivered to the Holders and the
Master Servicer, any bank or trust company to act as co-registrar under such
conditions as the Certificate Registrar may prescribe; provided, however, that
the Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment.
Section 3.03 Transfer and Exchange of Certificates.
(a) A Certificate (other than Book-Entry Certificates which shall be
subject to Section 3.09 hereof) may be transferred by the Holder thereof only
upon presentation and surrender of such Certificate at the office of the
Certificate Registrar duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney in such form as shall be
satisfactory to the Certificate Registrar. Upon the transfer of any Certificate
in accordance with the preceding sentence, the Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount (or Notional Amount) as the
Certificate being transferred. No service charge shall be made to a
Certificateholder for any registration of transfer of Certificates, but the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any registration
of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number
of new Certificates of the same Class, in authorized denominations, representing
in the aggregate the same Certificate Principal Amount (or Notional Amount) as
the Certificate surrendered, upon surrender of the Certificate to be exchanged
at the office of the Certificate Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by such Holder or his duly
authorized attorney in such form as is satisfactory to the Certificate
Registrar. Certificates delivered upon any such exchange will evidence the same
obligations, and will be entitled to the same rights and privileges, as the
Certificates surrendered. No service charge shall be made to a Certificateholder
for any exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any exchange of Certificates. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute, and the
Authenticating Agent shall authenticate, date and deliver the Certificates which
the Certificateholder making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.
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The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the
Depositor or an affiliate (as defined in Rule 405 under the 1933 Act)
of the Depositor or (y) being made to a "qualified institutional buyer"
(a "QIB") as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Act") by a transferor that has provided the Certificate
Registrar with a certificate in the form of Exhibit H hereto; and
(ii) The Certificate Registrar shall register the transfer of
a Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the
Act, or to any Person all of the equity owners in which are such
accredited investors, by a transferor who furnishes to the Certificate
Registrar a letter of the transferee substantially in the form of
Exhibit I hereto.
(d) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Certificate
Registrar has received (A) a certificate substantially in the form of Exhibit J
hereto from such transferee or (B) an Opinion of Counsel satisfactory to the
Certificate Registrar to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund being
deemed to be "plan assets" subject to the prohibited transactions provisions of
ERISA or Section 4975 of the Code and will not subject the Trustee, the
Certificate Registrar, the Master Servicer, the Securities Administrator or the
Depositor to any obligation in addition to those undertaken in the Agreement;
provided, however, that the Certificate Registrar will not require such
certificate or opinion in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Certificate Registrar has rendered an
opinion to the effect that the purchase and holding of an ERISA-Restricted
Certificate by a Plan or a Person that is purchasing or holding such a
Certificate with the assets of a Plan will not constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code. The preparation
and delivery of the certificates and opinions referred to above shall not be an
expense of the Trust Fund, the Trustee, the Certificate Registrar, the Master
Servicer, the Securities Administrator or the Depositor.
Notwithstanding the foregoing, no opinion or certificate shall be
required for the initial issuance of the ERISA-Restricted Certificates.
Notwithstanding anything to the contrary herein, any purported transfer of an
ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code without
the delivery to the Certificate Registrar of an Opinion of Counsel satisfactory
to the Certificate Registrar as described above shall be void and of no effect;
provided that the restriction set forth in this sentence shall not be applicable
if there has been delivered to the Certificate Registrar, an Opinion of Counsel
meeting the requirements of clause (B) of the first sentence of this paragraph
(d). The Trustee, the Certificate Registrar and the Depositor shall be under no
liability to any Person for any registration of transfer of any ERISA-Restricted
Certificate that is in fact not permitted by this Section 3.03(d) or for the
Paying Agent making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
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provisions of this Agreement so long as the transfer was registered by the
Certificate Registrar in accordance with the foregoing requirements. The last
preceding Holder of such Certificate that is not a plan or a Person acting on
behalf of a plan shall be entitled to recover from any purported Holder of any
ERISA-Restricted Certificate that was in fact an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of such
a plan , all payments made on such ERISA-Restricted Certificate at and after
either such time; provided that none of the Depositor, the Certificate Registrar
or the Trustee shall be responsible for such recovery if they otherwise made a
good faith effort to comply with this Section 3.03(d).
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.
(f) Notwithstanding anything to the contrary contained herein, no
Residual Certificate may be owned, pledged or transferred, directly or
indirectly, by or to (i) a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person is (A) not a
Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Certificate Registrar with an effective
Internal Revenue Service Form W-8ECI or successor form at the time and in the
manner required by the Code (any such person who is not covered by clause (A) or
(B) above is referred to herein as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale
or other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee and the Certificate Registrar an affidavit in
substantially the form attached hereto as Exhibit B representing and warranting,
among other things, that such transferee is neither a Disqualified Organization,
an agent or nominee acting on behalf of a Disqualified Organization, nor a
Non-permitted Foreign Holder (any such transferee, a "Permitted Transferee"),
and the proposed transferor shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit C.
In addition, the Trustee or the Certificate Registrar may (but shall have no
obligation to) require, prior to and as a condition of any such transfer, the
delivery by the proposed transferee of an Opinion of Counsel, addressed to the
Trustee and the Certificate Registrar, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial owner, is
not a Disqualified Organization, agent or nominee thereof, or a Non-permitted
Foreign Holder. Notwithstanding the registration in the Certificate Register of
any transfer, sale, or other disposition of a Residual Certificate to a
Disqualified Organization, an agent or nominee thereof, or Non-permitted Foreign
Holder, such registration shall be deemed to be of no legal force or effect
whatsoever and such Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder shall not be deemed to be a Certificateholder for
any
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purpose hereunder, including, but not limited to, the receipt of distributions
on such Residual Certificate. The Depositor, the Certificate Registrar and the
Trustee shall be under no liability to any Person for any registration or
transfer of a Residual Certificate to a Disqualified Organization, agent or
nominee thereof or Non-permitted Foreign Holder or for the Paying Agent making
any payments due on such Residual Certificate to the Holder thereof or for
taking any other action with respect to such Holder under the provisions of the
Agreement, so long as the transfer was effected in accordance with this Section
3.03(f), unless the Certificate Registrar shall have actual knowledge at the
time of such transfer or the time of such payment or other action that the
transferee is a Disqualified Organization, or an agent or nominee thereof, or
Non-permitted Foreign Holder. The Certificate Registrar shall be entitled to
recover from any Holder of a Residual Certificate that was a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder at the
time it became a Holder or any subsequent time it became a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder, all
payments made on such Residual Certificate at and after either such times (and
all costs and expenses, including but not limited to attorneys' fees, incurred
in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Certificate Registrar shall be paid and delivered
to the last preceding Holder of such Residual Certificate.
If any purported transferee shall become a registered Holder of a
Residual Certificate in violation of the provisions of this Section 3.03(f),
then upon receipt of written notice to the Trustee that the registration of
transfer of such Residual Certificate was not in fact permitted by this Section
3.03(f), the last preceding Permitted Transferee shall be restored to all rights
as Holder thereof retroactive to the date of such registration of transfer of
such Residual Certificate. The Depositor, the Certificate Registrar and the
Trustee shall be under no liability to any Person for any registration of
transfer of a Residual Certificate that is in fact not permitted by this Section
3.03(f), or for the Paying Agent making any payment due on such Certificate to
the registered Holder thereof or for taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered upon receipt of the affidavit described in the preceding paragraph of
this Section 3.03(f).
(g) Each Holder or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by
such Holder's or Owner's acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this section.
Section 3.04 Cancellation of Certificates.
Any Certificate surrendered for registration of transfer or exchange
shall be cancelled and retained in accordance with normal retention policies
with respect to cancelled certificates maintained by the Trustee or the
Certificate Registrar.
Section 3.05 Replacement of Certificates.
If (i) any Certificate is mutilated and is surrendered to the Trustee
or the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and there is delivered to the Trustee and the Certificate Registrar
such security or indemnity as may be required by them to save each of them
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harmless, then, in the absence of notice to the Depositor, the Trustee or the
Certificate Registrar that such destroyed, lost or stolen Certificate has been
acquired by a protected purchaser, the Trustee shall execute and the
Authenticating Agent shall 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 Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee, the Depositor or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee, the Depositor or
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
If after the delivery of such new Certificate, a protected purchaser of
the original Certificate in lieu of which such new Certificate was issued
presents for payment such original Certificate, the Depositor, the Certificate
Registrar and the Trustee or any agent shall be entitled to recover such new
Certificate from the Person to whom it was delivered or any Person taking
therefrom, except a protected purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expenses incurred by the Depositor, the Certificate Registrar, the
Trustee or any agent in connection therewith.
Section 3.06 Persons Deemed Owners.
Subject to the provisions of Section 3.09 with respect to Book-Entry
Certificates, the Depositor, the Master Servicer, the Trustee, the Certificate
Registrar, the Paying Agent and any agent of any of them shall treat the Person
in whose name any Certificate is registered upon the books of the Certificate
Registrar as the owner of such Certificate for the purpose of receiving
distributions pursuant to Sections 5.01 and 5.02 and for all other purposes
whatsoever, and neither the Depositor, the Master Servicer, the Trustee, the
Certificate Registrar, the Paying Agent nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07 Temporary Certificates.
(a) Pending the preparation of definitive Certificates, upon the order
of the Depositor, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver temporary Certificates that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such variations as the authorized officers executing such
Certificates may determine, as evidenced by their execution of such
Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Certificate Registrar without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver in exchange therefor a like aggregate Certificate
Principal Amount of definitive Certificates of the same Class in the
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authorized denominations. Until so exchanged, the temporary Certificates shall
in all respects be entitled to the same benefits under this Agreement as
definitive Certificates of the same Class.
Section 3.08 Appointment of Paying Agent.
The Trustee may appoint a Paying Agent (which may be the Trustee) for
the purpose of making distributions to Certificateholders hereunder. The Trustee
hereby appoints the Securities Administrator as the initial Paying Agent. The
Trustee shall cause any Paying Agent, other than the Securities Administrator,
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in an Eligible Account (which shall be
the Distribution Account) in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to the Certificateholders. All
funds remitted by the Trustee to any such Paying Agent for the purpose of making
distributions shall be paid to Certificateholders on each Distribution Date and
any amounts not so paid shall be returned on such Distribution Date to the
Trustee. If the Paying Agent is not the Trustee, the Trustee shall cause to be
remitted to the Paying Agent on or before the Business Day prior to each
Distribution Date, by wire transfer in immediately available funds, the funds to
be distributed on such Distribution Date. Any Paying Agent shall be either a
bank or trust company or otherwise authorized under law to exercise corporate
trust powers.
Section 3.09 Book-Entry Certificates.
(a) Each Class of Book-Entry Certificates, upon original issuance,
shall be issued in the form of one or more typewritten Certificates representing
the Book-Entry Certificates. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):
(i) the provisions of this Section 3.09 shall be in full force
and effect;
(ii) the Certificate Registrar, the Paying Agent and the
Trustee shall deal with the Clearing Agency for all purposes (including
the making of distributions on the Book-Entry Certificates) as the
authorized representatives of the Certificate Owners and the Clearing
Agency and shall be responsible for crediting the amount of such
distributions to the accounts of such Persons entitled thereto, in
accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09
conflict with any other provisions of this Agreement, the provisions of
this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Unless and until Definitive Certificates
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are issued pursuant to Section 3.09(c), the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal of and interest on
the Book-Entry Certificates to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the
Securities Administrator shall give all such notices and communications
specified herein to be given to Holders of the Book-Entry Certificates to the
Clearing Agency.
(c) If (i) (A) the Clearing Agency or the Depositor advises the Paying
Agent in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities with respect to the Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor
satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its
option, advises the Paying Agent in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Class Principal Amount of a Class of
Book-Entry Certificates advise the Paying Agent and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of a Class of Book-Entry Certificates, the Certificate
Registrar shall notify the Clearing Agency to effect notification to all
Certificate Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Certificate Registrar of the
Book-Entry Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Certificate
Registrar shall issue the Definitive Certificates. Neither the Depositor, the
Certificate Registrar nor the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the Clearing
Agency shall be deemed to be imposed upon and performed by the Certificate
Registrar, to the extent applicable, with respect to such Definitive
Certificates and the Certificate Registrar shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder. Notwithstanding the
foregoing, the Certificate Registrar, upon the instruction of the Depositor,
shall have the right to issue Definitive Certificates on the Closing Date in
connection with credit enhancement programs.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01 Custodial Accounts; Distribution Account.
(a) On or prior to the Closing Date, the Master Servicer shall have
caused the Servicers to establish and maintain one or more Custodial Accounts
(which shall be eligible accounts, as defined in the related Servicing
Agreement), as provided in the related Servicing Agreements,
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into which all Scheduled Payments and unscheduled payments with respect to the
Mortgage Loans, net of any deductions or reimbursements permitted under the
related Servicing Agreement, shall be deposited. On each Distribution Account
Deposit Date, the Servicers shall remit to the Securities Administrator for
deposit into the Distribution Account, all amounts so required to be deposited
into such account in accordance with the terms of the related Servicing
Agreement.
(b) The Securities Administrator, as Paying Agent for the Trustee,
shall establish and maintain an Eligible Account entitled "Distribution Account
of HSBC Bank, USA, as Trustee for the benefit of Sequoia Mortgage Trust 12
Holders of Mortgage Pass-Through Certificates." The Securities Administrator
shall, promptly upon receipt from the Servicers on each Distribution Account
Deposit Date, deposit into the Distribution Account and retain on deposit until
the related Distribution Date the following amounts:
(i) the aggregate of collections with respect to the Mortgage
Loans remitted by the Servicers from the related Custodial Accounts in
accordance with the Servicing Agreements;
(ii) any amounts required to be deposited by the Master
Servicer with respect to the Mortgage Loans for the related Due Period
pursuant to this Agreement, including the amount of any Advances or
Compensation Interest Payments with respect to the Mortgage Loans not
paid by the Servicers; and
(iii) any other amounts so required to be deposited in the
Distribution Account in the related Due Period pursuant to this
Agreement.
(c) In the event the Master Servicer or a Servicer has remitted in
error to the Distribution Account any amount not required to be remitted in
accordance with the definition of Available Distribution Amount, it may at any
time direct the Securities Administrator to withdraw such amount from the
Distribution Account for repayment to the Master Servicer or Servicer, as
applicable, by delivery of an Officer's Certificate to the Securities
Administrator and the Trustee which describes the amount deposited in error.
(d) On each Distribution Date and Redemption Date, the Securities
Administrator, as Paying Agent, shall distribute the Available Distribution
Amount to the Certificateholders and any other parties entitled thereto in the
amounts and priorities set forth in Section 5.02. The Securities Administrator
may from time to time withdraw from the Distribution Account and pay the Master
Servicer, the Trustee, the Securities Administrator or any Servicer any amounts
permitted to be paid or reimbursed to such Person from funds in the Distribution
Account pursuant to the clauses (A) through (D) of the definition of Available
Distribution Amount.
(e) Funds in the Distribution Account may be invested in Permitted
Investments selected by and at the written direction of the Securities
Administrator, which shall mature not later than one Business Day prior to the
Distribution Date (except that if such Permitted Investment is an obligation of
the Securities Administrator, then such Permitted Investment shall mature not
later than such applicable Distribution Date) and any such Permitted Investment
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of
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the Trustee (in its capacity as such) or its nominee. All income and gain
realized from any Permitted Investment shall be for the benefit of the
Securities Administrator and shall be subject to its withdrawal or order from
time to time, and shall not be part of the Trust Fund. The amount of any losses
incurred in respect of any such investments shall be deposited in such
Distribution Account by the Securities Administrator out of its own funds,
without any right of reimbursement therefor, immediately as realized.
Section 4.02 [Reserved]
Section 4.03 [Reserved]
Section 4.04 Reports to Trustee and Certificateholders.
On each Distribution Date, the Securities Administrator shall have
prepared and shall make available to the Trustee and each Certificateholder a
written report setting forth the following information (on the basis of Mortgage
Loan level information obtained from the Master Servicer and the Servicers).
(a) the amount of the distributions, separately identified, with
respect to each Class of Certificates;
(b) the amount of the distributions set forth in clause (a) allocable
to principal, separately identifying the aggregate amount of any Principal
Prepayments or other unscheduled recoveries of principal included in that
amount;
(c) the amount of the distributions set forth in clause (a) allocable
to interest and how it was calculated;
(d) the amount of any unpaid Interest Shortfall, Net WAC Shortfall or
Unpaid Net WAC Shortfall (if applicable) and the related accrued interest
thereon, with respect to each Class of Certificates;
(e) the Class Principal Amount of each Class of Certificates after
giving effect to the distribution of principal on that Distribution Date;
(f) the Aggregated Stated Principal Balance of the Mortgage Loans and
the applicable Net WAC of the Mortgage Loans at the end of the related
Prepayment Period;
(g) the Stated Principal Balance of the Mortgage Loans whose Mortgage
Rates adjust on the basis of the One-Month LIBOR index and the Six-Month LIBOR
index at the end of the related Prepayment Period;
(h) the Pro Rata Senior Percentage, Senior Percentage and the
Subordinate Percentage for the following Distribution Date;
(i) the Senior Prepayment Percentage and Subordinate Prepayment
Percentage for the following Distribution Date;
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(j) the amount of the Master Servicing Fee and the Servicing Fee paid
to or retained by the Master Servicer and by each Servicer, respectively;
(k) the amount of Advances for the related Due Period;
(l) the number and Stated Principal Balance of the Mortgage Loans that
were (A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days, (B) in foreclosure and
Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and (C)
in bankruptcy as of the close of business on the last day of the calendar month
preceding that Distribution Date;
(m) for any Mortgage Loan as to which the related Mortgaged Property
was an REO property during the preceding calendar month, the principal balance
of that Mortgage Loan as of the close of business on the last day of the related
Due Period;
(n) the total number and principal balance of any REO properties as of
the close of business on the last day of the preceding Due Period;
(o) the amount of Realized Losses incurred during the preceding
calendar month;
(p) the cumulative amount of Realized Losses incurred since the Closing
Date;
(q) the aggregate amount of Special Hazard Losses, Bankruptcy Losses
and Fraud Losses incurred during the preceding calendar month;
(r) the cumulative amount of Special Hazard Losses, Bankruptcy Losses
and Fraud Losses incurred since the Closing Date;
(s) the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
Amount and the Bankruptcy Loss Coverage Amount, in each case as of the related
Determination Date;
(t) the Realized Losses and Excess Losses, if any, allocated to each
Class of Certificates on that Distribution Date;
(u) the Certificate Interest Rate for each Class of Certificates for
that Distribution Date;
(v) the amount of any payments made by the Cap Provider to the Trust
Fund under the LIBOR Certificate Cap and the Class X Cap; and
(w) the aggregate amount of distributions from the Reserve Fund to the
Class A and Class B-1 Certificates.
The Securities Administrator shall make such reports available each
month via the Securities Administrator's website at http://www.ctslink.com.
Assistance in using the website may be obtained by calling the Securities
Administrator's customer service desk at (301) 815-6600. Certificateholders and
other parties that are unable to use the website are entitled to have a paper
copy mailed to them via first class mail by contacting the Securities
Administrator and indicating such. In preparing or furnishing the foregoing
information to the Trustee, the
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Securities Administrator shall be entitled to rely conclusively on the accuracy
of the information or data regarding the Mortgage Loans and the related REO
Properties that has been provided to the Securities Administrator by the Master
Servicer and the Servicers, and the Securities Administrator shall not be
obligated to verify, recompute, reconcile or recalculate any such information or
data.
Upon receipt by the Trustee (or any agent thereof) of the reasonable
advance written request of any Certificateholder that is a savings and loan,
bank or insurance company, which request shall be promptly forwarded to the
Securities Administrator, the Securities Administrator shall provide, or cause
to be provided, (or, to the extent that such information or documentation is not
required to be provided by a Servicer under the applicable Servicing Agreement,
shall use reasonable efforts to obtain such information and documentation from
such Servicer, and provide) to such Certificateholders such reports and access
to information and documentation regarding the Mortgage Loans as such
Certificateholders may reasonably deem necessary to comply with applicable
regulations of the Office of Thrift Supervision or its successor or other
regulatory authorities with respect to an investment in the Certificates;
provided, however, that the Securities Administrator shall be entitled to be
reimbursed by such Certificateholders for the Securities Administrator's actual
expenses incurred in providing such reports and access.
The Securities Administrator shall prepare and file with the Internal
Revenue Service ("IRS"), on behalf of the Trust Fund, an application for an
employer identification number on IRS Form SS-4 or by any other acceptable
method. The Securities Administrator shall also file a Form 8811 as required.
The Securities Administrator, upon receipt from the IRS of the Notice of
Taxpayer Identification Number Assigned, shall upon request promptly forward a
copy of such notice to the Trustee and the Depositor. The Securities
Administrator shall furnish any other information that is required by the Code
and regulations thereunder to be made available to Certificateholders. The
Master Servicer shall cause each Servicer to provide the Securities
Administrator with such information as is necessary for the Securities
Administrator to prepare such reports.
On or before January 31 of each year, the Depositor, on behalf of the
Trust, shall provide the Securities Administrator with written notice listing
all Distribution Date reports to Certificateholders with respect to Distribution
Dates occurring in the prior calendar year that were included in a Form 8-K
filing pursuant to Section 6.20(c); provided, that if no Form 10-K is required
to be filed for such prior calendar year, no written notice shall be required.
No later than March 15 of each year in which such written notice is provided by
the Depositor to the Securities Administrator, the Securities Administrator
shall sign a certification (in the form attached hereto as Exhibit M), for the
benefit of the Person(s) signing the Form 10-K Certification, regarding certain
aspects of the Form 10-K Certification).
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ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01 Distributions Generally.
(a) Subject to Section 7.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee or the Paying Agent shall
make distributions in accordance with this Article V. Such distributions shall
be made by check mailed to each Certificateholder's address as it appears on the
Certificate Register of the Certificate Registrar or, upon written request made
to the Securities Administrator at least five Business Days prior to the related
Record Date by any Certificateholder owning an aggregate initial Certificate
Principal Amount of at least $1,000,000, or in the case of a Class of
Interest-Only Certificates or Residual Certificate, a Percentage Interest of not
less than 100%, by wire transfer in immediately available funds to an account
specified in the request and at the expense of such Certificateholder; provided,
however, that the final distribution in respect of any Certificate shall be made
only upon presentation and surrender of such Certificate at the Certificate
Registrar's Corporate Trust Office; provided, further, that the foregoing
provisions shall not apply to any Class of Certificates as long as such
Certificate remains a Book-Entry Certificate in which case all payments made
shall be made through the Clearing Agency and its Clearing Agency Participants.
Wire transfers will be made at the expense of the Holder requesting such wire
transfer by deducting a wire transfer fee from the related distribution.
Notwithstanding such final payment of principal of any of the Certificates, each
Residual Certificate will remain outstanding until the termination of each REMIC
and the payment in full of all other amounts due with respect to the Residual
Certificates and at such time such final payment in retirement of any Residual
Certificate will be made only upon presentation and surrender of such
Certificate at the Certificate Registrar's Corporate Trust Office. If any
payment required to be made on the Certificates is to be made on a day that is
not a Business Day, then such payment will be made on the next succeeding
Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Principal Amounts or initial Class Notional
Amounts (or Percentage Interests).
Section 5.02 Distributions from the Certificate Account.
(a) On each Distribution Date, the Available Distribution Amount shall
be withdrawn by the Securities Administrator from the Distribution Account and
allocated among the classes of Senior Certificates and Subordinate Certificates
in the following order of priority:
(i) Concurrently, to the payment of the Interest Distribution
Amount and any Interest Shortfalls for each Class of Senior
Certificates; provided, however, that on each Distribution Date, the
Interest Distribution Amount that would otherwise be distributable to a
Class of Interest-Only Certificates shall be deposited in the Reserve
Fund to the extent of the Required Reserve Fund Deposit for such Class
and shall not be distributed to such Class;
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(ii) Sequentially to the Class A-R and Class A Certificates,
in that order, the Senior Principal Distribution Amount for such date,
until their respective Class Principal Amounts have been reduced to
zero;
(iii) To the Class B-1 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class on
such date;
(iv) To the Class B-1 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount,
until its Class Principal Amount has been reduced to zero;
(v) From the Reserve Fund, for payment to the Class A and
Class B-1 Certificates, sequentially in that order, any related Net WAC
Shortfall or related Unpaid Net WAC Shortfall for such date;
(vi) To the Class B-2 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(vii) To the Class B-2 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
(viii) To the Class B-3 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case, for such
Class and date;
(ix) To the Class B-3 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
(x) To the Class B-4 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(xi) To the Class B-4 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
(xii) To the Class B-5 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(xiii) To the Class B-5 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
(xiv) To the Class B-6 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
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(xv) To the Class B-6 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
and
(xvi) To the Class A-R Certificate and the Class LT-R
Certificate, any remaining amount.
(b) On each Distribution Date on and after the Credit Support Depletion
Date, the Available Distribution Amount shall be distributed to the Senior
Certificates, on a pro rata basis, first, to pay the Interest Distribution
Amount and any accrued but unpaid Interest Shortfalls; second, to pay the Senior
Principal Distribution Amount; third, to pay any related Net WAC Shortfall or
any related Unpaid Net WAC Shortfall; and fourth, to the Class A-R and Class
LT-R Certificate, any remaining Available Distribution Amount.
(c) Notwithstanding the priority and allocation set forth in Section
5.02(a)(iii), (iv) and (vi)-(xv) above, if with respect to any Class of
Subordinate Certificates on any Distribution Date the sum of the related Class
Subordination Percentages of such Class and of all other Classes of Subordinate
Certificates which have a higher numerical Class designation than such Class is
less than the Original Applicable Credit Support Percentage for such Class, no
distribution of Principal Prepayments shall be made to any such Classes and the
amount of such Principal Prepayment otherwise distributable to such Classes
shall be distributed to any Classes of Subordinate Certificates having lower
numerical Class designations than such Class, pro rata, based on the Class
Principal Amounts of the respective Classes immediately prior to such
Distribution Date and shall be distributed in the sequential order provided in
Section 5.02(a)(iii), (iv) and (vi)-(xv) above.
(d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(xvi) of this Section 5.02 on any Distribution Date shall be
allocated among the REMIC residual interests represented thereby such that each
such interest is allocated the excess of funds available to the related REMIC
over required distributions to the regular interests in such REMIC on such
Distribution Date.
(e) To the extent a Net WAC Shortfall is experienced on the Class A or
Class B-1 Certificates, the Securities Administrator shall withdraw from the
Reserve Fund an amount for distribution to such Class equal to the lesser of (1)
the amount of such Net WAC Shortfall and (2) the amount available therefor on
deposit in the Reserve Fund as provided in Section 5.06.
(f) For purposes of distributions of interest in paragraph (a) such
distributions to a Class of Certificates on any Distribution Date shall be made
first, in respect of Current Interest; and second, in respect of Interest
Shortfalls.
Section 5.03 Allocation of Losses.
(a) On or prior to each Distribution Date, the Master Servicer shall
aggregate the information provided by each Servicer with respect to the total
amount of Realized Losses, including Excess Losses, with respect to the Mortgage
Loans for the related Distribution Date.
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(b) On each Distribution Date, the principal portion of Realized
Losses, Bankruptcy Losses, Fraud Losses and Special Hazard Losses with respect
to such Distribution Date shall be allocated as follows:
(i) Realized Losses, Bankruptcy Losses, Fraud Losses and
Special Hazard Losses (other than Excess Losses) shall be allocated in
the following order:
first, to the Classes of Subordinate Certificates in
reverse order of their respective numerical Class designations
(beginning with the Class of Subordinate Certificates with the
highest numerical Class designation) until the Class Principal
Amount of each such Class is reduced to zero; and
second, to each Class of Senior Certificates, in each
case, until the Class Principal Amount of such Class of Senior
Certificates is reduced to zero;
(ii) the principal portion of any Excess Losses shall be
allocated proportionately on a pro rata basis to the Classes of
Certificates on the basis of their Class Certificate Principal Amounts.
(iii) The Class Principal Amount of the Class of Subordinate
Certificates then outstanding with the highest numerical Class
designation shall be reduced on each Distribution Date by the amount,
if any, by which the aggregate of the Class Principal Amounts of all
outstanding Classes of Certificates (after giving effect to the
distribution of principal and the allocation of Realized Losses,
Bankruptcy Losses, Fraud Losses and Special Hazard Losses and Excess
Losses on such Distribution Date) exceeds the Aggregate Stated
Principal Balance for the following Distribution Date.
(iv) Any allocation of a loss pursuant to this section to a
Class of Certificates shall be achieved by reducing the Class Principal
Amount thereof by the amount of such loss.
Section 5.04 Advances by Master Servicer.
If any Servicer fails to remit any Advance required to be made under
the applicable Servicing Agreement, the Master Servicer shall itself make, or
shall cause the successor Servicer to make, such Advance. If the Master Servicer
determines that an Advance is required, it shall on the Business Day preceding
the Distribution Date immediately following such Determination Date, remit to
the Securities Administrator from its own funds (or funds advanced by the
applicable Servicer) for deposit in the Account immediately available funds in
an amount equal to such Advance. The Master Servicer and each Servicer shall be
entitled to be reimbursed for all Advances made by it. Notwithstanding anything
to the contrary herein, in the event the Master Servicer determines in its
reasonable judgment that an Advance is non-recoverable, the Master Servicer
shall be under no obligation to make such Advance. If the Master Servicer
determines that an Advance is non-recoverable, it shall, on or prior to the
related Distribution Date, deliver an Officer's Certificate to the Trustee to
such effect.
Section 5.05 Compensating Interest Payments.
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The amount of the aggregate Master Servicing Fees payable to the Master
Servicer in respect of any Distribution Date shall be reduced (but not below
zero) by the amount of any Compensating Interest Payment for such Distribution
Date, but only to the extent that Prepayment Interest Shortfalls relating to
such Distribution Date are required to be paid but not actually paid by the
Servicers. Such amount shall not be treated as an Advance and shall not be
reimbursable to the Master Servicer.
Section 5.06 Reserve Fund.
(a) On the Closing Date, the Securities Administrator shall establish
and maintain in the Trustee's name, in trust for the benefit of the holders of
the LIBOR Certificates and the Interest Only Certificates, a Reserve Fund, into
which the Depositor shall deposit $10,000. The Reserve Fund shall be an Eligible
Account, and funds on deposit therein shall be held separate and apart from, and
shall not be commingled with, any other moneys, including, without limitation,
other moneys of the Trustee held pursuant to this Agreement. The Reserve Fund
shall not be an asset of any REMIC established hereby.
(b) On each Distribution Date, Current Interest that would otherwise be
distributable with respect to the Class X-1 and Class X-2 Certificates shall
instead be deposited in the Reserve Fund to the extent of the Required Reserve
Fund Deposit. In addition, on each Distribution Date, amounts that the
Securities Administrator received under the LIBOR Certificate Cap with respect
to such Distribution Date shall also be deposited in the Reserve Fund. Any
amounts received by the Securities Administrator on any Distribution Date with
respect to the Class X Cap shall not be deposited into the Reserve Fund but
instead shall be distributed to the Holders of the Class X-1 and Class X-2
Certificates in proportion to their respective Notional Amounts.
(c) On any Distribution Date for which a Net WAC Shortfall exists with
respect to the Class A or Class B-1 Certificates, the Securities Administrator
shall withdraw from the Reserve Fund an amount up to the amount of such Net WAC
Shortfall for distribution on such Distribution Date pursuant to Section
5.02(e).
(d) On any Distribution Date, if immediately after making the
distributions set forth in Section 5.02 above, the amount on deposit in the
Reserve Fund exceeds $10,000, the Securities Administrator shall distribute the
amount in excess of $10,000 to the Holders of the Class X-1 and Class X-2
Certificates, in proportion to their respective Notional Amounts.
(e) Funds in the Reserve Fund shall be invested in Permitted
Investments. Any earnings on amounts in the Reserve Fund shall be for the
benefit of the Class X-1 and Class X-2 Certificateholders. The Interest-Only
Certificates shall evidence ownership of the Reserve Fund for federal income tax
purposes and the Holders thereof shall direct the Securities Administrator, in
writing, as to investment of amounts on deposit therein. The Interest-Only
Certificateholder(s) shall be liable for any losses incurred on such
investments. In the absence of written instructions from the Interest-Only
Certificateholder as to investment of funds on deposit in the Reserve Fund, such
funds shall be invested in money market funds as described in paragraph (ix) of
the definition of Permitted Investments in Article I. For all Federal income tax
purposes, amounts transferred by the Upper-Tier REMIC to the Reserve Fund shall
be treated as amounts distributed by the Upper-Tier REMIC to the Interest-Only
Certificateholders.
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(f) Upon termination of the Trust Fund any amounts remaining in the
Reserve Fund shall be distributed to the Interest-Only Certificateholders.
ARTICLE VI
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR; EVENTS OF DEFAULT
Section 6.01 Duties of Trustee and the Securities Administrator.
(a) The Trustee, except during the continuance of an Event of Default,
and the Securities Administrator undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. Any permissive right of
the Trustee or the Securities Administrator provided for in this Agreement shall
not be construed as a duty of the Trustee or the Securities Administrator. If an
Event of Default has occurred and has not otherwise been cured or waived, the
Trustee or the Securities Administrator shall exercise such of the rights and
powers vested in it by this Agreement and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs, unless the Trustee is
acting as Master Servicer, in which case it shall use the same degree of care
and skill as the Master Servicer hereunder.
(b) Each of the Trustee and the Securities Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to the Trustee or the Securities
Administrator which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that neither the Trustee
nor the Securities Administrator shall be responsible for the accuracy or
content of any such resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Master Servicer or any
Servicer to the Trustee or the Securities Administrator pursuant to this
Agreement, and shall not be required to recalculate or verify any numerical
information furnished to the Trustee or the Securities Administrator pursuant to
this Agreement. Subject to the immediately preceding sentence, if any such
resolution, certificate, statement, opinion, report, document, order or other
instrument is found not to conform to the form required by this Agreement in a
material manner the Trustee shall take such action as it deems appropriate to
cause the instrument to be corrected, and if the instrument is not corrected to
the Trustee's satisfaction, the Trustee will provide notice thereof to the
Certificateholders and will, at the expense of the Trust Fund, which expense
shall be reasonable given the scope and nature of the required action, take such
further action as directed by the Certificateholders.
(c) Neither the Trustee nor the Securities Administrator shall have any
liability arising out of or in connection with this Agreement, except for its
negligence or willful misconduct. Notwithstanding anything in this Agreement to
the contrary, neither the Trustee nor the Securities Administrator shall be
liable for special, indirect or consequential losses or damages of any kind
whatsoever (including, but not limited to, lost profits). No provision of this
Agreement shall be construed to relieve the Trustee or the Securities
Administrator from liability for its own
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negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) Neither the Trustee nor the Securities Administrator shall
be personally liable with respect to any action taken, suffered or
omitted to be taken by it in good faith in accordance with the
direction of Holders of Certificates as provided in Section 6.18
hereof;
(ii) For all purposes under this Agreement, the Trustee shall
not be deemed to have notice of any Event of Default (other than
resulting from a failure by the Master Servicer (i) to remit funds (or
to make Advances) or (ii) to furnish information to the Trustee when
required to do so) unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is
in fact such a default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Holders of
the Certificates and this Agreement;
(iii) For all purposes under this Agreement, the Securities
Administrator shall not be deemed to have notice of any Event of
Default (other than resulting from a failure by the Master Servicer to
furnish information to the Securities Administrator when required to do
so) unless a Responsible Officer of the Securities Administrator has
actual knowledge thereof or unless written notice of any event which is
in fact such a default is received by the Securities Administrator at
the address provided in Section 11.07, and such notice references the
Holders of the Certificates and this Agreement;
(iv) No provision of this Agreement shall require the Trustee
or the Securities Administrator to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it; and none of the provisions
contained in this Agreement shall in any event require the Trustee or
the Securities Administrator to perform, or be responsible for the
manner of performance of, any of the obligations of the Master Servicer
under this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall
be responsible for any act or omission of the Master Servicer, the
Depositor, the Seller or the Custodian.
(d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall promptly remit to the applicable Servicer upon receipt
any such complaint, claim, demand, notice or other document (i) which is
delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.
(e) Neither the Trustee nor the Securities Administrator shall be
personally liable with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with
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the direction of the Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee or the Securities Administrator or exercising any trust
or power conferred upon the Trustee or the Securities Administrator, as
applicable, under this Agreement.
(f) Neither the Trustee nor the Securities Administrator shall be
required to perform services under this Agreement, or to expend or risk its own
funds or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the timely payment of its fees and expenses
or the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, and none of the provisions contained
in this Agreement shall in any event require the Trustee or the Securities
Administrator, as applicable, to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer or any Servicer
under this Agreement or any Servicing Agreement except during such time, if any,
as the Trustee shall be the successor to, and be vested with the rights, duties,
powers and privileges of, the Master Servicer in accordance with the terms of
this Agreement.
(g) The Trustee shall not be held liable by reason of any insufficiency
in the Distribution Account or the Reserve Fund 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).
(h) Except as otherwise provided herein, neither the Trustee nor the
Securities Administrator shall have any duty (A) to see to any recording,
filing, or depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any thereof, (B)
to see to any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Distribution Account, or (D) to confirm
or verify the contents of any reports or certificates of the Master Servicer or
any Servicer delivered to the Trustee or the Securities Administrator pursuant
to this Agreement believed by the Trustee or the Securities Administrator, as
applicable, to be genuine and to have been signed or presented by the proper
party or parties.
(i) Neither the Securities Administrator nor the Trustee shall be
liable in its individual capacity for an error of judgment made in good faith by
a Responsible Officer or other officers of the Trustee or the Securities
Administrator, as applicable, unless it shall be proved that the Trustee or the
Securities Administrator, as applicable, was negligent in ascertaining the
pertinent facts.
(j) Notwithstanding anything in this Agreement to the contrary, neither
the Securities Administrator nor the Trustee shall be liable for special,
indirect or consequential losses or damages of any kind whatsoever (including,
but not limited to, lost profits), even if the Trustee or the Securities
Administrator, as applicable, has been advised of the likelihood of such loss or
damage and regardless of the form of action.
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(k) Neither the Securities Administrator nor the Trustee shall be
responsible for the acts or omissions of the other, it being understood that
this Agreement shall not be construed to render them agents of one another.
Section 6.02 Certain Matters Affecting the Trustee and the Securities
Administrator.
Except as otherwise provided in Section 6.01:
(i) Each of the Trustee and the Securities Administrator may
request, and may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of
auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) Each of the Trustee and the Securities Administrator may
consult with counsel and any advice of its counsel or Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(iii) Neither the Trustee nor the Securities Administrator
shall be personally liable for any action taken, suffered or omitted by
it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(iv) Unless an Event of Default shall have occurred and be
continuing, neither the Trustee nor the Securities Administrator shall
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 (provided the same appears regular on its face), unless
requested in writing to do so by the Holders of at least a majority in
Class Principal Amount (or Percentage Interest) of each Class of
Certificates; provided, however, that, if the payment within a
reasonable time to the Trustee or the Securities Administrator, as
applicable, of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee or the Securities Administrator, as applicable, not reasonably
assured to the Trustee or the Securities Administrator by the security
afforded to it by the terms of this Agreement, the Trustee or the
Securities Administrator, as applicable, may require reasonable
indemnity against such expense or liability or payment of such
estimated expenses from the Certificateholders as a condition to
proceeding. The reasonable expense thereof shall be paid by the party
requesting such investigation and if not reimbursed by the requesting
party shall be reimbursed to the Trustee by the Trust Fund;
(v) Each of the Trustee and the Securities Administrator may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, custodians or
attorneys, which agents, custodians or attorneys shall have any and all
of the rights, powers, duties and obligations of the Trustee and the
Securities
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Administrator conferred on them by such appointment, provided that each
of the Trustee and the Securities Administrator shall continue to be
responsible for its duties and obligations hereunder to the extent
provided herein, and provided further that neither the Trustee nor the
Securities Administrator shall be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due
care by the Trustee or the Securities Administrator, as applicable;
(vi) Neither the Trustee nor the Securities Administrator
shall be under any obligation to exercise any of the trusts or powers
vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto, in each case at the
request, order or direction of any of the Certificateholders pursuant
to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee or the Securities Administrator, as
applicable, reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(vii) The right of the Trustee and the Securities
Administrator to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and neither the Trustee nor
the Securities Administrator shall be answerable for other than its
negligence or willful misconduct in the performance of such act; and
(viii) Neither the Trustee nor the Securities Administrator
shall be required to give any bond or surety in respect of the
execution of the Trust Fund created hereby or the powers granted
hereunder.
Section 6.03 Trustee and Securities Administrator Not Liable for
Certificates.
The Trustee and the Securities Administrator make no representations as
to the validity or sufficiency of this Agreement or of the Certificates (other
than the certificate of authentication on the Certificates) or of any Mortgage
Loan, or related document save that the Trustee and the Securities Administrator
represent that, assuming due execution and delivery by the other parties hereto,
this Agreement has been duly authorized, executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms except that such enforceability may be subject to (A)
applicable bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally, and (B) general principles of
equity regardless of whether such enforcement is considered in a proceeding in
equity or at law. The Trustee and the Securities Administrator shall not be
accountable for the use or application by the Depositor of funds paid to the
Depositor in consideration of the assignment of the Mortgage Loans to the Trust
Fund by the Depositor or for the use or application of any funds deposited into
the Distribution Account or any other fund or account maintained with respect to
the Certificates. The Trustee and the Securities Administrator shall not be
responsible for the legality or validity of this Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder. Except as otherwise provided herein, the
Trustee and the Securities Administrator shall have no responsibility for filing
any financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement.
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Section 6.04 Trustee and the Securities Administrator May Own
Certificates.
The Trustee and the Securities Administrator and any Affiliate or agent
of either of them in its individual or any other capacity may become the owner
or pledgee of Certificates and may transact banking and trust business with the
other parties hereto and their Affiliates with the same rights it would have if
it were not Trustee, Securities Administrator or such agent.
Section 6.05 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) an institution insured
by the FDIC, (ii) a corporation or national banking association, organized and
doing business under the laws of any State or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority and (iii) not an Affiliate of the
Master Servicer or any Servicer. If such corporation or national banking
association 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 or national banking association 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 provisions of this Section, the Trustee shall resign immediately
in the manner and with the effect specified in Section 6.06.
Section 6.06 Resignation and Removal of Trustee and the Securities
Administrator.
(a) Each of the Trustee and the Securities Administrator may at any
time resign and be discharged from the trust hereby created by giving written
notice thereof to the Trustee or the Securities Administrator, as applicable,
the Depositor and the Master Servicer. Upon receiving such notice of
resignation, the Depositor will promptly appoint a successor trustee or a
successor securities administrator, as applicable, by written instrument, one
copy of which instrument shall be delivered to the resigning Trustee or
resigning Securities Administrator, as applicable, one copy to the successor
trustee or successor securities administrator, as applicable, and one copy to
the Master Servicer. If no successor trustee or successor securities
administrator shall have been so appointed and shall have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee or resigning Securities Administrator, as applicable, may petition any
court of competent jurisdiction for the appointment of a successor trustee or
successor securities administrator, as applicable.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee or the Securities
Administrator shall become incapable of acting, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Trustee or the Securities Administrator of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or the Securities Administrator or of either of their
property or affairs for the purpose of rehabilitation, conservation or
liquidation, (iii) a tax is imposed or threatened with respect to the Trust Fund
by any state in which the Trustee or the Trust Fund held by the Trustee is
located, or (iv) the continued use of the Trustee or Securities Administrator
would result in a downgrading of the rating by any Rating Agency of any Class of
Certificates with a rating, then the Depositor
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shall remove the Trustee or the Securities Administrator, as applicable, and the
Depositor shall appoint a successor trustee or successor securities
administrator, as applicable, acceptable to the Master Servicer by written
instrument, one copy of which instrument shall be delivered to the Trustee or
Securities Administrator so removed, one copy each to the successor trustee or
successor securities Administrator, as applicable, and one copy to the Master
Servicer.
(c) The Holders of more than 50% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee or the Securities Administrator, as applicable,
and to the Depositor remove the Trustee or the Securities Administrator, as
applicable, by such written instrument, signed by such Holders or their
attorney-in-fact duly authorized, one copy of which instrument shall be
delivered to the Depositor, one copy to the Trustee or Securities Administrator,
as applicable and one copy to the Master Servicer; the Depositor shall thereupon
appoint a successor trustee or successor securities administrator, as
applicable, in accordance with this Section.
(d) Any resignation or removal of the Trustee or the Securities
Administrator, as applicable, and appointment of a successor trustee or
successor securities administrator pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee or the successor securities administrator, as applicable, as provided in
Section 6.07.
Section 6.07 Successor Trustee and Successor Securities Administrator.
(a) Any successor trustee or successor securities administrator
appointed as provided in Section 6.06 shall execute, acknowledge and deliver to
the Depositor and to its predecessor trustee or predecessor securities
administrator, as applicable, an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
or predecessor securities administrator, as applicable, shall become effective
and such successor trustee or successor securities administrator, as applicable,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee or securities administrator, as
applicable, herein. The predecessor trustee or predecessor securities
administrator, as applicable, shall deliver to the successor trustee (or assign
to the Trustee its interest under the Custody Agreement, to the extent permitted
thereunder) or successor securities administrator, as applicable, all Trustee
Mortgage Files and documents and statements related to each Trustee Mortgage
File held by it hereunder, and shall duly assign, transfer, deliver and pay over
to the successor trustee the entire Trust Fund, together with all necessary
instruments of transfer and assignment or other documents properly executed
necessary to effect such transfer and such of the records or copies thereof
maintained by the predecessor trustee in the administration hereof as may be
requested by the successor trustee and shall thereupon be discharged from all
duties and responsibilities under this Agreement. In addition, the Depositor and
the predecessor trustee or predecessor securities administrator, as applicable,
shall execute and deliver such other instruments and do such other things as may
reasonably be required to more fully and certainly vest and confirm in the
successor trustee or successor securities administrator, as applicable, all such
rights, powers, duties and obligations.
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(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(c) Upon acceptance of appointment by a successor trustee or successor
securities administrator, as applicable, as provided in this Section, the
predecessor trustee or predecessor securities administrator, as applicable,
shall mail notice of the succession of such trustee or securities administrator,
as applicable, hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to any Rating Agency. The expenses of such
mailing shall be borne by the Master Servicer.
Section 6.08 Merger or Consolidation of Trustee or the Securities
Administrator.
Any Person into which the Trustee or Securities Administrator may be
merged or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee or Securities
Administrator shall be a party, or any Persons succeeding to the business of the
Trustee or Securities Administrator, shall be the successor to the Trustee or
Securities Administrator hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding, provided that, in the case of the Trustee, such
Person shall be eligible under the provisions of Section 6.05.
Section 6.09 Appointment of Co-Trustee, Separate Trustee or Custodian.
(a) Notwithstanding any other provisions hereof, at any time, the
Trustee, the Depositor or the Certificateholders evidencing more than 50% of the
Class Principal Amount (or Percentage Interest) of every Class of Certificates
shall have the power from time to time to appoint one or more Persons, approved
by the Trustee, to act either as co-trustees jointly with the Trustee, or as
separate trustees, or as custodians, for the purpose of holding title to,
foreclosing or otherwise taking action with respect to any Mortgage Loan outside
the state where the Trustee has its principal place of business where such
separate trustee or co-trustee is necessary or advisable (or the Trustee has
been advised by the Master Servicer that such separate trustee or co-trustee is
necessary or advisable) under the laws of any state in which a property securing
a Mortgage Loan is located or for the purpose of otherwise conforming to any
legal requirement, restriction or condition in any state in which a property
securing a Mortgage Loan is located or in any state in which any portion of the
Trust Fund is located. The separate Trustees, co-trustees, or custodians so
appointed shall be trustees or custodians for the benefit of all the
Certificateholders and shall have such powers, rights and remedies as shall be
specified in the instrument of appointment; provided, however, that no such
appointment shall, or shall be deemed to, constitute the appointee an agent of
the Trustee. The obligation of the Master Servicer to make Advances pursuant to
Section 5.04 hereof shall not be affected or assigned by the appointment of a
co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
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(i) all powers, duties, obligations and rights conferred upon
the Trustee in respect of the receipt, custody and payment of moneys
shall be exercised solely by the Trustee;
(ii) all other 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, co-trustee, or custodian jointly, except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed 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, co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally
liable by reason of any act or omission of any other trustee or
custodian hereunder; and
(iv) the Trustee may at any time, by an instrument in writing
executed by it, with the concurrence of the Depositor, accept the
resignation of or remove any separate trustee, co-trustee or custodian,
so appointed by it or them, if such resignation or removal does not
violate the other terms of this Agreement.
(c) 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, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy given
to the Master Servicer.
(d) Any separate trustee, co-trustee or custodian 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, co-trustee or custodian 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.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the
extent necessary to fulfill the Trustee's obligations hereunder.
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(g) The Trust shall pay the reasonable compensation of the co-trustees
(which compensation shall not reduce any compensation payable to the Trustee
under such Section).
Section 6.10 Authenticating Agents.
(a) The Trustee may appoint one or more Authenticating Agents which
shall be authorized to act on behalf of the Trustee in authenticating
Certificates. The Trustee hereby appoints the Securities Administrator as
initial Authenticating Agent, and the Securities Administrator accepts such
appointment. Wherever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an Authenticating Agent and a certificate of authentication executed
on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
must be a corporation organized and doing business under the laws of the United
States of America or of any state, having a combined capital and surplus of at
least $15,000,000, authorized under such laws to do a trust business and subject
to supervision or examination by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor authenticating agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor authenticating agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor authenticating agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Section 6.11 Indemnification of the Trustee and the Securities
Administrator.
The Trustee and the Securities Administrator and their respective
directors, officers, employees and agents shall be entitled to indemnification
from the Depositor and the Trust Fund (provided that the Trust Fund's
indemnification under this Section 6.11 is limited by Section 4.01(d) for any
loss, liability or expense (including, without limitation, reasonable attorneys'
fees and disbursements (and, in the case of the Trustee, in connection with the
Custody Agreement, including the reasonable compensation and the expenses and
disbursements of its agents or counsel), incurred without negligence or willful
misconduct on their part, arising out of, or in
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connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder
including the costs and expenses of defending themselves against any claim in
connection with the exercise or performance of any of their powers or duties
hereunder, provided that:
(i) with respect to any such claim, the Trustee or the
Securities Administrator, as applicable, shall have given the Depositor
written notice thereof promptly after the Trustee, the Securities
Administrator, as applicable, shall have knowledge thereof;
(ii) while maintaining control over its own defense, the
Trustee or the Securities Administrator, as applicable, shall cooperate
and consult fully with the Depositor in preparing such defense; and
(iii) notwithstanding anything to the contrary in this Section
6.11, the Trust Fund shall not be liable for settlement of any such
claim by the Trustee or the Securities Administrator, as applicable,
entered into without the prior consent of the Depositor, which consent
shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of
this Agreement and the resignation or removal of the Trustee or the Securities
Administrator, as applicable, and shall be construed to include, but not be
limited to any loss, liability or expense under any environmental law.
Section 6.12 Fees and Expenses of the Securities Administrator and the
Trustee.
(a) Compensation for the services of the Securities Administrator
hereunder shall be paid by the Master Servicer from the Master Servicing Fee.
The Securities Administrator shall be entitled to all disbursements and
advancements incurred or made by the Securities Administrator in accordance with
this Agreement (including fees and expenses of its counsel and all persons not
regularly in its employment), except any such expenses arising from its
negligence, bad faith or willful misconduct.
(b) As compensation for its services hereunder, the Trustee shall be
entitled to receive a Trustee fee (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust) which
shall be paid by the Master Servicer pursuant to a separate agreement between
the Trustee and the Master Servicer. Any expenses incurred by the Trustee shall
be reimbursed in accordance with Section 6.11.
Section 6.13 Collection of Monies.
Except as otherwise expressly provided in this Agreement, the Trustee
may demand payment or delivery of, and shall receive and collect, all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement. The Trustee shall hold all such money and property received by it as
part of the Trust Fund and shall distribute it as provided in this Agreement.
Section 6.14 Events of Default; Trustee To Act; Appointment of
Successor.
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(a) The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(i) Any failure by the Master Servicer to furnish the
Securities Administrator the Mortgage Loan data sufficient to prepare
the reports described in Section 4.04 which continues unremedied for a
period of one Business Day after the date upon which written notice of
such failure shall have been given to such Master Servicer by the
Trustee or the Securities Administrator or to such Master Servicer, the
Securities Administrator and the Trustee by the Holders of not less
than 25% of the Class Principal Amount (or Class Notional Amount) of
each Class of Certificates affected thereby; or
(ii) Any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer contained in this
Agreement which continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee
or the Securities Administrator, or to the Master Servicer, the
Securities Administrator and the Trustee by the Holders of more than
50% of the Aggregate Voting Interests of the Certificates; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days or
any Rating Agency reduces or withdraws or threatens to reduce or
withdraw the rating of the Certificates because of the financial
condition or loan servicing capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities, voluntary liquidation
or similar proceedings of or relating to the Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose
of all or substantially all of its assets, or consolidate with or merge
into another entity or shall permit another entity to consolidate or
merge into it, such that the resulting entity does not meet the
criteria for a successor servicer as specified in Section 9.05 hereof;
or
(vii) If a representation or warranty set forth in Section
9.03 hereof shall prove to be incorrect as of the time made in any
respect that materially and adversely affects the interests of the
Certificateholders, and the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or cured
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within 30 days after the date on which written notice of such incorrect
representation or warranty shall have been given to the Master Servicer
by the Trustee or the Securities Administrator, or to the Master
Servicer, the Securities Administrator and the Trustee by the Holders
of more than 50% of the Aggregate Voting Interests of the Certificates;
or
(viii) A sale or pledge of any of the rights of the Master
Servicer hereunder or an assignment of this Agreement by the Master
Servicer or a delegation of the rights or duties of the Master Servicer
hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Trustee and
Certificateholders holding more than 50% of the Aggregate Voting
Interests of the Certificates; or
(ix) After receipt of notice from the Trustee, any failure of
the Master Servicer to make any Advances required to be made hereunder.
If an Event of Default described in clauses (i) through (ix) of this
Section shall occur, then, in each and every case, subject to applicable law, so
long as any such Event of Default shall not have been remedied within any period
of time prescribed by this Section, the Trustee, by notice in writing to the
Master Servicer may, and shall, if so directed by Certificateholders evidencing
more than 50% of the Class Principal Amount (or Class Notional Amount) of each
Class of Certificates, terminate all of the rights and obligations of the Master
Servicer hereunder and in and to the Mortgage Loans and the proceeds thereof. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer, and only in its capacity as Master
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
Master Servicer as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents or otherwise. The defaulting Master Servicer agrees to
cooperate with the Trustee and the Securities Administrator in effecting the
termination of the defaulting Master Servicer's responsibilities and rights
hereunder as Master Servicer including, without limitation, notifying Servicers
of the assignment of the master servicing function and providing the Trustee or
its designee all documents and records in electronic or other form reasonably
requested by it to enable the Trustee or its designee to assume the defaulting
Master Servicer's functions hereunder and the transfer to the Trustee for
administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Master Servicer in the Distribution Account and
any other account or fund maintained with respect to the Certificates or
thereafter received with respect to the Mortgage Loans. The Master Servicer
being terminated shall bear all costs of a master servicing transfer, including
but not limited to those of the Trustee or Securities Administrator reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, and costs of amending the
Agreement, if necessary.
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Notwithstanding the termination of its activities as Master Servicer,
each terminated Master Servicer shall continue to be entitled to reimbursement
under this Agreement to the extent such reimbursement relates to the period
prior to such Master Servicer's termination.
If any Event of Default shall occur, the Trustee, upon becoming aware
of the occurrence thereof, shall promptly notify the Securities Administrator
and each Rating Agency of the nature and extent of such Event of Default. The
Trustee or the Securities Administrator shall immediately give written notice to
the Master Servicer upon the Master Servicer's failure to make Advances as
required under this Agreement.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee receives
the resignation of the Master Servicer evidenced by an Opinion of Counsel
pursuant to Section 9.06, the Trustee, unless another master servicer shall have
been appointed, shall be the successor in all respects to the Master Servicer in
its capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by this Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Master Servicer prior to the issuance of any notice of
termination. The Trustee shall have no liability relating to the representations
and warranties of the Master Servicer set forth in Section 9.03. In the
Trustee's capacity as such successor, the Trustee shall have the same
limitations on liability herein granted to the Master Servicer. As compensation
therefor, the Trustee shall be entitled to receive all compensation payable to
the Master Servicer under this Agreement, including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be
unwilling to continue to so act, or shall, if it is unable to so act, petition a
court of competent jurisdiction to appoint, or appoint on its own behalf any
established housing and home finance institution servicer, master servicer,
servicing or mortgage servicing institution having a net worth of not less than
$15,000,000 and meeting such other standards for a successor master servicer as
are set forth in this Agreement, as the successor to such Master Servicer in the
assumption of all of the responsibilities, duties or liabilities of a master
servicer, like the Master Servicer. Any entity designated by the Trustee as a
successor master servicer may be an Affiliate of the Trustee; provided, however,
that, unless such Affiliate meets the net worth requirements and other standards
set forth herein for a successor master servicer, the Trustee, in its individual
capacity shall agree, at the time of such designation, to be and remain liable
to the Trust Fund for such Affiliate's actions and omissions in performing its
duties hereunder. 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 to the
Master Servicer hereunder. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate any
such succession and may make other arrangements with respect to the servicing to
be conducted hereunder which are not inconsistent
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herewith. The Master Servicer shall cooperate with the Trustee and any successor
master servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder including, without limitation, notifying
Mortgagors of the assignment of the master servicing functions and providing the
Trustee and successor master servicer, as applicable, all documents and records
in electronic or other form reasonably requested by it to enable it to assume
the Master Servicer's functions hereunder and the transfer to the Trustee or
such successor master servicer, as applicable, all amounts which shall at the
time be or should have been deposited by the Master Servicer in the Distribution
Account and any other account or fund maintained with respect to the
Certificates or thereafter be received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor master servicer shall be deemed to
be in default hereunder 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 Master Servicer to deliver, or any delay in delivering, cash,
documents or records to it, (ii) the failure of the Master Servicer to cooperate
as required by this Agreement, (iii) the failure of the Master Servicer to
deliver the Mortgage Loan data to the Trustee as required by this Agreement or
(iv) restrictions imposed by any regulatory authority having jurisdiction over
the Master Servicer. No successor master servicer shall be deemed to be in
default hereunder 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
Trustee to deliver, or any delay in delivering cash, documents or records to it
related to such distribution, or (ii) the failure of Trustee to cooperate as
required by this Agreement.
Section 6.15 Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event
of Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16 Waiver of Defaults.
More than 50% of the Aggregate Voting Interests of Certificateholders
may waive any default or Event of Default by the Master Servicer in the
performance of its obligations hereunder, except that a default in the making of
any required deposit to the Distribution Account that would result in a failure
of the Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such 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 thereon
except to the extent expressly so waived.
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Section 6.17 Notification to Holders.
Upon termination of the Master Servicer or appointment of a successor
to the Master Servicer, in each case as provided herein, the Trustee shall
promptly mail notice thereof by first class mail to the Securities
Administrator, and the Certificateholders at their respective addresses
appearing on the Certificate Register. The Trustee shall also, within 45 days
after the occurrence of any Event of Default known to the Trustee, give written
notice thereof to the Securities Administrator and the Certificateholders,
unless such Event of Default shall have been cured or waived prior to the
issuance of such notice and within such 45-day period.
Section 6.18 Directions by Certificateholders and Duties of Trustee
During Event of Default.
Subject to the provisions of Section 8.01 hereof, during the
continuance of any Event of Default, Holders of Certificates evidencing not less
than 25% of the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct 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; provided,
however, that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Master Servicer or any successor master servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Certificateholders, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the cost,
expenses and liabilities which may be incurred therein or thereby; and, provided
further, that, subject to the provisions of Section 8.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, in accordance
with an Opinion of Counsel, determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith determines that the
action or proceeding so directed would involve it in personal liability for
which it is not indemnified to its satisfaction or be unjustly prejudicial to
the non-assenting Certificateholders.
Section 6.19 Action Upon Certain Failures of the Master Servicer and
Upon Event of Default.
In the event that the Trustee shall have actual knowledge of any action
or inaction of the Master Servicer that would become an Event of Default upon
the Master Servicer's failure to remedy the same after notice, the Trustee shall
give notice thereof to the Master Servicer.
Section 6.20 Preparation of Tax Returns and Other Reports.
(a) The Securities Administrator shall prepare or cause to be prepared
on behalf of the Trust Fund, based upon information calculated in accordance
with this Agreement pursuant to instructions given by the Depositor, and the
Securities Administrator shall file federal tax returns, all in accordance with
Article X hereof. If the Trustee notifies the Securities Administrator in
writing that a state tax return or other return is required, then, at the sole
expense of the Trust Fund, the Securities Administrator shall prepare and file
such state income
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tax returns and such other returns as may be required by applicable law relating
to the Trust Fund, and, if required by state law, and shall file any other
documents to the extent required by applicable state tax law (to the extent such
documents are in the Securities Administrator's possession). The Securities
Administrator shall forward copies to the Depositor of all such returns and Form
1099 supplemental tax information and such other information within the control
of the Securities Administrator as the Depositor may reasonably request in
writing, and shall forward to the Trustee for distribution to each
Certificateholder such forms and furnish such information within the control of
the Securities Administrator as are required by the Code and the REMIC
Provisions to be furnished to them, and will prepare and disseminate to the
Trustee for distribution to Certificateholders Form 1099 (supplemental tax
information) (or otherwise furnish information within the control of the
Securities Administrator and the Trustee) to the extent required by applicable
law. The Master Servicer will indemnify the Securities Administrator and the
Trustee for any liability of or assessment against the Securities Administrator
and the Trustee, as applicable, resulting from any error in any of such tax or
information returns directly resulting from errors in the information provided
by such Master Servicer.
(b) The Securities Administrator shall prepare and file with the
Internal Revenue Service ("IRS"), on behalf of each of the Lower Tier REMIC and
Upper Tier REMIC, an application on IRS Form SS-4. The Securities Administrator,
upon receipt from the IRS of the Notice of Taxpayer Identification Number
Assigned for each REMIC, shall promptly forward copies of such notices to the
Master Servicer, the Trustee and the Depositor. The Securities Administrator
will file an IRS Form 8811.
(c) Within 15 days after each Distribution Date, the Depositor shall,
on behalf of the Trust and in accordance with industry standards, file with the
Securities and Exchange Commission (the "Commission") via the Electronic Data
Gathering and Retrieval System (EDGAR), a Form 8-K with a copy of the report to
the Certificateholders for such Distribution Date as an exhibit thereto. Prior
to March 30, 2003 (and, if applicable, prior to March 30 of each year
thereafter), the Depositor shall, on behalf of the Trust and in accordance with
industry standards, file with the Commission via EDGAR a Form 10-K with respect
to the Trust Fund. In addition, the Depositor will cause its senior officer in
charge of securitization to execute the certification (the "Form 10-K
Certification") required pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934, as amended, and to file the same with the Commission prior to March
30, 2003 (and, if applicable, prior to March 30 of each year thereafter). To the
extent any information or exhibits required to be included in the Form 10-K are
not available by March 30, the Depositor shall, on behalf of the Trust, file one
or more amended Form 10-Ks to include such missing information or exhibits
promptly after receipt thereof by the Depositor. Promptly following the first
date legally permissible under applicable regulations and interpretations of the
Commission, the Depositor shall, on behalf of the Trust and in accordance with
industry standards, file with the Commission via EDGAR a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Each of the
Securities Administrator, the Master Servicer and the Trustee agree to furnish
to the Depositor promptly, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement and the Mortgage Loans as the Depositor reasonably deems appropriate
to prepare and file all
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necessary reports with the Commission. The Depositor shall have no
responsibility to file any items other than those specified in this section.
ARTICLE VII
PURCHASE OF MORTGAGE LOANS AND
TERMINATION OF THE TRUST FUND
Section 7.01 Purchase of Mortgage Loans; Termination of Trust Fund Upon
Purchase or Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities of the Trustee, the
Securities Administrator and the Master Servicer created hereby (other than the
obligation of the Securities Administrator to make payments to
Certificateholders as set forth in Section 7.02), shall terminate on the
earliest of (i) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property, (ii) the
sale of the property held by the Trust Fund in accordance with Section 7.01(b)
(if the Holder of the Class LT-R Certificates so chooses to sell the assets of
the Trust Fund in connection with the redemption of the Certificates) or Section
7.01(c) and (iii) the Latest Possible Maturity Date; provided, however, that in
no event shall the Trust Fund created hereby continue beyond the expiration of
21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof. Any termination of the Trust Fund shall be carried
out in such a manner so that the termination of each REMIC included therein
shall qualify as a "qualified liquidation" under the REMIC Provisions.
(b) The Certificates shall be subject to optional redemption by the
Holder of the Class LT-R Certificate, in whole but not in part, on any
Distribution Date on or after the date on which the Aggregate Stated Principal
Balance is equal to or less than 20% of the Cut-off Date Balance. If the Class
LT-R Certificateholder elects to redeem the Certificates, it shall, no later
than 30 days prior to the Distribution Date selected for redemption (the
"Redemption Date"), deliver notices to the Trustee and the Securities
Administrator and either (a) deposit in the Distribution Account the Redemption
Price therefore or (b) state in such notice that the Redemption Price shall be
deposited in the Distribution Account not later than 10:00 a.m., New York City
time on the applicable Redemption Date. In connection with such redemption, if
the Holder of the Class LT-R Certificate elects to liquidate the assets of the
Trust Fund, such Holder shall cause the Trustee to cause each REMIC to adopt a
plan of complete liquidation for federal income tax purposes by complying with
the provisions of Section 7.02.
(c) On any Distribution Date occurring on or after the Initial Optional
Purchase Date, the Depositor has the option to cause the Trust Fund to adopt a
plan of complete liquidation pursuant to Section 7.03(a)(i) hereof to sell all
of its property. If the Depositor elects to exercise such option, it shall no
later than 30 days prior to the Distribution Date selected for purchase of the
assets of the Trust Fund (the "Purchase Date") deliver notices to the Trustee
and the Securities Administrator and either (a) deposit in the Distribution
Account the Redemption Price or (b) state in such notice that the Redemption
Price shall be deposited in the Distribution Account not
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later than 10:00 a.m., New York City time on the applicable Purchase Date. Upon
exercise of such option, the property of the Trust Fund shall be sold to the
Depositor at a price equal to the Redemption Price.
(d) The Depositor, the Master Servicer, each Servicer, the Securities
Administrator and the Custodian shall be reimbursed from the Redemption Price
for any Advances, Servicer Advances, accrual and unpaid Servicing Fees or other
amounts with respect to the Mortgage Loans that are reimbursable to such parties
under this Agreement, the related Servicing Agreement or the Custody Agreement.
Section 7.02 Procedure Upon Redemption Termination of Trust Fund.
(a) Notice of any redemption termination pursuant to the provisions of
Section 7.01, specifying the Distribution Date upon which the final distribution
shall be made or the Redemption Date of the Certificates, shall be given
promptly by the Trustee by first class mail to Certificateholders mailed in the
case of a redemption of the Certificate, no less than the first day of the month
in which the Distribution Date selected for redemption of the Certificates
occurs or upon (x) the sale of all of the property of the Trust Fund by the
Trustee or in the case of a sale of assets of the Trust Fund, or (y) upon the
final payment or other liquidation of the last Mortgage Loan or REO Property in
the Trust Fund. Such notice shall specify (A) the Redemption Date, Distribution
Date upon which final distribution on the Certificates of all amounts required
to be distributed to Certificateholders pursuant to Section 5.02 will be made
upon presentation and surrender of the Certificates at the Certificate
Registrar's Corporate Trust Office, and (B) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distribution being made
only upon presentation and surrender of the Certificates at the office or agency
of the Trustee therein specified. The Trustee shall give such notice to the
Securities Administrator, the Master Servicer and the Certificate Registrar at
the time such notice is given to Holders of the Certificates. Upon any such
termination, the duties of the Certificate Registrar with respect to the
Certificates shall terminate and the Trustee shall terminate or request the
Master Servicer to terminate, the Distribution Account and any other account or
fund maintained with respect to the Certificates, subject to the Trustee's
obligation hereunder to hold all amounts payable to Certificateholders in trust
without interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
If within two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.
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(c) Any reasonable expenses incurred by the Trustee in connection with
any redemption or termination or liquidation of the Trust Fund shall be
reimbursed from proceeds received from the liquidation of the Trust Fund.
Section 7.03 Additional Trust Fund Termination Requirements.
(a) Any termination of the Trust Fund shall be effected in accordance
with the following additional requirements, unless the Trustee seeks (at the
request of the party exercising the option to purchase all of the Mortgage Loans
pursuant to Section 7.01(c)), and subsequently receives, an Opinion of Counsel
(at the expense of such requesting party), addressed to the Trustee to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 7.03 will not (I) result in the imposition of taxes on any REMIC
under the REMIC Provisions or (II) cause any REMIC established hereunder to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the
final payment on the Certificates, upon notification by the Depositor
that it intends to exercise its option to cause the termination of the
Trust Fund, the Trustee shall adopt a plan of complete liquidation of
the Trust Fund on behalf of each REMIC, meeting the requirements of a
qualified liquidation under the REMIC Provisions;
(ii) Any sale of the assets of the Trust Fund pursuant to
Section 7.02 shall be a sale for cash and shall occur at or after the
time of adoption of such a plan of complete liquidation and prior to
the time of making of the final payment on the Certificates;
(iii) On the date specified for final payment of the
Certificates, the Securities Administrator shall make final
distributions of principal and interest on the Certificates in
accordance with Section 5.02 and, after payment of, or provision for
any outstanding expenses, distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates
all cash on hand after such final payment (other than cash retained to
meet claims), and the Trust Fund (and each REMIC) shall terminate at
that time; and
(iv) In no event may the final payment on the Certificates or
the final distribution or credit to the Holders of the Residual
Certificates be made after the 89th day from the date on which the plan
of complete liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof
hereby agrees to accept the plan of complete liquidation adopted by the Trustee
under this Section and to take such other action in connection therewith as may
be reasonably requested by the Securities Administrator or any Servicer.
Section 7.04 Retention of Certificates by Holder of the Class LT-R
Certificate.
If the Holder of the Class LT-R Certificate elects to redeem the
Certificates in accordance with the provisions of Section 7.01(b) but not to
liquidate the assets of the Trust Fund, it may elect to cause the Certificates
to remain outstanding, in which event, no plan of complete liquidation shall be
adopted by the Trustee and no termination of this Agreement or the Trust
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Fund will occur under this Article VII. If the Holder of the Class LT-R
Certificate so elects, the Certificates shall remain validly outstanding,
subject to the following paragraph.
On or following the Redemption Date, the Certificate Registrar, if so
directed by the Holder of the Class LT-R Certificate in writing not less than
five (5) Business Days prior to the Redemption Date, and upon receipt of
Certificates surrendered in connection with such redemption and all transfer
documents required pursuant to Section 3.03 hereof, shall authenticate and
prepare for delivery on the Redemption Date new Certificates or Definitive
Certificates (as directed by the Holder of the Class LT-R Certificate) on the
order of the Holder of the Class LT-R Certificate against receipt by the Trustee
of immediately available funds in an amount not less than the Redemption Price.
Notwithstanding the foregoing, no redemption of any Certificate shall
be permitted without retiring it and no sale of previously redeemed Certificates
may be made by the Holder of the Class LT-R Certificate unless such holder shall
have delivered to the Trustee an Opinion of Counsel as provided in Section
7.03(a).
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01 Limitation on Rights of Holders.
(a) The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or this Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
take any action or proceeding in any court for a partition or winding up of this
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder, shall
have any right to vote or in any manner otherwise control the Master Servicer or
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.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Principal Amount or Class Notional Amount (or Percentage Interest) of
Certificates of each Class affected thereby shall have made written request upon
the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the cost, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for
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sixty days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or proceeding
and no direction inconsistent with such written request has been given such
Trustee during such sixty-day period by such Certificateholders; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder, the Securities
Administrator and the Trustee, that no one or more Holders of Certificates shall
have any right in any manner whatever by virtue or by availing of any provision
of this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of such Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 8.02 Access to List of Holders.
(a) If the Trustee is not acting as Certificate Registrar, the
Certificate Registrar will furnish or cause to be furnished to the Trustee,
within fifteen days after receipt by the Certificate Registrar of a request by
the Trustee in writing, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Certificateholders of each Class as
of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter
referred to as "Applicants") apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Certificates and
is accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants reasonable access during the normal
business hours of the Trustee to the most recent list of Certificateholders held
by the Trustee or shall, as an alternative, send, at the Applicants' expense,
the written communication proffered by the Applicants to all Certificateholders
at their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing
Agency, by receiving and holding a Certificate, agrees with the Depositor, the
Master Servicer, the Securities Administrator, the Certificate Registrar and the
Trustee that neither the Depositor, the Master Servicer, the Securities
Administrator, the Certificate Registrar nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
Section 8.03 Acts of Holders of Certificates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders or Certificate Owners, if the Holder is a Clearing Agency, may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and
the Securities
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Administrator and, where expressly required herein, to the Master Servicer. Such
instrument or instruments (as the action embodies therein and evidenced thereby)
are herein sometimes referred to as an "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agents shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Securities Administrator
and the Master Servicer, if made in the manner provided in this Section. Each of
the Trustee, the Securities Administrator and the Master Servicer shall promptly
notify the others of receipt of any such instrument by it, and shall promptly
forward a copy of such instrument to the others.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments or deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the individual
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee, the Securities Administrator, the
Master Servicer, nor the Depositor shall be affected by any notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Trustee or
the Master Servicer in reliance thereon, whether or not notation of such action
is made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01 Duties of the Master Servicer; Enforcement of Servicer's
and Master Servicer's Obligations.
(a) The Master Servicer, on behalf of the Trustee, the Depositor and
the Certificateholders shall supervise, monitor and oversee the servicing of the
Mortgage Loans by each Servicer and the performance of the Servicers under the
Servicing Agreements, and shall use its reasonable good faith efforts to cause
the Servicers duly and punctually to perform all of their duties and obligations
thereunder (including the obligation of each Servicer to maintain an
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errors and omissions policy and fidelity bond). Upon the occurrence of a default
of which an Authorized Officer of the Master Servicer has actual knowledge under
a Servicing Agreement, the Master Servicer shall promptly notify the Trustee
thereof, and shall specify in such notice the action, if any, the Master
Servicer is taking in respect of such default. So long as any such default shall
be continuing, the Master Servicer may, and shall if it determines such action
to be in the best interests of Certificateholders, (i) terminate all of the
rights and powers of such Servicer pursuant to the applicable provisions of the
Servicing Agreement; (ii) exercise any rights it may have to enforce the
Servicing Agreement against such Servicer; and/or (iii) waive any such default
under the Servicing Agreement or take any other action with respect to such
default as is permitted thereunder. Notwithstanding any provision of this
Agreement or any Servicing Agreement to the contrary, the Master Servicer shall
have no duty or obligation to supervise, monitor or oversee the activities of,
or to enforce the obligations of, (i) the Servicer under its Servicing Agreement
with respect to any Additional Collateral or any Limited Purpose Surety Bond
relating thereto, including, without limitation, the collection of any amounts
owing to the Trust Fund in respect thereof (unless and until the Master Servicer
shall have assumed the obligations of such Servicer as successor servicer under
the related Servicing Agreement pursuant to this Section 9.01, in which case, as
successor servicer, it shall be bound to serve and administer the Additional
Collateral and any related Limited Purpose Surety Bond in accordance with the
provisions of such Servicing Agreement) or (ii) the Servicer under its Servicing
Agreement with respect to the servicing or administration of defaulted or
delinquent Mortgage Loans and the management and disposition of any REO
Properties or for any actions of the Trustee in connection therewith.
(b) Upon any termination by the Master Servicer of a Servicer's rights
and powers pursuant to its Servicing Agreement, the rights and powers of the
Servicer with respect to the Mortgage Loans shall vest in the Master Servicer
and the Master Servicer shall be the successor in all respects to such Servicer
in its capacity as Servicer with respect to such Mortgage Loans under the
related Servicing Agreement, unless or until the Master Servicer shall have
appointed, with the consent of the Trustee and the Rating Agencies, such consent
not to be unreasonably withheld, and in accordance with the applicable
provisions of the Servicing Agreement, a new Fannie Mae- or FHLMC-approved
Person to serve as successor to the Servicer; provided, however, that it is
understood and agreed by the parties hereto that there will be a period of
transition (not to exceed 90 days) before the actual servicing functions can be
fully transferred to a successor servicer (including the Master Servicer). With
such consent, the Master Servicer may elect to continue to serve as successor
servicer under the Servicing Agreement. Upon appointment of a successor
servicer, as authorized under this Section 9.01(b), unless the successor
servicer shall have assumed the obligation of the terminated Servicer under such
Servicing Agreement, the Trustee and such successor servicer shall enter into a
servicing agreement in a form substantially similar to the affected Servicing
Agreement. In connection with any such appointment, the Master Servicer may make
such arrangements for the compensation of such successor as it and such
successor shall agree, but in no event shall such compensation of any successor
servicer (including the Master Servicer) be in excess of that payable to the
Servicer under the affected Servicing Agreement.
The Master Servicer shall pay the costs of such enforcement (including
the termination of any Servicer, the appointment of a successor servicer or the
transfer and assumption of the
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servicing by the Master Servicer) at its own expense and shall be reimbursed
therefor initially (i) by the terminated Servicer, (ii) from a general recovery
resulting from such enforcement only to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans, (iii) from a
specific recovery of costs, expenses or attorney's fees against the party
against whom such enforcement is directed, or (iv) to the extent that such
amounts described in (i)-(iii) above are insufficient to reimburse the Master
Servicer for such costs of enforcement, from the Trust Fund, as provided in
Section 9.04.
If the Master Servicer assumes the servicing with respect to any of the
Mortgage Loans, it will not assume liability for the representations and
warranties of any Servicer it replaces or for the errors or omissions of such
Servicer.
(c) Upon any termination of a Servicer's rights and powers pursuant to
its Servicing Agreement, the Master Servicer shall promptly notify the Trustee
and the Rating Agencies, specifying in such notice that the Master Servicer or
any successor servicer, as the case may be, has succeeded the Servicer under the
Servicing Agreement, which notice shall also specify the name and address of any
such successor servicer.
(d) Neither the Depositor nor the Trustee shall consent to the
assignment by any Servicer of such Servicer's rights and obligations under the
Servicing Agreement without the prior written consent of the Master Servicer,
which consent shall not be unreasonably withheld.
Section 9.02 Assumption of Master Servicing by Trustee.
(a) In the event the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Event of Default under this
Agreement), the Trustee shall thereupon assume all of the rights and obligations
of such Master Servicer hereunder and under each Servicing Agreement entered
into with respect to the Mortgage Loans or shall appoint a Fannie-Mae or
FHLMC-approved server as successor with servicer acceptable to the Depositor and
the Rating Agencies. The Trustee, its designee or any successor master servicer
appointed by the Trustee shall be deemed to have assumed all of the Master
Servicer's interest herein and therein to the same extent as if such Servicing
Agreement had been assigned to the assuming party, except that the Master
Servicer shall not thereby be relieved of any liability or obligations of the
Master Servicer under such Servicing Agreement accruing prior to its replacement
as Master Servicer, and shall be liable to the Trustee, and hereby agrees to
indemnify and hold harmless the Trustee from and against all costs, damages,
expenses and liabilities (including reasonable attorneys' fees) incurred by the
Trustee as a result of such liability or obligations of the Master Servicer and
in connection with the Trustee's assumption (but not its performance, except to
the extent that costs or liability of the Trustee are created or increased as a
result of negligent or wrongful acts or omissions of the Master Servicer prior
to its replacement as Master Servicer) of the Master Servicer's obligations,
duties or responsibilities thereunder.
(b) The Master Servicer that has been terminated shall, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Servicing Agreement and the
related Mortgage Loans and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Servicing Agreement to the assuming party.
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Section 9.03 Representations and Warranties of the Master Servicer.
(a) The Master Servicer hereby represents and warrants to the
Depositor, the Securities Administrator and the Trustee, for the benefit of the
Certificateholders, as of the Closing Date that:
(i) it is validly existing and in good standing under the laws
of the United States of America as a national banking association, and
as Master Servicer has full power and authority to transact any and all
business contemplated by this Agreement and to execute, deliver and
comply with its obligations under the terms of this Agreement, the
execution, delivery and performance of which have been duly authorized
by all necessary corporate action on the part of the Master Servicer;
(ii) the execution and delivery of this Agreement by the
Master Servicer and its performance and compliance with the terms of
this Agreement will not (A) violate the Master Servicer's charter or
bylaws, (B) violate any law or regulation or any administrative decree
or order to which it is subject or (C) constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party
or by which it is bound or to which any of its assets are subject,
which violation, default or breach would materially and adversely
affect the Master Servicer's ability to perform its obligations under
this Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights in general, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iv) the Master Servicer is not in default with respect to any
order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency to the extent that any such
default would materially and adversely affect its performance
hereunder;
(v) the Master Servicer is not a party to or bound by any
agreement or instrument or subject to any charter provision, bylaw or
any other corporate restriction or any judgment, order, writ,
injunction, decree, law or regulation that may materially and adversely
affect its ability as Master Servicer to perform its obligations under
this Agreement or that requires the consent of any third person to the
execution of this Agreement or the performance by the Master Servicer
of its obligations under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
would prohibit its entering into this Agreement or performing its
obligations under this Agreement;
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(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is a Fannie Mae- or FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of or compliance by the
Master Servicer with this Agreement or the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders (if any) as have been obtained;
and
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master
Servicer;
(b) It is understood and agreed that the representations and warranties
set forth in this Section shall survive the execution and delivery of this
Agreement. The Master Servicer shall indemnify the Depositor, the Securities
Administrator and the Trustee and hold them harmless against any loss, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or assertion
based on or grounded upon, or resulting from, a material breach of the Master
Servicer's representations and warranties contained in Section 9.03(a). It is
understood and agreed that the enforcement of the obligation of the Master
Servicer set forth in this Section to indemnify the Depositor, the Securities
Administrator and the Trustee as provided in this Section constitutes the sole
remedy (other than as set forth in Section 6.14) of the Depositor, the
Securities Administrator and the Trustee, respecting a breach of the foregoing
representations and warranties. Such indemnification shall survive any
termination of the Master Servicer as Master Servicer hereunder, and any
termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising
out of the breach of any representations and warranties made in this Section
shall accrue upon discovery of such breach by either the Depositor, the Master
Servicer or the Trustee or notice thereof by any one of such parties to the
other parties.
Section 9.04 Compensation to the Master Servicer.
The Master Servicer shall be entitled to be paid by the Trust Fund, and
either retain or withdraw from the Distribution Account, (i) its Master
Servicing Fee with respect to each Distribution Date, (ii) amounts necessary to
reimburse itself for any previously unreimbursed Advances, Servicer Advances and
Nonrecoverable Advances in accordance with the definition of "Available
Distribution Amount" and (iii) amounts representing assumption fees, late
payment charges or other ancillary income not included in the definition of
"Available Distribution Amount" and which are not required to be remitted by the
Servicers to the Securities Administrator or deposited by the Securities
Administrator into the Distribution Account. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement.
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In addition, Depositor agrees, except as otherwise expressly provided
herein, to reimburse the Master Servicer, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by the Master Servicer in
connection with the performance of its duties hereunder (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), to the extent not otherwise reimbursed pursuant to this Agreement,
except any such expense, disbursement or advance as may be attributable to its
willful misfeasance, bad faith or negligence.
Section 9.05 Merger or Consolidation.
Any Person into which the Master Servicer may be merged or
consolidated, or any Person resulting from any merger, conversion, other change
in form or consolidation to which the Master Servicer shall be a party, or any
Person succeeding to the business of the Master Servicer, shall be the successor
to the Master Servicer hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or resulting
Person to the Master Servicer shall be a Person that shall be qualified and
approved to service mortgage loans for Fannie Mae or FHLMC and shall have a net
worth of not less than $15,000,000.
Section 9.06 Resignation of Master Servicer.
Except as otherwise provided in Sections 9.05 and 9.07 hereof, the
Master Servicer shall not resign from the obligations and duties hereby imposed
on it unless the Master Servicer's duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it and cannot be cured. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee shall have assumed, or a successor master servicer shall have been
appointed by the Trustee and until such successor shall have assumed, the Master
Servicer's responsibilities and obligations under this Agreement. Notice of such
resignation shall be given promptly by the Master Servicer and the Depositor to
the Trustee.
If, at any time, the Master Servicer resigns under this Section 9.06,
or transfers or assigns its rights and obligations under Section 9.07, or is
removed as Master Servicer pursuant to Section 6.14, then at such time as Wells
Fargo Bank Minnesota, National Association also shall resign (and shall be
entitled to resign) as Securities Administrator, Paying Agent, Authenticating
Agent and Certificate Registrar under this Agreement. In such event, the
obligations of each such party shall be assumed by the Trustee or such successor
master servicer appointed by the Trustee (subject to the provisions of Section
9.02(c)).
Section 9.07 Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder; provided, however, that the Master
Servicer shall have the right with the prior written consent of the Trustee and
the
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Depositor (which consent shall not be unreasonably withheld), and upon delivery
to the Trustee and the Depositor of a letter from each Rating Agency to the
effect that such action shall not result in a downgrading of the Certificates,
to delegate or assign to or subcontract with or authorize or appoint any
qualified Person to perform and carry out any duties, covenants or obligations
to be performed and carried out by the Master Servicer hereunder. Notice of such
permitted assignment shall be given promptly by the Master Servicer to the
Depositor and the Trustee. If, pursuant to any provision hereof, the duties of
the Master Servicer are transferred to a successor master servicer, the entire
amount of the Master Servicing Fees and other compensation payable to the Master
Servicer pursuant hereto shall thereafter be payable to such successor master
servicer. Such successor Master Servicer shall also pay the fees of the Trustee
and the Securities Administrator, as provided herein.
Section 9.08 Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Trustee 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 Master
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Master Servicer shall be under no obligation
to appear in, prosecute or defend any legal action that is not incidental to its
duties to master service the Mortgage Loans in accordance with this Agreement
and that in its opinion may involve it in any expenses or liability; provided,
however, that the Master Servicer may in its sole discretion undertake any such
action that it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund and the Master Servicer shall be entitled to be
reimbursed therefor out of the Distribution Account.
The Master Servicer shall not be liable for any acts or omissions of
any Servicer except to the extent that damages or expenses are incurred as a
result of such act or omissions and such damages and expenses would not have
been incurred but for the negligence, willful misfeasance, bad faith or
recklessness of the Master Servicer in supervising, monitoring and overseeing
the obligations of the Servicers in this Agreement.
Section 9.09 Indemnification; Third-Party Claims.
The Master Servicer agrees to indemnify the Depositor, the Securities
Administrator and the Trustee, and hold them harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, liability, fees and expenses that the Depositor,
the Securities Administrator or the Trustee may sustain as a result of the
Master Servicer's willful misfeasance, bad faith or negligence in the
performance of its duties hereunder or by reason of its reckless disregard for
its obligations and duties under this
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Agreement. The Depositor, the Securities Administrator and the Trustee shall
immediately notify the Master Servicer if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans entitling the Depositor, the
Securities Administrator or the Trustee to indemnification under this Section
9.09, whereupon the Master Servicer shall assume the defense of any such claim
and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or them in respect of such claim.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01 REMIC Administration.
(a) REMIC elections as set forth in the Preliminary Statement shall be
made on Forms 1066 or other appropriate federal tax or information return for
the taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code. The latest possible
maturity date for purposes of Treasury Regulation 1.86OG-1(a)(4) will be the
Latest Possible Maturity Date.
(c) The Securities Administrator shall 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 Securities Administrator
shall pay any and all tax related expenses (not including taxes) of each REMIC,
including but not limited to any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to such REMIC that
involve the Internal Revenue Service or state tax authorities, but only to the
extent that (i) such expenses are ordinary or routine expenses, including
expenses of a routine audit but not expenses of litigation (except as described
in (ii)); or (ii) such expenses or liabilities (including taxes and penalties)
are attributable to the negligence or willful misconduct of the Securities
Administrator in fulfilling its duties hereunder (including its duties as tax
return preparer). The Securities Administrator shall be entitled to
reimbursement of expenses to the extent provided in clause (i) above from the
Securities Administration Account, provided, however, the Securities
Administrator shall not be entitled to reimbursement for expenses incurred in
connection with the preparation of tax returns and other reports as required by
Section 6.20 and this Section.
(d) The Securities Administrator shall prepare, and the Trustee shall
sign and file, as instructed by the Securities Administrator, all of each
REMIC's federal and appropriate state tax and information returns as such
REMIC's direct representative. The expenses of preparing and filing such returns
shall be borne by the Securities Administrator.
(e) The Securities Administrator or its designee shall perform on
behalf of each REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue
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Service or any state or local taxing authority. Among its other duties, if
required by the Code, the REMIC Provisions, or other such guidance, the
Securities Administrator shall provide, upon receipt of additional reasonable
compensation, (i) to the Treasury or other governmental authority such
information as is necessary for the application of any tax relating to the
transfer of a Residual Certificate to any disqualified person or organization
pursuant to Treasury Regulation 1.860E-2(a)(5) and any person designated in
Section 860E(e)(3) of the Code and (ii) to the Trustee such information as is
necessary for the Trustee to provide to the Certificateholders such information
or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Securities Administrator, the Master Servicer and
the Holders of Certificates shall take any action or cause any REMIC to take any
action necessary to create or maintain the status of any REMIC as a REMIC under
the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. Neither the Trustee, the Securities Administrator, the
Master Servicer nor the Holder of any Residual Certificate shall knowingly take
any action, cause any REMIC 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 any REMIC as a REMIC or
(ii) result in the imposition of a tax upon any REMIC (including but not limited
to the tax on prohibited transactions as defined in Code Section 860F(a)(2) and
the tax on prohibited contributions set forth on Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless the Trustee, the Securities
Administrator and the Master Servicer have received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing any REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee, the Securities Administrator, the
Master Servicer or their respective designees, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to
any REMIC, and no such Person shall take any such action or cause any REMIC to
take any such action as to which the Trustee, the Securities Administrator or
the Master Servicer has advised it in writing that an Adverse REMIC Event could
occur; provided, however, that if no Adverse REMIC Event would occur but such
action could result in the imposition of additional taxes on the Residual
Certificateholders, no such Person shall take any such action, or cause any
REMIC to take any such action without the written consent of the Residual
Certificateholders.
(g) Each Holder of a Residual Certificate shall pay when due any and
all taxes imposed on the related REMIC by federal or state governmental
authorities. To the extent that such taxes are not paid by a Residual
Certificateholder, the Trustee or the Paying Agent shall pay any remaining REMIC
taxes out of current or future amounts otherwise distributable to the Holder of
the Residual Certificate in any such REMIC or, if no such amounts are available,
out of other amounts held in the Collection Account, and shall reduce amounts
otherwise payable to holders of regular interests in any such REMIC, as the case
may be.
(h) The Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to each REMIC on a calendar
year and on an accrual basis.
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(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement.
(j) Neither the Securities Administrator nor the Master Servicer shall
enter into any arrangement by which any REMIC will receive a fee or other
compensation for services.
(k) The Trustee and the Securities Administrator shall treat the
Reserve Fund as an outside reserve fund within the meaning of Treasury
Regulation Section 1.860G-2(h) that is owned by the holders of the Interest-Only
Certificates and that is not an asset of any REMIC. The Trustee and the
Securities Administrator shall treat the rights of the Holders of the LIBOR
Certificates to receive distributions from the Reserve Fund to cover Net WAC
Shortfalls and Unpaid Net WAC Shortfalls as rights to payments under a cap
contract written by the Holders of the Class X-1 and Class X-2 Certificates in
favor of the Holders of the LIBOR Certificates. Thus, each Class A and Class B1
Certificates shall be treated as representing not only ownership of regular
interests in a REMIC, but also ownership of an interest in an interest rate cap
contract. For purposes of determining the issue prices of the Certificates, the
interest rate cap contracts shall be assumed to have a value of $250,000 unless
and until required otherwise by an applicable taxing authority.
(l) "The Class LT-R Holder shall act as "tax matters person" with
respect to the Lower-Tier REMIC and shall act as agent for the Class A-R
Certificateholder as "tax matters person" with respect to the Upper-Tier REMIC
and the Securities Administrator shall act as agent for the Class LT-R Holder in
such roles, unless and until another party is so designated by the Class LT-R
Holder."
Section 10.02 Prohibited Transactions and Activities.
Neither the Depositor, the Master Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of each REMIC pursuant to Article VII of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to any REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of any such REMIC as a REMIC or of the interests therein
other than the Residual Certificate as the regular interests therein, (b) affect
the distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.
Section 10.03 Indemnification with Respect to Prohibited Transactions
or Loss of REMIC Status.
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In the event that a REMIC fails to qualify as a REMIC, loses its status
as a REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Securities Administrator of its duties and
obligations set forth herein, the Securities Administrator shall indemnify the
Certificateholders of the related Residual Certificate against any and all
losses, claims, damages, liabilities or expenses ("Losses") resulting from such
negligence; provided, however, that the Securities Administrator shall not be
liable for any such Losses attributable to the action or inaction of the
Depositor, the Trustee or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Securities Administrator has relied. Notwithstanding the
foregoing, however, in no event shall the Securities Administrator have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement or under any Servicing Agreement or under any
Acknowledgement, (2) for any Losses other than arising out of malfeasance,
willful misconduct or negligent performance by the Service Administrator of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders of the related Residual Certificate
(in addition to payment of principal and interest on the Certificates).
Section 10.04 REO Property.
(a) Notwithstanding any other provision of this Agreement, the Master
Servicer, acting on behalf of the Trustee hereunder, shall not, except to the
extent provided in the applicable Servicing Agreement, knowingly permit any
Servicer to, rent, lease, or otherwise earn income on behalf of any REMIC with
respect to any REO Property which might cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the Code or result in the receipt by any REMIC of any "income from non-permitted
assets" within the meaning of section 860F(a)(2) of the Code or any "net income
from foreclosure property" which is subject to tax under the REMIC Provisions
unless the applicable Servicer has provided to the Trustee an Opinion of Counsel
concluding that, under the REMIC Provisions, such action would not adversely
affect the status of any REMIC as a REMIC and any income generated for any REMIC
by the REO Property would not result in the imposition of a tax upon such REMIC.
(b) The Depositor shall cause the applicable Servicer (to the extent
provided in its Servicing Agreement) to make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Depositor shall,
or shall cause the applicable Servicer (to the extent provided in its Servicing
Agreement) to, dispose of any REO Property within three years of its acquisition
by the Trust Fund unless the Depositor or the applicable Servicer (on behalf of
the Trust Fund) has received a grant of extension from the Internal Revenue
Service to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the REMIC may hold REO Property for
a longer period without adversely affecting the REMIC status of such REMIC or
causing the imposition of a Federal or state tax upon such REMIC. If such an
extension has been received, then the Depositor, acting on behalf of the Trustee
hereunder, shall, or shall cause the applicable Servicer to, continue to attempt
to sell the REO Property for its fair market value for such period longer than
three years as such extension permits (the "Extended Period"). If such an
extension has not been received and the Depositor or the applicable Servicer,
acting on behalf of the Trust Fund hereunder, is unable to sell the
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REO Property within 33 months after its acquisition by the Trust Fund or if such
an extension, has been received and the Depositor or the applicable Servicer is
unable to sell the REO Property within the period ending three months before the
close of the Extended Period, the Depositor shall cause the applicable Servicer,
before the end of the three year period or the Extended Period, as applicable,
to (i) purchase such REO Property at a price equal to the REO Property's fair
market value or (ii) auction the REO Property to the highest bidder (which may
be the applicable Servicer) in an auction reasonably designed to produce a fair
price prior to the expiration of the three-year period or the Extended Period,
as the case may be.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Binding Nature of Agreement; Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Section 11.02 Entire Agreement.
This Agreement contains the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.
Section 11.03 Amendment.
(a) This Agreement may be amended from time to time by the Depositor,
the Master Servicer, the Securities Administrator, and the Trustee, without
notice to or the consent of any of the Holders, (i) to cure any ambiguity or
mistake, (ii) to cause the provisions herein to conform to or be consistent with
or in furtherance of the statements made with respect to the Certificates, the
Trust Fund or this Agreement in any Offering Document, or to correct or
supplement any provision herein which may be inconsistent with any other
provisions herein or with the provisions of any Servicing Agreement, (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement or (iv) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code and
the REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of any REMIC created pursuant to this Agreement, nor shall such amendment
effected pursuant to clause (iii) of such sentence adversely affect in any
material respect the interests of any Holder. Prior to entering into any
amendment without the consent of Holders pursuant to this paragraph, the Trustee
shall be provided with an Opinion of Counsel (at the expense of the party
requesting such amendment) to the effect that such amendment is permitted under
this Section. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder, if the Trustee receives written
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confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce the then current rating assigned to the Certificates.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Securities Administrator and the Trustee,
with the consent of the Holders of not less than 66-2/3% of the Class Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders; provided, however, that no such amendment
shall be made unless the Trustee receives an Opinion of Counsel, at the expense
of the party requesting the change, that such change will not adversely affect
the status of any REMIC as a REMIC or cause a tax to be imposed on such REMIC;
and provided further, that no such amendment may (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 percentages of Class Principal
Amount or Class Notional Amount (or Percentage Interest) of Certificates of each
Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Principal Amount or
Class Notional Amount (or Percentage Interest) of each Class of Certificates
affected thereby. For purposes of this paragraph, references to "Holder" or
"Holders" shall be deemed to include, in the case of any Class of Book-Entry
Certificates, the related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Holder, the Depositor and the Rating Agencies.
(d) It shall not be necessary for the consent of Holders 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 Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing
Agreement, the Trustee shall not consent to any amendment of any Servicing
Agreement except pursuant to the standards provided in this Section with respect
to amendment of this Agreement.
Section 11.04 Voting Rights.
Except to the extent that the consent of all affected
Certificateholders is required pursuant to this Agreement, with respect to any
provision of this Agreement requiring the consent of Certificateholders
representing specified percentages of aggregate outstanding Certificate
Principal Amount or Class Notional Amount (or Percentage Interest), Certificates
owned by the Depositor, the Master Servicer, the Securities Administrator, the
Trustee, any Servicer or any Affiliates thereof are not to be counted so long as
such Certificates are owned by the Depositor, the Master Servicer, the
Securities Administrator, the Trustee, any Servicer or any Affiliate thereof.
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Section 11.05 Provision of Information.
(a) For so long as any of the Certificates of any Series or Class are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act, each
of the Depositor, the Master Servicer and the Trustee agree to cooperate with
each other to provide to any Certificateholders and to any prospective purchaser
of Certificates designated by such holder, upon the request of such holder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act. Any reasonable, out-of-pocket expenses incurred by the Trustee,
the Master Servicer or the Securities Administrator in providing such
information shall be reimbursed by the Depositor.
(b) The Securities Administrator shall provide to any person to whom a
Prospectus was delivered, upon the request of such person specifying the
document or documents requested, (i) a copy (excluding exhibits) of any report
on Form 8-K or Form 10-K filed with the Securities and Exchange Commission
pursuant to Section 9.23(b) and (ii) a copy of any other document incorporated
by reference in the Prospectus. Any reasonable out-of-pocket expenses incurred
by the Securities Administrator in providing copies of such documents shall be
reimbursed by the Depositor.
(c) On each Distribution Date, the Securities Administrator shall
deliver or cause to be delivered by first class mail or make available on its
website to the Depositor, Attention: Contract Finance, a copy of the report
delivered to Certificateholders pursuant to Section 4.04.
Section 11.06 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.07 Notices.
All requests, demands, notices, authorizations, directions, consents,
waivers and communications hereunder shall be in writing and shall be deemed to
have been duly given when received by (a) in the case of the Depositor, Sequoia
Residential Funding, Inc., 591 Redwood Highway, Suite 3160, Mill Valley, CA
94941, telecopy number (415) 381-1773, Attention: Sequoia Mortgage Trust 12, (b)
in the case of the Seller, RWT Holdings, Inc., 591 Redwood Highway, Suite 3140,
Mill Valley, CA 94941, telecopy number (415) 381-1773, Attention: Sequoia
Mortgage Trust 12, (c) in the case of the Master Servicer or the Securities
Administrator, Wells Fargo Bank Minnesota, National Association, P.O. Box 98,
Columbia, Maryland 21046 (or, for overnight deliveries, 9062 Old Annapolis Road,
Columbia, Maryland 21045), telecopy number (410) 715-2380, Attention: Sequoia
Mortgage Trust 12, and (d) with respect to the Trustee or the Certificate
Registrar, its respective Corporate Trust Office, or as to each party such other
address as may hereafter be furnished by such party to the other parties in
writing. All demands, notices and communications to a party hereunder shall be
in writing and
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shall be deemed to have been duly given when delivered to such party at the
relevant address, facsimile number or electronic mail address set forth above or
at such other address, facsimile number or electronic mail address as such party
may designate from time to time by written notice in accordance with this
Section 11.07.
Section 11.08 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.09 Indulgences; No Waivers.
Neither the failure nor any delay on the part of a party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.
Section 11.10 Headings Not To Affect Interpretation.
The headings contained in this Agreement are for convenience of
reference only, and they shall not be used in the interpretation hereof.
Section 11.11 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, express or implied,
shall give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except to
the extent specified in Section 11.15.
Section 11.12 Special Notices to the Rating Agencies.
(a) The Depositor shall give prompt notice to the Rating Agencies of
the occurrence of any of the following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) any Assignment by the Master Servicer of its rights
hereunder or delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in
Section 6.14;
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(iv) any notice of termination given to the Master Servicer
pursuant to Section 6.14 and any resignation of the Master Servicer
hereunder;
(v) the appointment of any successor to any Master Servicer
pursuant to Section 6.14;
(vi) the making of a final payment pursuant to Section 7.02;
and
(vii) any termination of the rights and obligations of any
Servicer under the applicable Servicing Agreement.
(b) All notices to the Rating Agencies provided for this Section shall
be in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to Moody's, to:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Residential Mortgages
If to S&P, to:
Standard & Poor's Ratings Service,
a Division of The McGraw-Hill
Companies, Inc.
55 Water Street
New York, New York 10041
Attention: Residential Mortgages
If to Fitch Ratings, to:
Fitch, Inc.
One State Street Plaza
New York, New York 10004
Attention: Residential Mortgages
(c) The Securities Administrator shall provide or make available to the
Rating Agencies reports prepared pursuant to Section 4.04. In addition, the
Securities Administrator shall, at the expense of the Trust Fund, make available
to each Rating Agency such information as such Rating Agency may reasonably
request regarding the Certificates or the Trust Fund, to the extent that such
information is reasonably available to the Securities Administrator.
(d) The Depositor hereby represents to S&P that, to the Depositor's
knowledge, the information provided to such Rating Agency, including the loan
level detail, is true and correct according to such Rating Agency's
requirements.
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Section 11.13 Conflicts.
To the extent that the terms of this Agreement conflict with the terms
of any Servicing Agreement, the related Servicing Agreement shall govern.
Section 11.14 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
Section 11.15 No Petitions.
The Trustee and the Master Servicer, by entering into this Agreement,
hereby covenant and agree that they shall not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to this Agreement or any of the
documents entered into by the Depositor in connection with the transactions
contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers hereunto duly authorized as of the
day and year first above written.
SEQUOIA RESIDENTIAL FUNDING, INC.,
as Depositor
By:_________________________________
John H. Isbrandtsen
Vice President
HSBC BANK USA,
as Trustee
By:_________________________________
Todd Niemy
Vice President
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By:_________________________________
Peter J. Masterman
Vice President
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Securities
Administrator
By:_________________________________
Stacey Wainwright
Assistant Vice President
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Solely for purposes of Section 2.04
accepted and agreed to by:
RWT HOLDINGS, INC.
By:____________________________
Name: John H. Isbrandtsen
Title: Vice President
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EXHIBIT A
FORMS OF CERTIFICATES
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EXHIBIT B
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes
and says:
1. That he [she] is [title of officer] ________________________
of [name of Purchaser] _____________________________________
(the "Purchaser"), a _______________________ [description of
type of entity] duly organized and existing under the laws of
the [State of __________] [United States], on behalf of which
he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is [ ].
3. That the Purchaser is not a Disqualified Organization (as
defined in the Agreement) within the meaning of Section
860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not be a Disqualified Organization as of
[date of transfer], and that the Purchaser is not acquiring a
Residual Certificate (as defined in the Agreement) for the
account of, or as agent (including a broker, nominee, or other
middleman) for, any person or entity from which it has not
received an affidavit substantially in the form of this
affidavit.
4. That the Purchaser either (x) is not, and on__________________
[date of transfer] will not be, an employee benefit plan
subject to Section 406 or Section 407 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Code, the trustee of any such plan or a
person acting on behalf of any such plan or investing the
assets of any such plan to acquire a Residual Certificate; (y)
is an insurance company that is purchasing the Certificate
with funds contained in an "insurance company general account"
as defined in Section V(e) of Prohibited Transaction Class
Exemption ("PTCE") 95-60 and the purchase and holding of the
Certificate are covered under Section I and III of PTCE 95-60;
or (z) herewith delivers to the Trustee and the Certificate
Registrar an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Certificate Registrar, and
upon which the Trustee and the Certificate Registrar shall be
entitled to rely, to the effect that the purchase or holding
of such Residual Certificate by the Investor will not result
in the assets of the Trust Fund being deemed to be plan assets
and subject to the prohibited transaction provisions of ERISA
or the Code and will not subject the Trustee, the Securities
Administrator, the Master Servicer or the Depositor to any
obligation in addition to those undertaken by such entities in
the Pooling and Servicing
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Agreement, which opinion of counsel shall not be an expense of
the Trustee or the Certificate Registrar.
5. That the Purchaser hereby acknowledges that under the terms of
the Pooling and Servicing Agreement dated as of December 1,
2002 (the "Agreement"), by and among Sequoia Residential
Funding, Inc., as Depositor, Wells Fargo Bank Minnesota,
National Association, as Master Servicer and as Securities
Administrator and HSBC Bank USA, as Trustee with respect to
Sequoia Mortgage Trust 12 Mortgage Pass-Through Certificates,
no transfer of the Residual Certificates shall be permitted to
be made to any person unless the Certificate Registrar and
Trustee have received a certificate from such transferee
containing the representations in paragraphs 3 and 4 hereof.
6. That the Purchaser does not hold REMIC residual securities as
nominee to facilitate the clearance and settlement of such
securities through electronic book-entry changes in accounts
of participating organizations (such entity, a "Book-Entry
Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes
legally required to be paid with respect to such Residual
Certificate.
8. That the Purchaser will not transfer a Residual Certificate to
any person or entity (i) as to which the Purchaser has actual
knowledge that the requirements set forth in paragraph 3,
paragraph 6 or paragraph 10 hereof are not satisfied or that
the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without
obtaining from the prospective Purchaser an affidavit
substantially in this form and providing to the Trustee and
the Certificate Registrar a written statement substantially in
the form of Exhibit C to the Agreement.
9. That the Purchaser understands that, as the holder of a
Residual Certificate, the Purchaser may incur tax liabilities
in excess of any cash flows generated by the interest and that
it intends to pay taxes associated with holding such Residual
Certificate as they become due.
10. That the Purchaser (i) is not a Non-U.S. Person or (ii) is a
Non-U.S. Person that holds a Residual Certificate in
connection with the conduct of a trade or business within the
United States and has furnished the transferor, the Trustee
and the Certificate Registrar with an effective Internal
Revenue Service Form W-8ECI (Certificate of Foreign Person's
Claim for Exemption From Withholding on Income Effectively
Connected With the Conduct of a Trade or Business in the
United States) or successor form at the time and in the manner
required by the Code or (iii) is a Non-U.S. Person that has
delivered to the transferor, the Trustee and the Certificate
Registrar an opinion of a nationally recognized tax counsel to
the effect that the transfer of such Residual Certificate to
it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that
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such transfer of a Residual Certificate will not be
disregarded for federal income tax purposes. "Non-U.S. Person"
means a person other than a "United States Person" within the
meaning of Section 7701(a)(30) of the Code.
11. The Purchaser will not cause income from the Residual
Certificate to be attributable to a foreign permanent
establishment or fixed base of the Purchaser or another U.S.
taxpayer.
12. That the Purchaser agrees to such amendments of the Pooling
and Servicing Agreement as may be required to further
effectuate the restrictions on transfer of any Residual
Certificate to a Disqualified Organization, an agent thereof,
a Book-Entry Nominee, or a person that does not satisfy the
requirements of paragraph 7 and paragraph 10 hereof.
13. That the Purchaser consents to the designation of the
Securities Administrator to act as agent for the "tax matters
person" of each REMIC created by the Trust Fund pursuant to
the Pooling and Servicing Agreement.
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IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[title of officer] this _____ day of __________, 20__.
_________________________________
[name of Purchaser]
By:______________________________
Name:
Title:
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________ 20__.
NOTARY PUBLIC
______________________________
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________ 20__.
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EXHIBIT C
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
----------------------------
Date
Re: Sequoia Mortgage Trust 12
Mortgage Pass-Through Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
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EXHIBIT D
FORM OF CUSTODY AGREEMENT
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EXHIBIT E
LIST OF SERVICING AGREEMENTS
1. The Master Servicing Agreement between RWT Holdings, Inc. ("RWT") and
Morgan Stanley Dean Witter Credit Corporation, dated August 1, 2002, as
modified by the related Acknowledgements.
2. The Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as
of August 1, 2002, between RWT and GreenPoint Mortgage Funding, Inc.,
as modified by the related Acknowledgements.
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EXHIBIT F
LIST OF PURCHASE AGREEMENTS
1. The Master Mortgage Loan Purchase Agreement between RWT Holdings, Inc.
("RWT") and Morgan Stanley Dean Witter Credit Corporation, dated August
1, 2002, as modified by the related Acknowledgements.
2. The Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as
of August 1, 2002, between RWT and GreenPoint Mortgage Funding, Inc.,
as modified by the related Acknowledgements.
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EXHIBIT G
LIST OF LIMITED PURPOSE SURETY BONDS
1. Ambac Assurance Corporation Surety Bond No. AB0240BE, issued March 17,
1999, for Morgan Stanley Dean Witter Credit Corporation loans.
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EXHIBIT H
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Sequoia Mortgage Trust 12
Mortgage Pass-Through Certificates
Reference is hereby made to the Pooling and Servicing Agreement, dated
as of December 1, 2002 (the "Pooling and Servicing Agreement"), by and among
Sequoia Residential Funding, Inc., as Depositor, Wells Fargo Bank Minnesota,
National Association, as Master Servicer and as Securities Administrator and
HSBC Bank USA, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Pooling and Servicing Agreement.
This letter relates to $__________ initial Certificate Balance of Class
___ Certificates which are held in the form of Definitive Certificates
registered in the name of (the "Transferor"). The Transferor has requested a
transfer of such Definitive Certificates for Definitive Certificates of such
Class registered in the name of [insert name of transferee].
In connection with such request, and in respect of such Certificates,
the Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Pooling and
Servicing Agreement and the Certificates and (ii) Rule 144A under the Securities
Act to a purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its own
account or for the account of a "qualified institutional buyer," which purchaser
is aware that the sale to it is being made in reliance upon Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Underwriters and the Depositor.
_____________________________________
[Name of Transferor]
By:__________________________________
Name:
Title:
Dated: ___________, ____
63963
SEQUOIA 12
Pooling and Servicing Agreement
H-1
EXHIBIT I
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Sequoia Mortgage Trust 12 Mortgage Pass-Through Certificates (the
"Privately Offered Certificates") of Sequoia Residential Funding, Inc. (the
"Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold except as permitted
in the following sentence. We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we
should sell any Privately Offered Certificates within two years of the
later of the date of original issuance of the Privately Offered
Certificates or the last day on which such Privately Offered
Certificates are owned by the Depositor or any affiliate of the
Depositor we will do so only (A) to the Depositor, (B) to "qualified
institutional buyers" (within the meaning of Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act
("QIBs"), (C) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act, or (D) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act that is not a QIB (an
"Institutional Accredited Investor") which, prior to such transfer,
delivers to the Certificate Registrar under the Pooling and Servicing
Agreement, dated as of December 1, 2002, by and among Sequoia
Residential Funding, Inc., as Depositor, Wells Fargo Bank Minnesota,
National Association, as Master Servicer and as Securities
Administrator and HSBC Bank USA, as Trustee, a signed letter in the
form of this letter; and we further agree, in the capacities stated
above, to provide to any person purchasing any of the Privately Offered
Certificates from us a notice advising such purchaser that resales of
the Privately Offered Certificates are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor,
we will be required to furnish to the Certificate Registrar a
certification from such transferee in the form hereof to confirm that
the proposed sale is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act. We further understand that the Privately Offered
Certificates purchased by us will bear a legend to the foregoing
effect.
63963
SEQUOIA 12
Pooling and Servicing Agreement
I-1
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Privately Offered Certificates, and we and any account for which we are
acting are each able to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional Accredited
Investor) as to each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make
our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that
in accordance with ERISA, the Code and the Exemption, no Plan and no
person acting on behalf of such a Plan may acquire such Certificate
except in accordance with Section 3.03(d) of the Pooling and Servicing
Agreement.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Pooling and Servicing Agreement.
63963
SEQUOIA 12
Pooling and Servicing Agreement
I-2
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
____________________________________
[Purchaser]
By: ________________________________
Name:
Title:
63963
SEQUOIA 12
Pooling and Servicing Agreement
I-3
EXHIBIT J
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of ______________
(the "Investor"), a [corporation duly organized] and existing under the
laws of __________, on behalf of which he makes this affidavit.
2. The Investor either (x) is not, and on ___________ [date of
transfer] will not be, an employee benefit plan subject to Section 406 or
Section 407 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), the trustee of any such plan or a person acting on
behalf of any such plan or investing the assets of any such plan; (y) if
the Certificate has been the subject of an ERISA-Qualifying Underwriting,
is an insurance company that is purchasing the Certificate with funds
contained in an "insurance company general account" as defined in Section
V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60 and the
purchase and holding of the Certificate are covered under Section I and III
of PTCE 95-60; or (z) herewith delivers to the Certificate Registrar an
opinion of counsel (a "Benefit Plan Opinion") satisfactory to the
Certificate Registrar, and upon which the Certificate Registrar shall be
entitled to rely, to the effect that the purchase or holding of such
Certificate by the Investor will not result in the assets of the Trust Fund
being deemed to be plan assets and subject to the prohibited transaction
provisions of ERISA or the Code and will not subject the Trustee, the
Master Servicer, the Certificate Registrar, the Securities Administrator or
the Depositor to any obligation in addition to those undertaken by such
entities in the Pooling and Servicing Agreement, which opinion of counsel
shall not be an expense of the Trust Fund, the Trustee, the Certificate
Registrar, the Securities Administrator or the Depositor.
3. The Investor hereby acknowledges that under the terms of the
Pooling and Servicing Agreement dated as of December 1, 2002 (the
"Agreement"), by and among Sequoia Residential Funding, Inc., as Depositor,
Wells Fargo Bank Minnesota, National Association, as Master Servicer and as
Securities Administrator and HSBC Bank USA, as Trustee, no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person
unless the Certificate Registrar has received a certificate from such
transferee in the form hereof.
63963
SEQUOIA 12
Pooling and Servicing Agreement
J-1
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________ 20___.
_________________________________
[Investor]
By:______________________________
Name:
Title:
ATTEST:
_____________________________
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named ________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________________ of the Investor, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____ day of _________ 20___.
_____________________________
NOTARY PUBLIC
My commission expires the _____
day of __________, 20___.
63963
SEQUOIA 12
Pooling and Servicing Agreement
J-2
EXHIBIT K
FORM OF LETTER OF REPRESENTATIONS
WITH THE DEPOSITORY TRUST COMPANY
63963
SEQUOIA 12
Pooling and Servicing Agreement
K-1
EXHIBIT L
FORM OF CAP AGREEMENT
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SEQUOIA 12
Pooling and Servicing Agreement
L-1
EXHIBIT M
FORM OF CERTIFICATION TO BE PROVIDED TO
DEPOSITOR BY THE SECURITIES ADMINISTRATOR
Sequoia Mortgage Trust 12 (the "Trust")
Mortgage Pass-Through Certificates
I, ____________________, a ______________ of Wells Fargo Bank Minnesota,
National Association ("Wells Fargo"), as Securities Administrator of the
Trust, hereby certify to Sequoia Residential Funding, Inc. (the
"Depositor"), and its officers, directions and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:
1. The Depositor has provided to the Securities Administrator a written
notice listing all of the monthly distribution reports that were prepared by the
Securities Administrator and that will be included in the Depositor's Form 10-K
for the Trust's fiscal year ending on _____________. I have reviewed each of
such distribution reports.
2. Based on my knowledge, the information in these distribution reports
prepared by the Securities Administrator, taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the period covered by
that annual report.
3. Based on my knowledge, the distribution information required to be
provided by the Securities Administrator under the Pooling and Servicing
Agreement, dated as of December 1, 2002 among the Depositor, Wells Fargo, as
Master Servicer and Securities Administrator and HSBC Bank USA, as Trustee
creating the Trust is included in these reports.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
63963
SEQUOIA 12
Pooling and Servicing Agreement
M-1
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Securities Administrator
Dated: _________________ By: _____________________________
Name:
Title:
63963
SEQUOIA 12
Pooling and Servicing Agreement
M-2
SCHEDULE A
MORTGAGE LOAN SCHEDULE
63963
SEQUOIA 12
Pooling and Servicing Agreement
SCHEDULE B
MORTGAGE LOAN REPRESENTATIONS AND
WARRANTIES OF THE SELLER
[For Mortgage Loans acquired from GreenPoint Mortgage Funding, Inc.
("GreenPoint"), see Mortgage Loan Flow Purchase, Sale & Servicing
Agreement, dated as of August 1, 2002 among RWT Holdings, Inc.,
GreenPoint and Redwood Trust, Inc.]
[For Mortgage Loans acquired from Morgan Stanley Dean Witter Credit
Corporation ("MSDWCC"), see Master Mortgage Loan Purchase Agreement,
dated as of August 1, 2002 among RWT Holdings, Inc., MSDWCC and Redwood
Trust, Inc.]