EXHIBIT 99.1
EXECUTION COPY
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 November 1, 2003
---------------------------
SEQUOIA MORTGAGE TRUST 2003-7
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................ 10
Section 1.01. Definitions.......................................................... 10
Section 1.02. Calculations Respecting Mortgage Loans............................... 46
ARTICLE II DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES............................ 46
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans....................................................... 46
Section 2.02. Acceptance of Trust Fund by Trustee; Review of Documentation
for Trust Fund....................................................... 50
Section 2.03. Representations and Warranties of the Depositor...................... 50
Section 2.04. Discovery of Breach; Repurchase or Substitution of Mortgage
Loans................................................................ 52
Section 2.05 Delivery of Subsequent Mortgage Loans................................ 55
Section 2.06. Grant Clause......................................................... 57
ARTICLE III THE CERTIFICATES......................................................... 58
Section 3.01. The Certificates..................................................... 58
Section 3.02. Registration......................................................... 59
Section 3.03. Transfer and Exchange of Certificates................................ 59
Section 3.04. Cancellation of Certificates......................................... 63
Section 3.05. Replacement of Certificates.......................................... 63
Section 3.06. Persons Deemed Owners................................................ 63
Section 3.07. Temporary Certificates............................................... 64
Section 3.08. Appointment of Paying Agent.......................................... 64
Section 3.09. Book-Entry Certificates.............................................. 64
ARTICLE IV ADMINISTRATION OF THE TRUST FUND.......................................... 66
Section 4.01. Custodial Accounts; Distribution Account............................. 66
Section 4.02 The Pre-Funding Accounts............................................. 67
Section 4.03 The Capitalized Interest Account..................................... 69
Section 4.04. Reports to Trustee and Certificateholders............................ 69
ARTICLE V DISTRIBUTIONS TO HOLDERS OF CERTIFICATES................................... 71
Section 5.01. Distributions Generally.............................................. 71
Section 5.02. Distributions from the Distribution Account.......................... 72
Section 5.03. Allocation of Losses................................................. 76
Section 5.04. Advances by Master Servicer.......................................... 77
Section 5.05. Compensating Interest Payments....................................... 77
Section 5.06. Reserve Fund......................................................... 77
i
ARTICLE VI CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR;
EVENTS OF DEFAULT................................................................ 79
Section 6.01. Duties of Trustee and the Securities Administrator................... 79
Section 6.02. Certain Matters Affecting the Trustee and the Securities
Administrator........................................................ 82
Section 6.03. Trustee and Securities Administrator Not Liable for Certificates..... 83
Section 6.04. Trustee and the Securities Administrator May Own Certificates........ 84
Section 6.05. Eligibility Requirements for Trustee................................. 84
Section 6.06. Resignation and Removal of Trustee and the Securities
Administrator........................................................ 84
Section 6.07. Successor Trustee and Successor Securities Administrator............. 85
Section 6.08. Merger or Consolidation of Trustee or the Securities
Administrator........................................................ 86
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian............. 86
Section 6.10. Authenticating Agents................................................ 88
Section 6.11. Indemnification of the Trustee and the Securities Administrator...... 88
Section 6.12. Fees and Expenses of Securities Administrator and the Trustee........ 89
Section 6.13. Collection of Monies................................................. 89
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor.......... 90
Section 6.15. Additional Remedies of Trustee Upon Event of Default................. 93
Section 6.16. Waiver of Defaults................................................... 93
Section 6.17. Notification to Holders.............................................. 94
Section 6.18. Directions by Certificateholders and Duties of Trustee During
Event of Default..................................................... 94
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon
Event of Default..................................................... 94
Section 6.20. Preparation of Tax Returns and Other Reports......................... 94
ARTICLE VII PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE
TRUST FUND....................................................................... 96
Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon
Purchase or Liquidation of All Mortgage Loans........................ 96
Section 7.02. Procedure Upon Termination of Trust Fund............................. 97
Section 7.03. Additional Trust Fund Termination Requirements....................... 98
ARTICLE VIII RIGHTS OF CERTIFICATEHOLDERS............................................ 99
Section 8.01. Limitation on Rights of Holders...................................... 99
Section 8.02. Access to List of Holders............................................ 99
Section 8.03. Acts of Holders of Certificates...................................... 100
ARTICLE IX ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE
MASTER SERVICER.................................................................. 101
Section 9.01. Duties of the Master Servicer; Enforcement of Servicer's and
Master Servicer's Obligations........................................ 101
ii
Section 9.02 Assumption of Master Servicing by Trustee............................ 103
Section 9.03. Representations and Warranties of the Master Servicer................ 103
Section 9.04. Compensation to the Master Servicer.................................. 105
Section 9.05. Merger or Consolidation.............................................. 105
Section 9.06. Resignation of Master Servicer....................................... 105
Section 9.07. Assignment or Delegation of Duties by the Master Servicer............ 106
Section 9.08. Limitation on Liability of the Master Servicer and Others............ 106
Section 9.09. Indemnification; Third-Party Claims.................................. 107
ARTICLE X REMIC ADMINISTRATION....................................................... 107
Section 10.01. REMIC Administration................................................. 107
Section 10.02. Prohibited Transactions and Activities............................... 110
Section 10.03. Indemnification with Respect to Prohibited Transactions or Loss
of REMIC Status...................................................... 110
Section 10.04. REO Property......................................................... 110
ARTICLE XI MISCELLANEOUS PROVISIONS.................................................. 111
Section 11.01. Binding Nature of Agreement; Assignment.............................. 111
Section 11.02. Entire Agreement..................................................... 111
Section 11.03. Amendment............................................................ 111
Section 11.04. Voting Rights........................................................ 113
Section 11.05. Provision of Information............................................. 113
Section 11.06. Governing Law........................................................ 113
Section 11.07. Notices.............................................................. 113
Section 11.08. Severability of Provisions........................................... 114
Section 11.09. Indulgences; No Waivers.............................................. 114
Section 11.10. Headings Not To Affect Interpretation................................ 114
Section 11.11. Benefits of Agreement................................................ 114
Section 11.12. Special Notices to the Rating Agencies............................... 114
Section 11.13. Conflicts............................................................ 116
Section 11.14. Counterparts......................................................... 116
Section 11.15 No Petitions......................................................... 116
iii
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 [Reserved]
Exhibit M Form of Certification to be Provided to the Depositor by the Securities
Administrator
Schedule A Mortgage Loan Schedule
iv
This POOLING AND SERVICING AGREEMENT, dated as of November 1, 2003 (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 Initial Mortgage Loans from the Seller
and at the Closing Date is the owner of the Initial 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 Initial Mortgage Loans, an initial deposit to each
Pre-Funding Account of the Original Pre-Funded Amount with respect to the
related Mortgage Pool, an initial deposit to the Capitalized Interest Account in
an amount sufficient to satisfy the aggregate Capitalized Interest Requirement
on the Certificates during the Pre-Funding Period, 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 Pre-Funding Accounts and the Capitalized Interest Account) be treated for
federal income tax purposes as comprising three real estate mortgage investment
conduits (each, a "REMIC" or, in the alternative, the "Lower-Tier REMIC," the
"Middle-Tier REMIC," and the "Upper-Tier REMIC"). Each Certificate, other than
the Class A-R and Class LT-R Certificate, is hereby designated as a regular
interest in the Upper-Tier REMIC, as described herein. In addition, each of the
LIBOR Certificates represents the right to receive payments in respect of Net
WAC Shortfalls from the Reserve Fund as provided in Section 5.02 and Section
5.06. The owners of the Interest-Only Certificates beneficially own the Reserve
Fund. The Class A-R Certificate is hereby designated as the sole class of
residual interest in the Upper-Tier REMIC. The Class LT-R Certificate evidences
ownership of the sole class of residual interest in the Middle-Tier REMIC (the
"MT-R Interest") and the sole class of residual interest in the Lower-Tier REMIC
(the "LT-R Interest").
The Lower-Tier REMIC shall hold as its assets all property of the Trust
Fund other than the Additional Collateral, the assets held in the Reserve Fund,
the Pre-Funding Accounts and the Capitalized Interest Account, and the interests
in any REMIC formed hereby. Each Lower-Tier Interest other than the LT-R
Interest is hereby designated as a regular interest in the Lower-Tier REMIC and
the LT-R Interest is hereby designated as the sole Class of residual interest in
the
Lower-Tier REMIC. The Middle-Tier REMIC shall hold as its assets the Lower-Tier
Interests other than the LT-R Interest. Each Middle-Tier Interest other than the
MT-R Interest is hereby designated as a regular interest in the Middle-Tier
REMIC and the MT-R Interest is hereby designated as the sole Class of residual
interest in the Middle-Tier REMIC. The Upper-Tier REMIC shall hold as its assets
the Middle-Tier Interests other than the MT-R Interests.
THE LOWER-TIER REMIC.
The following table specifies the Class designation, interest rate, and
initial Class Principal Amount for each Class of Lower-Tier Interests:
INITIAL CLASS
LOWER-TIER REMIC PRINCIPAL
INTEREST DESIGNATION INTEREST RATE AMOUNT RELATED MORTGAGE POOL
- -------------------- ------------- ---------------- ---------------------
LT1-A-1 (1) $ 9,312,015.23 Pool 1
LT2-A-1 (1) $ 10,351,471.00 Pool 1
LT3-A-1 (1) $ 9,986,458.84 Pool 1
LT4-A-1 (1) $ 9,634,317.68 Pool 1
LT5-A-1 (1) $ 9,294,593.68 Pool 1
LT6-A-1 (1) $ 8,966,848.98 Pool 1
LT7-A-1 (1) $ 8,650,661.17 Pool 1
LT8-A-1 (1) $ 8,345,622.73 Pool 1
LT9-A-1 (1) $ 8,051,340.52 Pool 1
LT10-A-1 (1) $ 7,767,435.23 Pool 1
LT11-A-1 (1) $ 7,493,541.00 Pool 1
LT12-A-1 (1) $ 7,229,304.76 Pool 1
LT13-A-1 (1) $ 6,974,386.01 Pool 1
LT14-A-1 (1) $ 6,728,456.15 Pool 1
LT15-A-1 (1) $ 6,491,198.24 Pool 1
LT16-A-1 (1) $ 6,262,306.50 Pool 1
LT17-A-1 (1) $ 6,041,485.89 Pool 1
LT18-A-1 (1) $ 5,828,451.84 Pool 1
LT19-A-1 (1) $ 5,622,929.76 Pool 1
LT20-A-1 (1) $ 5,424,654.77 Pool 1
LT21-A-1 (1) $ 5,006,426.64 Pool 1
LT22-A-1 (1) $ 4,825,889.45 Pool 1
LT23-A-1 (1) $ 4,651,788.89 Pool 1
LT24-A-1 (1) $ 4,483,896.75 Pool 1
LT25-A-1 (1) $ 4,321,992.87 Pool 1
LT26-A-1 (1) $ 4,165,864.90 Pool 1
LT27-A-1 (1) $ 4,015,308.00 Pool 1
LT28-A-1 (1) $ 3,870,124.56 Pool 1
LT29-A-1 (1) $ 3,730,123.97 Pool 1
LT30-A-1 (1) $ 3,595,122.33 Pool 1
LT31-A-1 (1) $ 3,464,942.30 Pool 1
LT32-A-1 (1) $ 3,339,412.76 Pool 1
LT33-A-1 (1) $ 3,218,368.69 Pool 1
LT34-A-1 (1) $ 3,101,650.86 Pool 1
LT35-A-1 (1) $ 2,989,105.70 Pool 1
LT36-A-1 (1) $ 2,880,585.08 Pool 1
LT37-A-1 (1) $ 2,605,214.10 Pool 1
2
INITIAL CLASS
LOWER-TIER REMIC PRINCIPAL
INTEREST DESIGNATION INTEREST RATE AMOUNT RELATED MORTGAGE POOL
- -------------------- ------------- ---------------- ---------------------
LT38-A-1 (1) $ 2,513,349.40 Pool 1
LT39-A-1 (1) $ 2,424,724.00 Pool 1
LT40-A-1 (1) $ 2,339,223.72 Pool 1
LT41-A-1 (1) $ 2,256,738.33 Pool 1
LT42-A-1 (1) $ 61,742,666.72 Pool 1
LT-Pool 1 (1) $ 12,743,342.15 Pool 1
LT-Pool 1-PSA (1) $ 128,720.63 Pool 1
LT1-A-2 (2) $ 16,219,120.82 Pool 2
LT2-A-2 (2) $ 18,029,407.44 Pool 2
LT3-A-2 (2) $ 17,393,656.92 Pool 2
LT4-A-2 (2) $ 16,780,324.15 Pool 2
LT5-A-2 (2) $ 16,188,618.65 Pool 2
LT6-A-2 (2) $ 15,617,777.77 Pool 2
LT7-A-2 (2) $ 15,067,065.81 Pool 2
LT8-A-2 (2) $ 14,535,772.98 Pool 2
LT9-A-2 (2) $ 14,023,214.53 Pool 2
LT10-A-2 (2) $ 13,528,729.84 Pool 2
LT11-A-2 (2) $ 13,051,681.61 Pool 2
LT12-A-2 (2) $ 12,591,454.99 Pool 2
LT13-A-2 (2) $ 12,147,456.81 Pool 2
LT14-A-2 (2) $ 11,719,114.83 Pool 2
LT15-A-2 (2) $ 11,305,877.00 Pool 2
LT16-A-2 (2) $ 10,907,210.70 Pool 2
LT17-A-2 (2) $ 10,522,602.12 Pool 2
LT18-A-2 (2) $ 10,151,555.55 Pool 2
LT19-A-2 (2) $ 9,793,592.78 Pool 2
LT20-A-2 (2) $ 9,448,252.44 Pool 2
LT21-A-2 (2) $ 8,719,811.31 Pool 2
LT22-A-2 (2) $ 8,405,365.39 Pool 2
LT23-A-2 (2) $ 8,102,130.28 Pool 2
LT24-A-2 (2) $ 7,809,708.52 Pool 2
LT25-A-2 (2) $ 7,527,716.68 Pool 2
LT26-A-2 (2) $ 7,255,784.87 Pool 2
LT27-A-2 (2) $ 6,993,556.33 Pool 2
LT28-A-2 (2) $ 6,740,686.86 Pool 2
LT29-A-2 (2) $ 6,496,844.48 Pool 2
LT30-A-2 (2) $ 6,261,708.92 Pool 2
LT31-A-2 (2) $ 6,034,971.26 Pool 2
LT32-A-2 (2) $ 5,816,333.47 Pool 2
LT33-A-2 (2) $ 5,605,508.12 Pool 2
LT34-A-2 (2) $ 5,402,217.90 Pool 2
LT35-A-2 (2) $ 5,206,195.33 Pool 2
LT36-A-2 (2) $ 5,017,182.37 Pool 2
LT37-A-2 (2) $ 4,537,559.81 Pool 2
LT38-A-2 (2) $ 4,377,556.99 Pool 2
LT39-A-2 (2) $ 4,223,196.18 Pool 2
LT40-A-2 (2) $ 4,074,278.40 Pool 2
LT41-A-2 (2) $ 3,930,611.75 Pool 2
3
INITIAL CLASS
LOWER-TIER REMIC PRINCIPAL
INTEREST DESIGNATION INTEREST RATE AMOUNT RELATED MORTGAGE POOL
- -------------------- ------------- ---------------- ---------------------
LT42-A-2 (2) $ 107,538,587.04 Pool 2
LT-Pool 2 (2) $ 22,195,386.86 Pool 2
LT-Pool 2-PSA (2) $ 224,195.83 Pool 2
LT-R Interest (3) (3) N/A
- ----------
(1) The interest rate with respect to any Distribution Date (and the
related Accrual Period) for these Lower-Tier Interests will be a per
annum rate equal to the Pool 1 Net WAC.
(2) The interest rate with respect to any Distribution Date (and the
related Accrual Period) for these Lower-Tier Interests will be a per
annum rate equal to the Pool 2 Net WAC.
(3) The LT-R Interest is the sole class of residual interests in the
Lower-Tier REMIC. It does not have a principal balance and does not
bear interest.
On each Distribution Date, the Available Distribution Amount for each
Mortgage Pool distributable as interest shall be distributed as interest with
respect to the Lower-Tier Interests based on the interest rates described above.
On each Distribution Date, Interest Shortfalls attributable to any Mortgage Pool
shall be allocated among the related Lower-Tier Interests based on the relative
amounts of interest otherwise accrued for the related Accrual Period on each
such Lower-Tier Interest.
On each Distribution Date, the remaining Available Distribution Amount
for each Mortgage Pool shall be distributed as principal on the Lower-Tier
Interests as follows:
(i) First, to the LT-Pool 1-PSA Interest until the Class
Principal Amount of such Lower-Tier Interest equals
one percent of the Pool Subordinate Amount for Pool 1
for the next succeeding Distribution Date;
(ii) Second, to the LT-Pool 2-PSA Interest until the Class
Principal Amount of such Lower-Tier Interest equals
one percent of the Pool Subordinate Amount for Pool 2
for the next succeeding Distribution Date;
(iii) Third, to the LT-Pool 1-PSA or to the LT-Pool 2-PSA
Interests until the ratio of the Class Principal
Amount of the LT-Pool 1-PSA Interest to the Class
Principal Amount of the LT-Pool 2 PSA Interest equals
the ratio of the Pool 1 Subordinate Amount to the
Pool 2 Subordinate Amount;
(iv) Fourth, to the Lower-Tier Interests other than those
having "PSA" in their class designation as follows:
a. To the LT-Pool 1 and LT1-A-1 through LT42-A-1
Interests until the aggregate of their Class
Principal Amounts equals the difference between
(a) the Aggregate Stated Principal Balance of the
Pool 1 Mortgage Loans, minus, (b) the Class
Principal Amount of the LT-Pool 1-PSA Interest on
such Distribution Date, taking into account the
distributions under priorities (i) through (iii)
above, sequentially in the following order:
4
i. First, to the extent of principal
distributions on the Class A-1
Certificates on such Distribution Date, to
the Lower-Tier Interests in REMIC 1 having
"A-1" in their Class designation, until
the aggregate of the Class Principal
Amounts of such Lower-Tier Interests
equals the Class Principal Amount of the
Class A-1 Certificate, in ascending order
of their numerical designation until the
Class Principal Amount of each such
Lower-Tier Interest is reduced to zero;
and
ii. Second, to the LT-Pool 1 Interest until
its Class Principal Amount is reduced to
zero;
b. To the LT-Pool 2 and LT1-A-2 through LT42-A-2
Interests until the aggregate of their Class
Principal Amounts equals the difference between
(a) the Aggregate Stated Principal Balance of the
Pool 2 Mortgage Loans, minus, (b) the Class
Principal Amount of the LT-Pool 2-PSA Interest on
such Distribution Date, taking into account the
distributions under priorities (i) through (iii)
above, sequentially in the following order:
i. First, to the extent of principal
distributions on the Class A-2
Certificates on such Distribution Date, to
the Lower-Tier Interests in REMIC 1 having
"A-2" in their Class designation, until
the aggregate of the Class Principal
Amounts of such Lower-Tier Interests
equals the Class Principal Amount of the
Class A-2 Certificate, in ascending order
of their numerical designation until the
Class Principal Amount of each such
Lower-Tier Interest is reduced to zero;
and
ii. Second, to the LT-Pool 2 Interest until
its Class Principal Amount is reduced to
zero.
On each Distribution Date, Realized Losses attributable to principal,
with respect to any Mortgage Pool shall each be allocated among the Lower-Tier
Interests in the same manner that principal is distributed among such Lower-Tier
Interests.
THE MIDDLE-TIER REMIC
The following table sets forth (or describes) the Class designation,
interest rate, and initial Class Principal Amount for each Class of Middle-Tier
Interests.
MIDDLE-TIER REMIC INITIAL CLASS CORRESPONDING CLASS OF
INTEREST DESIGNATION INTEREST RATE PRINCIPAL AMOUNT CERTIFICATE(s)
- -------------------- ------------- ----------------- ----------------------
MT- A1 (1) $ 290,000,000.00 A1
MT-Pool 1-NAS (2) (2) X-1
MT-Pool 1-
Companion (3) (3) X-2
MT-A2 (4) $ 505,100,000.00 A2
MT-Pool 2-NAS (5) (5) X-1
5
MT-Pool 2- (6) (6) X-2
Companion
MT-B1 (7) $ 16,607,000.00 B-1, X-B
MT-B2 (7) $ 6,642,000.00 B-2
MT-B3 (7) $ 4,982,000.00 B-3
MT-B4 (7) $ 2,490,000.00 B-4
MT-B5 (7) $ 1,660,000.00 B-5
MT-B6 (7) $ 2,910,545.00 B-6
MT-AR (8) $ 100.00 A-R
MT-R Interest (9) (9) LT-R
- ----------
(1) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for the Class MT-A1 Interests is the per annum rate equal
to the least of (i) One-Month LIBOR plus 0.32%, (ii) the Pool 1 Net WAC and
(iii) 11.50%; provided, however, if the Mortgage Loans and related property
are not purchased pursuant to Section 7.01(b) 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 MT-A1 Interests will be LIBOR plus 0.64%.
(2) The Class MT-Pool 1-NAS Component is an interest only component. With
respect to any Distribution Date (and the related Accrual Period), the
Class MT- Pool 1-NAS Component is entitled to receive a specified portion
of the interest accrued on each of Lower-Tier Interests LT1-A-1 through
LT42-A-1 for the specific Distribution Dates listed in the schedule set
forth below, at a rate equal to the lesser of (i) 0.80% and (ii) the
excess, if any, of the Pool 1 Net WAC for such Distribution Date over the
Certificate Interest Rate for the Class A-1 Certificates for such
Distribution Date (multiplied by a fraction, the numerator of which is 25
and the denominator of which is 30 for the first Distribution Date only).
LOWER-TIER INTEREST DISTRIBUTION DATES
- ------------------- ------------------
LT1-A-1 1
LT2-A-1 1-2
LT3-A-1 1-3
LT4-A-1 1-4
LT5-A-1 1-5
LT6-A-1 1-6
LT7-A-1 1-7
LT8-A-1 1-8
LT9-A-1 1-9
LT10-A-1 1-10
LT11-A-1 1-11
LT12-A-1 1-12
LT13-A-1 1-13
LT14-A-1 1-14
LT15-A-1 1-15
LT16-A-1 1-16
LT17-A-1 1-17
LT18-A-1 1-18
LT19-A-1 1-19
LT20-A-1 1-20
LT21-A-1 1-21
LT22-A-1 1-22
LT23-A-1 1-23
LT24-A-1 1-24
LT25-A-1 1-25
LT26-A-1 1-26
LT27-A-1 1-27
LT28-A-1 1-28
LT29-A-1 1-29
6
LT30-A-1 1-30
LT31-A-1 1-31
LT32-A-1 1-32
LT33-A-1 1-33
LT34-A-1 1-34
LT35-A-1 1-35
LT36-A-1 1-36
LT37-A-1 1-37
LT38-A-1 1-38
LT39-A-1 1-39
LT40-A-1 1-40
LT41-A-1 1-41
LT42-A-1 1-42
(3) The Class MT-Pool 1-Companion Component is an interest only component.
With respect to any Distribution Date (and the related Accrual Period), the
Class MT-Pool 1-Companion Component is entitled to receive a specified
portion of the interest accrued on each of Lower-Tier Interests LT1-A-1
through LT42-A-1, in each case, at a rate equal to the excess, if any, of
(i) the Pool 1 Net WAC for such Distribution Date over (ii) the sum of the
Certificate Interest Rate on the Class A-1 Certificates for such
Distribution Date (multiplied by a fraction, the numerator of which is 25
and the denominator of which is 30 for the first Distribution Date only)
and, for any Distribution Date on which the Class MT- Pool 1-NAS Component
is entitled to a portion of the interest accrued on such Lower-Tier
Interest, 0.80%.
(4) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for the Class MT-A-2 Interest is the per annum rate equal
to the least of (i) Six-Month LIBOR plus 0.345%, (ii) the Pool 2 Net WAC
and (iii) 11.50%; provided, however, if the Mortgage Loans and related
property are not purchased pursuant to Section 7.01(b) 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 MT-A-2 Interest will be LIBOR plus 0.69%.
(5) The Class MT-Pool 2-NAS Component is an interest only component. With
respect to any Distribution Date (and the related Accrual Period), the
Class MT-Pool 2-NAS Component is entitled to receive a specified portion of
the interest accrued on each of Lower-Tier Interests LT1-A-2 through
LT42-A-2, at a rate equal to the lesser of (i) 0.80% and (ii) the excess,
if any, of the Pool 2 Net WAC for such Distribution Date over the
Certificate Interest Rate for the Class A-2 Certificates for such
Distribution Date (multiplied by a fraction, the numerator of which is 25
and the denominator of which is 30 for the first Distribution Date only).
LOWER-TIER INTEREST DISTRIBUTION DATES
- ------------------- ------------------
LT1-A-2 1
LT2-A-2 1-2
LT3-A-2 1-3
LT4-A-2 1-4
LT5-A-2 1-5
LT6-A-2 1-6
LT7-A-2 1-7
LT8-A-2 1-8
LT9-A-2 1-9
LT10-A-2 1-10
LT11-A-2 1-11
LT12-A-2 1-12
LT13-A-2 1-13
LT14-A-2 1-14
LT15-A-2 1-15
LT16-A-2 1-16
LT17-A-2 1-17
LT18-A-2 1-18
LT19-A-2 1-19
7
LT20-A-2 1-20
LT21-A-2 1-21
LT22-A-2 1-22
LT23-A-2 1-23
LT24-A-2 1-24
LT25-A-2 1-25
LT26-A-2 1-26
LT27-A-2 1-27
LT28-A-2 1-28
LT29-A-2 1-29
LT30-A-2 1-30
LT31-A-2 1-31
LT32-A-2 1-32
LT33-A-2 1-33
LT34-A-2 1-34
LT35-A-2 1-35
LT36-A-2 1-36
LT37-A-2 1-37
LT38-A-2 1-38
LT39-A-2 1-39
LT40-A-2 1-40
LT41-A-2 1-41
LT42-A-2 1-42
(6) The Class MT-Pool 2-Companion Component is an interest only component.
With respect to any Distribution Date (and the related Accrual Period), the
Class MT-Pool 2-Companion Component is entitled to receive a specified
portion of the interest accrued on each of Lower-Tier Interests LT-1-A-2
through LT42-A-2, in each case, at a rate equal to the excess, if any, of
(i) the Pool 2 Net WAC for such Distribution Date over (ii) the sum of the
Certificate Interest Rate on the Class A-2 Certificates for such
Distribution Date (multiplied by a fraction, the numerator of which is 25
and the denominator of which is 30 for the first Distribution Date only)
and, for any Distribution Date on which the Class MT-Pool 2-NAS Component
is entitled to a portion of the interest accrued on such Lower-Tier
Interest, 0.80%.
(7) With respect to any Distribution Date (and the related Accrual Period),
these Interests will bear interest at a per annum rate equal to the
Subordinate Net WAC, which is a weighted average rate based on the rate
applicable to the LT-Pool 1-PSA interest and the LT-Pool 2-PSA Interest.
(8) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for the MT-AR Interest is a per annum rate equal to the
Pool 1 Net WAC.
(9) The MT-R Interest is the sole class of residual interests in the
Middle-Tier REMIC. It does not have a principal balance and does not bear
interest.
On each Distribution Date, the Securities Administrator, as Paying Agent,
shall distribute interest and principal on, and shall allocate Realized Losses
among, the Middle-Tier Interests in the same manner that such amounts are
distributed on and such losses are allocated among the Corresponding Classes of
Certificates.
THE CERTIFICATES AND THE UPPER-TIER REMIC
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.
8
INITIAL CLASS
CERTIFICATE CLASS PRINCIPAL AMOUNT
CLASS DESIGNATION INTEREST RATE OR CLASS NOTIONAL AMOUNT
- ----------------- ------------- ------------------------
Class A-1 (1) $ 290,000,000.00
Class X-1 (2) (3)
Class A-2 (4) $ 505,100,000.00
Class X-2 (5) (6)
Class B-1 (7) $ 16,607,000.00
Class X-B (8) (9)
Class B-2 (10) $ 6,642,000.00
Class B-3 (10) $ 4,982,000.00
Class B-4 (10) $ 2,490,000.00
Class B-5 (10) $ 1,660,000.00
Class B-6 (10) $ 2,910,545.00
Class A-R (11) $ 100.00
Class LT-R (12) (12)
(1) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A-1 Certificates is a specified
portion of the interest accrued on the MT-A-1 Middle-Tier Interest equal to
a per annum rate equal to the least of (i) One-Month LIBOR plus 0.32%, (ii)
the Pool 1 Net WAC and (iii) 11.50%; provided, however, if the Mortgage
Loans and related property are not purchased pursuant to Section 7.01(b) 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-1 Certificates will be LIBOR plus 0.64%.
(2) With respect to any Distribution Date (and the related Accrual Period),
Current Interest on the Class X-1 Certificates will be equal to the sum of
Current Interest for the MT-Pool 1-NAS interest and Current Interest for
the MT-Pool 2-NAS interest for such Distribution Date.
(3) The Class X-1 Certificate is an interest only Class and for any
Distribution Date shall have a Class Notional Amount equal to the sum of
(i) the Pool 1 NAS Component Notional Amount and (ii) the Pool 2 NAS
Component Notional Amount for such Distribution Date. The initial Class
Notional Amount of the Class X-1 Certificates is $795,100,000.
(4) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A-2 Certificates is a specified
portion of the interest accrued on the MT-A2 Middle-Tier Interest equal to
a per annum rate equal to the least of (i) Six-Month LIBOR plus 0.345%,
(ii) the Pool 2 Net WAC and (iii) 11.50%; provided, however, if the
Mortgage Loans and related property are not purchased pursuant to Section
7.01(b) 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-2 Certificates will be LIBOR
plus 0.69%.
(5) With respect to any Distribution Date (and the related Accrual Period),
Current Interest on the Class X-2 Certificates will be equal to the sum of
Current Interest for the MT-Pool 1-Companion interest and Current Interest
for the MT-Pool 2-Companion interest for such Distribution Date.
(6) The Class X-2 Certificate is an interest only Certificate and for any
Distribution Date shall have a Class Notional Amount equal to the sum of
(i) the Pool 2 Companion Component Notional Amount and (ii) the Pool 2
Companion Component Notional Amount for such Distribution Date. The initial
Class Notional Amount of the Class X-2 Certificates is $795,100,000.
(7) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class B-1 Certificates is the per annum
rate equal to the least of (i) One-Month LIBOR plus 0.55%, (ii) the
Subordinate Net WAC (which is a rate equal to a weighted average of the
rates applicable to the MT-B1 through MT-B6 Middle-Tier Interests) and
(iii) 11.50%; provided, however, if the Mortgage Loans and related property
are not purchased pursuant to Section 7.01(b) 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 0.825%.
9
(8) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-B Certificates will be equal to
the excess of the Subordinate Net WAC (which is a rate equal to a weighted
average of the rates applicable to the MT-B1 through MT-B6 Middle-Tier
Interests) over the Certificate Interest Rate on the Class B-1 Certificates
(multiplied by a fraction, the numerator of which is 25 and the denominator
of which is 30 for the first Distribution Date only).
(9) The Class X-B Interest is an interest only Certificate and for any
Distribution Date the Class X-B Certificate shall bear interest at the
interest rate described above on a Class Notional Amount equal to the Class
Principal Amount of the Class B-1 Certificates immediately before such
Distribution Date. The initial Class Notional Amount of the Class X-B
Certificates is $16,607,000.
(10) The Certificate Interest Rates with respect to any Distribution Date (and
the related Accrual Period) for the Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates will equal the Subordinate Net WAC (which is
a rate equal to a weighted average of the rates applicable to the MT-B1
through MT-B6 Middle-Tier Interests).
(11) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A-R Certificate will equal the
Pool 1 Net WAC.
(12) The Class LT-R Certificate does not have a principal balance and does not
bear interest.
As of the Cut-off Date, the Initial Mortgage Loans had an Aggregate
Stated Principal Balance of $724,046,689.47.
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:
1M Sub-account: The Sub-account established under the Pool 1
Pre-Funding Account for the acquisition of Subsequent Mortgage Loans which are
One-Month LIBOR Loans.
6M Sub-account: The Sub-account established under the Pool 1
Pre-Funding Account for the acquisition of Subsequent Mortgage Loans which are
Six-Month LIBOR Loans.
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 December 19, 2003. The Accrual
Period applicable to the remaining Classes of Certificates and to each
Lower-Tier Interest and Middle-Tier Interest is the calendar month preceding the
month in which the Distribution Date occurs. Interest shall accrue on all
Classes of Certificates and on all Lower-
10
Tier Interests and Middle-Tier Interests on the basis of a 360-day year
consisting of twelve 30-day months.
Acknowledgements: The Assignment, Assumption and Recognition
Agreements, each dated November 25, 2003, 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 the 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.
Adverse REMIC Event: Either (i) loss of status as a REMIC, within the
meaning of Section 860D of the Code, for any group of assets identified as a
REMIC in the Preliminary Statement to this Agreement, or (ii) imposition of any
tax, including the tax imposed under Section 860F(a)(1) on prohibited
transactions, and the tax imposed under Section 860G(d) on certain contributions
to a REMIC, on any REMIC created hereunder to the extent such tax would be
payable from assets held as part of the Trust Fund.
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 Expense Rate: With respect to any Mortgage Loan, the sum of
the Master Servicing Fee Rate and the applicable Servicing Fee Rate.
11
Aggregate Senior Percentage: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate of
the Class Principal Amounts of the Class A-1, Class A-2 and Class A-R
Certificates and the denominator of which is the Aggregate Stated Principal
Balance for such date, but in no event greater than 100%.
Aggregate Subordinate Percentage: As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.
Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans (and when such
term is used with respect to a particular Mortgage Pool, the aggregate of the
Stated Principal Balances of the Mortgage Loans in such 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 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.
Apportioned Principal Balance: As to any Distribution and each Class of
Subordinate Certificates, the Class Principal Amount thereof multiplied by a
fraction, the numerator of which is the applicable Pool Subordinate Amount
(i.e., the Pool 1 Subordinate Amount or the Pool 2 Subordinate Amount, as the
case may require), and the denominator of which is the sum of the Pool
Subordinate Amounts, in each case, on such date.
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
12
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
and each Mortgage Pool, the total amount of all cash received by the Master
Servicer on the Mortgage Loans in such Mortgage Pool 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 Master
Servicing Fees) and principal collected on the related 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 related 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 related 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
related Mortgage Loans; (5) the aggregate Purchase Price of all Defective
Mortgage Loans in such Mortgage Pool purchased from the Trust Fund during the
related Prepayment Period; and (6) any investment earnings in amounts on deposit
in the related Pre-Funding Account which have been transferred to the
Distribution Account for distribution on Distribution Date; minus:
(A) all related fees, 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 equal to the product of (i) the
applicable Pool Percentage and (ii) $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.
13
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.
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.
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: Class A-1, Class A-2, Class X-1, Class X-2,
Class X-B, 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.
Capitalized Interest Account: The account created and maintained by the
Securities Administrator on behalf of the Trustee and the Certificateholders
pursuant to Section 4.03, which account is not an asset of any of the REMICs.
Capitalized Interest Requirement: As to any Distribution date and each
Mortgage Pool up to and including the Distribution Date immediately following
the close of the Pre-Funding Period, the product of (x) the excess of (a) the
Original Pre-Funded Amount for such Mortgage Pool over (b) the aggregate of the
Stated Principal Balances of the Subsequent Mortgage Loans transferred to the
Trust Fund for inclusion in such Mortgage Pool prior to such Distribution Date
that have a Scheduled Payment that will be included in the amounts distributed
to such Mortgage Pool's Related Certificate Group on such Distribution Date, (y)
the Pool 1 Net WAC (in the case
14
of Pool 1) or Pool 2 Net WAC (in the case of Pool 2) and (z) a fraction, the
numerator of which is 30 and the denominator of which is 360. The Capitalized
Interest Requirement for a Mortgage Pool shall be reduced by any investment
earnings on deposit in such Pool's Pre-Funding Account which have been
transferred to the Distribution Account for inclusion in such Pool's Available
Distribution Amount for distribution to Certificateholders on such Distribution
Date.
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 Group: Each of the Group 1 Certificates and the Group 2
Certificates.
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 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 Middle-Tier REMIC, the term "Class" refers to all Middle-Tier
Interests having the same alphanumeric 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.
15
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. With
respect to any Lower-Tier or Middle-Tier Interest, the initial Class Principal
Amount as shown or described in the table set forth in the Preliminary Statement
for the issuing REMIC, as reduced by principal distributed with respect to such
Lower-Tier or Middle-Tier Interest and Realized Losses allocated to such
Lower-Tier or Middle-Tier Interest 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 A-1 Companion Sub Account: As defined in Section 5.06(b).
Class A-1 NAS Sub Account: As defined in Section 5.06(b).
Class A-2 Companion Sub Account: As defined in Section 5.06(b).
Class A-2 NAS Sub Account: As defined in Section 5.06(b).
Class B-1 Sub Account: As defined in Section 5.06(b).
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
LT-R Interest and the MT-R Interest.
Class X Certificates: The Class X-1, Class X-2 and Class X-B
Certificates.
Class X-1 Required Reserve Fund Deposit: For any Distribution Date, an
amount equal to the sum of the Pool 1 NAS Component Required Reserve Fund
Deposit and the Pool 2 NAS Component Required Reserve Fund Deposit for such
Distribution Date.
Class X-2 Required Reserve Fund Deposit: For any Distribution Date, an
amount equal to the sum of the Pool 1 Companion Component Required Reserve Fund
Deposit and the Pool 2 Companion Component Required Reserve Fund Deposit for
such Distribution Date.
Class X-B Required Reserve Fund Deposit: For any Distribution Date, an
amount equal to the lesser of (i) the Current Interest for the Class X-B
Certificates for such Distribution Date and (ii) the amount required to bring
the balance on deposit in the Class B-1 Sub Account up to an amount equal to the
sum of (a) the Net WAC Shortfalls for such Distribution Date with respect to the
Class B-1 Certificates and (b) $2,500.
16
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: November 25, 2003.
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.
Companion Component: Either the Pool 1 Companion Component or the Pool
2 Companion Component, as applicable.
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.
Component: Any of the Pool 1 NAS Component, the Pool 2 NAS Component,
the Pool 1 Companion Component or the Pool 2 Companion Component, as applicable.
Component Interest Rate: Any of the Pool 1 NAS Component Interest Rate,
the Pool 1 Companion Component Interest Rate, the Pool 2 NAS Component Interest
Rate or the Pool 2 Companion Component Interest Rate, as applicable.
Component Notional Amount: Any of the Pool 1 NAS Component Notional
Amount, the Pool 1 Companion Component Notional Amount, the Pool 2 NAS Component
Notional Amount or the Pool 2 Companion Component Notional Amount, as
applicable.
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 Sequoia Mortgage Trust 2003-7, 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
17
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, Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479, Attention: Corporate Trust, Sequoia Mortgage Trust 2003-7.
Corresponding Classes Of Certificates: With respect to each Middle-Tier
Interest, the Class or Classes of Certificates so designated 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 each
Component of a Class and any Distribution Date, the aggregate amount of interest
accrued at the applicable Certificate Interest Rate or Component Interest Rate
during the related Accrual Period on the Class Principal Amount (or related
Class Notional Amount or related Component Notional Amount, as applicable) of
such Class or Component 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 all or a portion of the Mortgage Documents and the
related Trustee Mortgage Files and listed on the Mortgage Loan Schedule as the
Custodian of such Mortgage Documents and related Trustee Mortgage Files. The
initial Custodian is Deutsche Bank National Trust Company.
Custody Agreement: The custody agreement, dated as of November 1, 2003,
among the Depositor, the Seller, the Trustee and Deutsche Bank National Trust
Company, as Custodian. A copy of the Custody Agreement is attached hereto as
Exhibit D.
Cut-off Date: November 1, 2003.
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
18
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 860E(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. 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 December
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 December
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, 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
19
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, and any Certificate that does not satisfy
the applicable rating requirement under the Underwriter's Exemption.
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.
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.
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.
Fitch Ratings: Fitch, Inc., or any successor in interest.
Global Securities: The global certificates representing the Book-Entry
Certificates.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class A-1 and Class A-R Certificate.
20
Group 2: All of the Group 2 Certificates.
Group 2 Certificate: A Class A-2 Certificate.
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.
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 Mortgage Loan: Any Mortgage Loan acquired by the Trust Fund on
the Closing Date for inclusion in Pool 1or Pool 2 as indicated on the Mortgage
Loan Schedule.
Initial One-Month LIBOR Rate: 1.11875%.
Initial Six-Month LIBOR Rate: 1.22875%.
Initial Optional Purchase Date: The first Distribution Date following
the date on which the Aggregate Stated Principal Balance is equal to or less
than 10.00% of the Aggregate Stated Principal Balance as of the Cut-off Date.
Initial Trust Receipt. With respect to any Mortgage Loan, as defined in
the related 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.
21
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
(i) 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 and each
Component of a Class, on any Distribution Date, the Current Interest for such
Class or Component, as applicable, as reduced by such Class's share of Net
Prepayment Interest Shortfalls and Relief Act Shortfalls. Any such shortfalls
and reductions shall be allocated among all Classes of Certificates (other than
the Class X Certificates) of the related Certificate Group and to each of the
Pool 1 and Pool 2 Components, as the case may be, and all classes of Subordinate
Certificates proportionately based on (i) in the case of the Senior Certificates
(other than the Class X-1 and Class X-2 Certificates) and each of the Pool 1 and
Pool 2 Components, the related Current Interest otherwise payable thereon and
(ii) in the case of the Subordinate Certificates, interest accrued on their
Apportioned Principal Balances before taking into account any reductions in such
amounts from Net Interest Shortfalls for that Distribution Date. With respect to
the Class X-1 Certificates, the "Interest Distribution Amount" for such
Certificates shall include, to the extent that the Interest Distribution Amount
on the Pool 1 NAS Component or Pool 2 NAS Component, as applicable, for any
Distribution Date is reduced by any related Interest Shortfalls, amounts that
would otherwise be payable to the related Pool Companion Component hereunder
(after the payment of any related Required Reserve Fund Deposit) and paid to the
related Pool NAS Component pursuant to Section 5.02(a)(i).
Interest-Only Certificates: Any of the Class X-1, Class X-2 and Class
X-B Certificates.
Interest Shortfall: As to any Class of Certificates and any Component
of a Class and any Distribution Date, (i) the amount by which the Interest
Distribution Amount for such Class or Component, as applicable, on such
Distribution Date and all prior Distribution Dates exceeds (ii) amounts
distributed in respect thereof to such Class or Component, as applicable, on
prior Distribution Dates.
Interest Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, an amount equal to one month's interest on the
applicable Principal Transfer Amount at the weighted average Certificate
Interest Rate of the applicable Undercollateralized Group, plus any interest
accrued on such Undercollateralized Group remaining unpaid from prior
Distribution Dates.
Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.
Latest Possible Maturity Date: The Distribution Date occurring in
December 2033.
LIBOR: As applicable, One-Month LIBOR or Six-Month LIBOR.
22
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-1, Class A-2 and Class B-1 Certificate.
LIBOR Determination Date: For the Class A-1 and Class B-1 Certificates,
the second LIBOR Business Day immediately preceding the commencement of each
Accrual Period for such Certificates. For the Class A-2 Certificates, the second
LIBOR Business Day immediately preceding the commencement of the Accrual Period
relating to the Distribution Date in September and March of each year.
Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit G.
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: Any one of the interests in the Lower-Tier REMIC
as described in the Preliminary Statement.
Lower-Tier REMIC: As described in the Preliminary Statement.
LT-R Interest: The residual interest in the 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.
23
Master Servicing Fee: With respect to any Distribution Date, an amount
equal to the product of one-twelfth of the Master Servicing Fee Rate and the
Stated Principal Balance of each Mortgage Loan as of the first day of the
related Due Period.
Master Servicing Fee Rate: 0.0065% per annum.
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.
Middle-Tier REMIC: As described in the Preliminary Statement.
Middle-Tier Interest: Any one of the interests in the Middle-Tier REMIC
as described in the Preliminary Statement.
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 related Custodian pursuant to the
related Custody Agreement.
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. The
term "Mortgage Loans" shall collectively refer to the Initial Mortgage Loans and
any Subsequent Mortgage Loans.
Mortgage Loan Purchase and Sale Agreement: The mortgage loan purchase
and sale agreement, dated as of November 1, 2003, between the Seller and the
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, Subsequent 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) identify the designated Mortgage Pool in
which such Mortgage Loan is included; (iii) separately identify One-Month LIBOR
Loans and Six-Month LIBOR Loans; and (iv) 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: Each of Pool 1 and Pool 2.
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.
24
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.
MT-R Interest: The residual interest in the Middle-Tier REMIC, as
described in the Preliminary Statement.
NAS Component: Either the Pool 1 NAS Component or the Pool 2 NAS
Component, as applicable.
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/or
Master 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 Aggregate Expense
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.
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. For any Class of LIBOR Certificates and any
Distribution Date, the sum of:
(i) the excess, if any, of the amount that would have been the
Current Interest for such Class if the Certificate Interest
Rate for such Class were calculated without regard to clause
(ii) in the definition thereof, over the actual Current
Interest for such Class for such Distribution Date;
(ii) any excess described in clause (i) above 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).
25
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Non-Upper-Tier REMIC: As defined in Section 10.01(d).
Non-U.S. Person: Any person other than a "United States person" within
the meaning of Section 7701(a)(30) of the Code.
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.
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, Class X-2 or Class X-B
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 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: With respect to the first Accrual Period, the Initial
One-Month LIBOR Rate. With respect to each subsequent Accrual Period, a per
annum rate determined on the LIBOR Determination Date for the Class A-1 and
Class B-1 Certificates 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, One-Month LIBOR for such date will be the most recently
published Interest Settlement Rate. In the event that the BBA no longer sets an
Interest
26
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 One-Month LIBOR by the Securities
Administrator and the Securities Administrator's subsequent calculation of the
Certificate Interest Rate applicable to the Class A-1 and Class B-1 Certificates
for the relevant Accrual Period, in the absence of manifest error, will be final
and binding.
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 - 4.25%; Class B-2 - 2.25%; Class B-3
- - 1.45%; Class B-4 - 0.85%; Class B-5 - 0.55%; and Class B-6 - 0.35%.
Original Capitalized Interest Amount: $204,395.00.
Original Pre-Funded Amount: With respect to Pool 1, $38,787,464.88 and
with respect to Pool 2, $67,557,490.55.
Original Subordinate Principal Amount: The aggregate of the initial
Class Principal Amounts of the Classes of Subordinated Certificates.
Overcollateralized Group: On any Distribution Date, any Certificate
Group which is not an Undercollateralized Group.
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
and Class LT-R Certificates, the Percentage Interest evidenced thereby shall
27
equal the initial Certificate Principal Amount thereof divided by the initial
Class Principal Amount of all Certificates of the same Class. With respect to
each of the Class A-R and Class LT-R Certificates, 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 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;
28
(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 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 Asset Regulations: The Department of Labor regulations set forth
in 29 C.F.R. 2510.3-101.
Pool 1: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 1.
29
Pool 1 Adjusted Net WAC: For any Distribution Date, a per annum rate
equal to the product of (i) 12 and (ii) a fraction, the numerator of which is
the excess of (x) what the Current Interest on the Class A-1 Certificates would
have been for such Distribution Date had the Certificate Interest Rate on such
class been the Pool 1 Net WAC over (y) the Current Interest on the Pool 1 NAS
Component for such Distribution Date and the denominator of which is the Class
Principal Amount of the Class A-1 Certificates immediately prior to such
Distribution Date.
Pool 1 Companion Component: The Component of the Class X-2 Certificates
related to the Pool 1 Mortgage Loans.
Pool 1 Companion Component Interest Rate: For any Distribution Date,
the excess, if any, of (x) the Pool 1 Adjusted Net WAC for such Distribution
Date over (y) the Certificate Interest Rate on the Class A-1 Certificates for
such Distribution Date (for the first Distribution Date only, adjusted to
reflect the actual number of days in the Accrual Period).
Pool 1 Companion Component Notional Amount: For any Distribution Date,
an amount equal to the Class Principal Amount of the Class A-1 Certificates
immediately prior to such Distribution Date.
Pool 1 Companion Component Required Reserve Fund Deposit: For any
Distribution Date, an amount equal to the lesser of (i) the Interest
Distribution Amount for the Pool 1 Companion Component for such Distribution
Date and (ii) the amount required to bring the balance on deposit in the Class
A-1 Companion Sub Account up to an amount equal to the sum of (a) the Net WAC
Shortfalls for such Distribution Date with respect to the Class A-1
Certificates, (b) the sum of all amounts deposited to the Class A-1 NAS Sub
Account in excess of the first $1,000 deposited therein prior to such
Distribution Date and not otherwise reimbursed to the Pool 1 NAS Component,
including interest on such amounts at the Pool 1 NAS Component Interest Rate,
and (c) $4,000.
Pool 1 Components: The Pool 1 NAS Component and the Pool 1 Companion
Component.
Pool 1 Mortgage Loans: Any Mortgage Loan in Pool 1.
Pool 1 NAS Component: The Component of the Class X-1 Certificates
related to the Pool 1 Mortgage Loans.
Pool 1 NAS Component Interest Rate: For any Distribution Date, the
lesser of (x) 0.80% and (y) the excess, if any, of the Pool 1 Net WAC for such
Distribution Date over the Certificate Interest Rate for the Class A-1
Certificates for such Distribution Date.
Pool 1 NAS Component Notional Amount: For any Distribution Date, the
lesser of (x) the amount set forth for such Distribution Date on the Pool 1 NAS
Notional Amount Schedule and (y) the Class Principal Amount of the Class A-1
Certificates immediately prior to such Distribution Date. On and after the
Distribution Date in June 2007, the Pool 1 NAS Component Notional Amount will
equal zero.
30
Pool 1 NAS Component Required Reserve Fund Deposit: For any
Distribution Date, an amount equal to the lesser of (i) the Interest
Distribution Amount for the Pool 1 NAS Component for such Distribution Date and
(ii) the amount required to bring the balance on deposit in the Class A-1 NAS
Sub Account up to an amount equal to the sum of (a) the positive difference, if
any, between (1) the Net WAC Shortfalls for such Distribution Date with respect
to the Class A-1 Certificates and (2) the amount on deposit in the Class A-1
Companion Sub Account after giving effect to the Required Reserve Fund Deposit
made thereto on such Distribution Date, and (b) $1,000.
Pool 1 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 1 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances.
Pool 1 NAS Notional Amount Schedule: For any Distribution Date and the
Pool 1 NAS Component Notional Amount, the schedule of notional amounts set forth
below:
Notional Notional
Distribution Date Amount ($) Distribution Date Amount ($)
- --------------------------- ---------------- --------------------------- ----------------
December 2003.............. $ 290,000,000.00 September 2005............. $ 130,536,093.38
January 2004............... 280,687,984.77 October 2005............... 125,710,203.93
February 2004.............. 270,336,513.77 November 2005.............. 121,058,415.04
March 2004................. 260,350,054.93 December 2005.............. 116,574,518.29
April 2004................. 250,715,737.25 January 2006............... 112,252,525.42
May 2004................... 241,421,143.57 February 2006.............. 108,086,660.52
June 2004.................. 232,454,294.59 March 2006................. 104,071,352.52
July 2004.................. 223,803,633.42 April 2006................. 100,201,227.96
August 2004................ 215,458,010.69 May 2006................... 96,471,103.99
September 2004............. 207,406,670.17 June 2006.................. 92,875,981.66
October 2004............... 199,639,234.94 July 2006.................. 89,411,039.36
November 2004.............. 192,145,693.94 August 2006................ 86,071,626.60
December 2004.............. 184,916,389.18 September 2006............. 82,853,257.91
January 2005............... 177,942,003.17 October 2006............... 79,751,607.05
February 2005.............. 171,213,547.02 November 2006.............. 76,762,501.35
March 2005................. 164,722,348.78 December 2006.............. 73,881,916.27
April 2005................. 158,460,042.28 January 2007............... 71,276,702.17
May 2005................... 152,418,556.39 February 2007.............. 68,763,352.77
June 2005.................. 146,590,104.55 March 2007................. 66,338,628.77
July 2005.................. 140,967,174.79 April 2007................. 63,999,405.05
August 2005................ 135,542,520.02 May 2007................... 61,742,666.72
Pool 1 Pre-Funded Amount: As of any date of determination, the
aggregate outstanding balance on deposit in the Pool 1 Pre-Funding Account
(exclusive of any investment earnings thereon).
Pool 1 Pre-Funding Account: The account established and maintained by
the Securities Administrator pursuant to Section 4.02, consisting of the 1M
Sub-account and the 6M Sub-account, holding the Pool 1 Pre-Funded Amount.
31
Pool 1 Subordinate Amount: For any Distribution Date, the excess of (i)
the sum of (a) the Aggregate Stated Principal Balance of the Pool 1 Mortgage
Loans and (b) the Pool 1 Pre-Funded Amount immediately prior to such
Distribution Date over (ii) the sum of the Class Principal Amounts of the Class
A-1 and Class A-R Certificates immediately before such Distribution Date.
Pool 2: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 2.
Pool 2 Adjusted Net WAC: For any Distribution Date, a per annum rate
equal to the product of (i) 12 and (ii) a fraction, the numerator of which is
the excess of (x) what the Current Interest on the Class A-2 Certificates would
have been for such Distribution Date had the Certificate Interest Rate on such
class been the Pool 2 Net WAC over (y) the Current Interest on the Pool 2 NAS
Component for such Distribution Date and the denominator of which is the Class
Principal Amount of the Class A-2 Certificates immediately prior to such
Distribution Date.
Pool 2 Companion Component: The Component of the Class X-2 Certificates
related to the Pool 2 Mortgage Loans.
Pool 2 Companion Component Interest Rate: For any Distribution Date,
the excess, if any, of (x) the Pool 2 Adjusted Net WAC for such Distribution
Date over (y) the Certificate Interest Rate on the Class A-2 Certificates for
such Distribution Date (for the first Distribution Date only, adjusted to
reflect the actual number of days in the related Accrual Period).
Pool 2 Companion Component Notional Amount: For any Distribution Date,
an amount equal to the Class Principal Amount of the Class A-2 Certificates
immediately prior to such Distribution Date.
Pool 2 Companion Component Required Reserve Fund Deposit: For any
Distribution Date, an amount equal to the lesser of (i) the Interest
Distribution Amount for the Pool 2 Companion Component for such Distribution
Date and (ii) the amount required to bring the balance on deposit in the Class
A-2 Companion Sub Account up to an amount equal to the sum of (a) the Net WAC
Shortfalls for such Distribution Date with respect to the Class A-2
Certificates, (b) the sum of all amounts deposited to the Class A-2 NAS Sub
Account in excess of the first $500 deposited therein prior to such Distribution
Date and not otherwise reimbursed to the Pool 2 NAS Component, including
interest on such amounts at the Pool 2 NAS Component Interest Rate, and (c)
$2,000.
Pool 2 Components: The Pool 2 NAS Component and the Pool 2 Companion
Component.
Pool 2 Mortgage Loans: Any Mortgage Loan in Pool 2.
Pool 2 NAS Component: The Component of the Class X-1 Certificates
related to the Pool 2 Mortgage Loans.
32
Pool 2 NAS Component Interest Rate: For any Distribution Date, the
lesser of (x) 0.80% and (y) the excess, if any, of the Pool 2 Net WAC for such
Distribution Date over the Certificate Interest Rate for the Class A-2
Certificates for such Distribution Date.
Pool 2 NAS Component Notional Amount: For any Distribution Date, the
lesser of (x) the amount set forth for such Distribution Date on the Pool 2 NAS
Notional Amount Schedule and (y) the Class Principal Amount of the Class A-2
Certificates immediately prior to such Distribution Date. On and after the
Distribution Date in June 2007, the Pool 2 NAS Component Notional Amount will
equal zero.
Pool 2 NAS Component Required Reserve Fund Deposit: For any
Distribution Date, an amount equal to the lesser of (i) the Interest
Distribution Amount for the Pool 2 NAS Component for such Distribution Date and
(ii) the amount required to bring the balance on deposit in the Class A-2 NAS
Sub Account up to an amount equal to the sum of (a) the positive difference, if
any, between (1) the Net WAC Shortfalls for such Distribution Date with respect
to the Class A-2 Certificates and (2) the amount on deposit in the Class A-2
Companion Sub Account after giving effect to the Required Reserve Fund Deposit
made thereto on such Distribution Date, and (b) $500.
Pool 2 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 2 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances.
Pool 2 NAS Notional Amount Schedule: For any Distribution Date and the
Pool 2 NAS Component Notional Amount, the schedule of notional amounts set forth
below:
Notional Notional
Distribution Date Amount ($) Distribution Date Amount ($)
- --------------------------- ---------------- --------------------------- ----------------
December 2003.............. $ 505,100,000.00 September 2005............. $ 227,357,700.95
January 2004............... 488,880,879.18 October 2005............... 218,952,335.56
February 2004.............. 470,851,471.74 November 2005.............. 210,850,205.28
March 2004................. 453,457,814.82 December 2005.............. 203,040,496.76
April 2004................. 436,677,490.67 January 2006............... 195,512,780.08
May 2004................... 420,488,872.02 February 2006.............. 188,256,995.21
June 2004.................. 404,871,094.25 March 2006................. 181,263,438.88
July 2004.................. 389,804,028.44 April 2006................. 174,522,752.02
August 2004................ 375,268,255.46 May 2006................... 168,025,907.54
September 2004............. 361,245,040.93 June 2006.................. 161,764,198.62
October 2004............... 347,716,311.09 July 2006.................. 155,729,227.36
November 2004.............. 334,664,629.48 August 2006................ 149,912,893.89
December 2004.............. 322,073,174.49 September 2006............. 144,307,385.77
January 2005............... 309,925,717.68 October 2006............... 138,905,167.87
February 2005.............. 298,206,602.85 November 2006.............. 133,698,972.54
March 2005................. 286,900,725.85 December 2006.............. 128,681,790.17
April 2005................. 275,993,515.15 January 2007............... 124,144,230.36
May 2005................... 265,470,913.03 February 2007.............. 119,766,673.37
June 2005.................. 255,319,357.48 March 2007................. 115,543,477.19
July 2005.................. 245,525,764.70 April 2007................. 111,469,198.79
August 2005................ 236,077,512.26 May 2007................... 107,538,587.04
33
Pool 2 Pre-Funded Amount: As of any date of determination, the
outstanding balance on deposit in the Pool 2 Pre-Funding Account (exclusive of
any investment earnings thereon).
Pool 2 Pre-Funding Account: The account established and maintained by
the Securities Administrator pursuant to Section 4.02 holding the Pool 2
Pre-Funded Amount.
Pool 2 Subordinate Amount: For any Distribution Date, the excess of (i)
the sum of (a) the Aggregate Stated Principal Balance of the Pool 2 Mortgage
Loans and (b) the Pool 2 Pre-Funded Amount immediately prior to such
Distribution Date over (ii) the Class Principal Amount of the Class A-2
Certificates immediately before such Distribution Date.
Pool Percentage: With respect to each Mortgage Pool and any
Distribution Date, a fraction, expressed as a percentage, the numerator of which
is the sum of (a) the Aggregate Stated Principal Balance of such Mortgage Pool
as of such date and (b) the Pool 1 Pre-Funded Amount, in the case of Pool 1, and
the Pool 2 Pre-Funded Amount, in the case of Pool 2, and the denominator of
which is the Aggregate Stated Principal Balance as of such Due Date.
Pool Subordinate Amount: Either of the Pool 1 or Pool 2 Subordinate
Amounts.
Pre-Funded Amount: As of any date of determination, the sum of the Pool
1 Pre-Funded Amount and the Pool 2 Pre-Funded Amount.
Pre-Funding Accounts: Each of the Pool 1 Pre-Funding Account and the
Pool 2 Pre-Funding Account.
Pre-Funding Period: The period commencing on the Closing Date and
ending on the earlier of (a) December 31, 2003 and (b) the date the last
Subsequent Mortgage Loan is acquired.
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 Stated 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 Mortgage Pool and
any Distribution Date, the sum of (a) each Scheduled Payment of principal
collected or advanced on the related 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 in such Mortgage Pool purchased in accordance with Section 2.04
hereof and received during the related Prepayment Period, (c) the principal
portion of any related Substitution Amount received during the related
Prepayment Period, (d) the principal portion of all Insurance Proceeds received
during the related Prepayment Period
34
with respect to Mortgage Loans in such Mortgage Pool 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 in such Mortgage Pool, (f) the principal portion of the proceeds
of any Additional Collateral with respect to the Mortgage Loans in such Mortgage
Pool, (g) the principal portion of all partial and full principal prepayments of
Mortgage Loans in such Mortgage Pool 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, that portion of the Redemption Price
in respect of principal for such 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.
Principal Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, the excess, if any, of the aggregate Class Principal
Amount of such Undercollateralized Group immediately prior to such Distribution
Date, over the Aggregate Stated Principal Balance of the related Mortgage Pool
immediately prior to such Distribution Date.
Pro Rata Senior Percentage: With respect to each Distribution Date and
each Mortgage Pool, the percentage equivalent of a fraction, the numerator of
which is the aggregate Class Principal Amount of the Class or Classes of Senior
Certificates of the Related Certificate Group immediately prior to such
Distribution Date, and the denominator of which is the Aggregate of the Stated
Principal Balance of the related Mortgage Pool for such Distribution Date;
provided, however, that on any Distribution Date after a Senior Termination Date
has occurred with respect to any Mortgage Pool, the Pro Rata Senior Percentage
of the remaining Senior Certificates is the percentage equivalent of a fraction,
the numerator of which is the aggregate of the Class Principal Amounts of the
remaining Classes of Senior Certificates immediately prior to such date, and the
denominator of which is the aggregate Class Principal Amount of all Classes of
Certificates immediately prior to such 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 November 21, 2003, together
with the accompanying prospectus dated July 24, 2003, relating to the
Certificates.
Purchase Agreements: The mortgage purchase agreements listed in Exhibit
F hereto, as each such agreement may be amended or supplemented from time to
time as permitted hereunder.
35
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, (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 and (iii) the amount of any costs and damages incurred by the
Trust Fund as a result of any violation of any applicable federal, state, or
local predatory or abusive lending law arising from or in connection with the
origination of such Mortgage Loan.
Rapid Prepayment Conditions: As to any Distribution Date, if (1) the
Aggregate Subordinate Percentage on such date is less than 200% of the Aggregate
Subordinate Percentage on the Closing Date; or (2) the outstanding Stated
Principal Balance of the Mortgage Loans in any Mortgage Pool delinquent 60 days
or months, as a percentage of such Mortgage Pool's Pool Subordinate Amount, is
greater than or equal to 50%.
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
36
related Accrual Period (as increased by any Interest Shortfalls but excluding
any 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.
Related Certificate Group: The Certificate Group related to a
particular Mortgage Pool as indicated by the same numerical designation (i.e.,
Group 1 Certificates are related to Pool 1 and Group 2 Certificates are related
to Pool 2).
Relief Act Shortfalls: 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.
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 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
related 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 related 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
37
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: Each of the Pool 1 NAS Component
Required Reserve Fund Deposit, the Pool 1 Companion Component Required Reserve
Fund Deposit, the Pool 2 NAS Component Required Reserve Fund Deposit, the Pool 2
Companion Component Required Reserve Fund Deposit and the Class X-B Required
Reserve Fund Deposit.
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
consisting of the Class A-1 NAS Sub Account, the Class A-1 Companion Sub
Account, the Class A-2 NAS Sub Account, the Class A-2 Companion Sub Account and
the Class B-1 Sub Account.
Residual Certificate: Each of the Class A-R and Class LT-R
Certificates.
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 B-4, Class B-5, Class B-6 or Class
LT-R Certificate.
Restricted Global Security: As defined in Section 3.01(c).
S&P: Standard & Poor's Ratings 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: With respect to any Mortgage Loan, as defined
in the related 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.
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
38
successor Securities Administrator shall be appointed as herein provided, then
such successor Securities Administrator.
Seller: RWT Holdings, Inc., a Delaware corporation.
Senior Certificate: Any one of the Class A-1, Class A-2, Class X-1,
Class X-2, Class X-B or Class A-R Certificates, as applicable.
Senior Percentage: Except as provided in this definition, with respect
to any Distribution Date and Mortgage Pool before December 2013, 100%. The
Senior Percentage for any Distribution Date occurring (i) before the
Distribution Date in December 2013 but in or after December 2006 on which the
Two Times Test is satisfied, or (ii) in or after December 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 December 2006, the Senior
Percentage is the Pro Rata Senior Percentage plus 50% of an amount equal to 100%
minus the related Pro Rata Senior Percentage. With respect to any Distribution
Date after the Senior Termination Date, the related Senior Percentage for such
Mortgage Pool will equal zero. 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 related 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 and
each Mortgage Pool, during the ten years beginning on the first Distribution
Date, 100%. Except as provided herein, the Senior Prepayment Percentage for each
Mortgage Pool and any Distribution Date occurring on or after the tenth
anniversary of the first Distribution Date shall be as follows: (i) from
December 2013 through November 2014, the Senior Percentage plus 70% of the
Subordinate Percentage for that Distribution Date; (ii) from December 2014
through November 2015, the Senior Percentage plus 60% of the Subordinate
Percentage for that Distribution Date; (iii) from December 2015 through November
2016, the Senior Percentage plus 40% of the Subordinate Percentage for that
Distribution Date; (iv) from December 2016 through November 2017, the Senior
Percentage plus 20% of the Subordinate Percentage for that Distribution Date;
and (v) from and after December 2017, the related 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 with respect to any Mortgage
Pool 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 related Senior
Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce that Class Principal Amount to zero.
39
Senior Principal Distribution Amount: With respect to each Mortgage
Pool and any Distribution Date, the sum of:
(1) the related Senior Percentage of all amounts
described in clause (a) 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 related Senior Prepayment Percentage of
the Stated Principal Balance of that Mortgage Loan and
(y) Net Liquidation Proceeds allocable to
principal received with respect to that Mortgage Loan.
(3) the related Senior Prepayment Percentage of the
amounts described in clauses (b), (c), (d) and (g) of the definition of
"Principal Distribution Amount" for that Mortgage Pool;
provided, however, that on any Distribution Date after a Senior Termination
Date, the Senior Principal Distribution Amount for the remaining Certificate
Group will be calculated pursuant to the above formula based on all Mortgage
Loans rather than the Mortgage Loans in the related Mortgage Pool only.
Senior Termination Date: For each Certificate Group, the Distribution
Date when the aggregate of the Class Certificate Principal Balances of that
Group 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 Stated 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.
40
Six-Month LIBOR: With respect to the first Accrual Period, the Initial
Six-Month LIBOR Rate. With respect to each subsequent Accrual Period, a per
annum rate determined on the immediately preceding LIBOR Determination Date for
the Class A-2 Certificates in the following manner by the Securities
Administrator on the basis of the "Interest Settlement Rate" set by the BBA for
six-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, Six-Month 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 Six-Month LIBOR by the Securities
Administrator and the Securities Administrator's subsequent calculation of the
Certificate Interest Rate applicable to the Class A-2 Certificates for the
relevant Accrual Period, in the absence of manifest error, will be final and
binding.
Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.
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 December
2013 through November 2014, 30% of the Original Subordinate Principal Amount,
(b) with respect to each Distribution Date from December 2014 through November
2015, 35% of the Original
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Subordinate Principal Amount, (c) with respect to each Distribution Date from
December 2015 through November 2016, 40% of the Original Subordinate Principal
Amount, (d) with respect to each Distribution Date from December 2016 through
November 2017, 45% of the Original Subordinate Principal Amount and (e) with
respect to each Distribution Date from and after December 2017, 50% of the
Original Subordinate Principal Amount.
Sub Account: In the case of the Initial Mortgage Loans, each of the
Class A-1 NAS Sub Account, the Class A-1 Companion Sub Account, the Class A-2
NAS Sub Account, the Class A-2 Companion Sub Account and the Class B-1 Sub
Account, constituting the Reserve Fund. In the case of the Subsequent Mortgage
Loans, each of the Class 1M Sub-account and 6M Sub-account constituting the Pool
1 Pre-Funding Account.
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(c).
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 Net WAC: For any Distribution Date, the weighted average of
the Pool 1 Net WAC and the Pool 2 Net WAC, in each case weighted on the basis of
the relative Pool Subordinate Amounts for Pool 1 and Pool 2, respectively,
immediately prior to such Distribution Date.
Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior Percentage
for such Mortgage Pool for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date and for each Mortgage Pool, the difference between 100% and the related
Senior Prepayment Percentage for such Mortgage Pool for that Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date and each Mortgage Pool, an amount equal to the sum of:
(1) the related Subordinate Percentage of all
amounts described in clause (a) of the definition of
"Principal Distribution Amount" for that Distribution Date;
(2) with respect to each Mortgage Loan in the
related Mortgage Pool 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,
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up to the Subordinate Percentage of the Stated Principal
Balance of such Mortgage Loan; and
(3) the related Subordinate Prepayment
Percentage of all amounts described in clauses (b), (c), (d)
and (g) of the definition of "Principal Distribution Amount"
for that Mortgage Pool and that Distribution Date;
minus the sum of:
any Principal Transfer Amount paid from the Available
Distribution Amount of the Related Certificate Group to an
Undercollateralized Group; and
the amount of principal distributions made to the
Senior Certificates pursuant to Section 5.02(k).
provided, however, that on any Distribution Date after a Senior Termination Date
has occurred with respect to a Mortgage Pool, the Subordinate Principal
Distribution Amount will not be calculated with respect to a Mortgage Pool, but
instead will equal the amount calculated as above based on a Subordinate
Percentage or Subordinate Prepayment Percentage, as applicable, for the
Subordinate Certificates for such Distribution Date with respect to all of the
Mortgage Loans.
Subsequent Cut-Off Date: With respect to any Subsequent Mortgage Loan,
the first day of the calendar month in which the related Subsequent Transfer
Date occurs.
Subsequent Delivery Requirements: After giving effect to the
acquisition of all Subsequent Mortgage Loans by a Mortgage Pool, the Mortgage
Loans in such Pool (which shall all be Mortgage Loans bearing interest at an
adjustable rate of interest) shall:
With respect to Pool 1:
(i) have a weighted average Margin of not less than
1.800%;
(ii) have a weighted average Effective Loan-to-Value Ratio
(after giving effect to the value of any Additional Collateral) not in
excess of 70.00%;
(iii) consist of Six-Month LIBOR Loans having an aggregate
Stated Principal Balance of not more than $27,087,938.69 greater than
the aggregate Stated Principal Balance of Six-Month LIBOR Loans in Pool
1 on the Closing Date, and One-Month LIBOR Loans having an aggregate
Stated Principal Balance of not more than $11,699,526.19 greater than
the aggregate Stated Principal Balance of One-Month LIBOR Loans in Pool
1 on the Closing Date;
(iv) have a remaining term to maturity of not greater than
360 months; and
(v) have a Loan-to-Value Ratio not greater than 100.00%.
With respect to Pool 2:
(i) have a weighted average Margin of not less than
1.850%;
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(ii) have a weighted average Effective Loan-to-Value Ratio
(after giving effect to the value of any Additional Collateral) not in
excess of 70.00%;
(iii) shall consist of Six-Month LIBOR Loans having an
aggregate Stated Principal Balance of not more than $67,557,490.55
greater than the aggregate Stated Principal Balance of Six-Month LIBOR
Loans in Pool 2 on the Closing Date;
(iv) have a remaining term to maturity of not greater than
360 months;
(v) have a Loan-to-Value Ratio not greater than 100.00%;
Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the Trust Fund
and delivered to the Custodian on behalf of Trustee on a Subsequent Transfer
Date.
Subsequent Transfer Date: The date on which any Subsequent Mortgage
Loan is conveyed by the Depositor to the Trust Fund.
Subsequent Transfer Date Notice: The form of Notice of Subsequent
Transfer Date attached as Exhibit A to each Mortgage Loan Purchase and Sale
Agreement, specifying the date on which a Subsequent Mortgage Loan will be
conveyed to the Trust Fund.
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).
Transfer Price: With respect to any Subsequent Mortgage Loan, the price
specified in the Subsequent Transfer Date Notice which shall be no less than the
Stated Principal Balance of the Subsequent Mortgage Loan, as increased by any
amount of principal and interest received on such Subsequent Mortgage Loan from
and after the related Subsequent Cut-off Date specified in the Subsequent
Transfer Date Notice.
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, all cash, instruments or
property held or required to be held in the Custodial Accounts, the Distribution
Account, the Capitalized Interest Account and the Pre-Funding Accounts, property
that secured a Mortgage Loan, the pledge, control and guaranty agreements and
any 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
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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 the related Custodian on behalf of the Trustee.
Two Times Test: As to any Distribution Date, (i) the Aggregate
Subordinate Percentage is at least two times the Aggregate 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 November 2006, cumulative Realized
Losses with respect to the Mortgage Loans do not exceed 20% of the Original
Subordinate Principal Amount, and thereafter, 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.
Undercollateralized Group: With respect to any Distribution Date, any
Certificate Group, with respect to which the aggregate Class Principal Amount of
such Certificate Group is greater than the aggregate Stated Principal Balance of
the Mortgage Loans in the related Mortgage Pool immediately prior to such
Distribution Date.
Underwriters: Greenwich Capital Markets, Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Banc of America Securities LLC and Morgan Stanley &
Co. Incorporated.
Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-24
as most recently amended and restated by PTE 2002-41 or any substantially
similar administrative exemption granted by the U.S. Department of Labor to the
Underwriters.
Underwriting Agreement: The Underwriting Agreement, dated November 21,
2003, 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.
Upper-Tier REMIC: As described in the Preliminary Statement.
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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,
96.00% of all Voting Interests shall be allocated to each Class of the Class
A-1, Class A-2, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
B-6 Certificates. Voting Interests shall be allocated among such Certificates
based on the product of (i) 96% 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. At all times during the term of this Agreement,
1.00% of all Voting Interests shall be allocated to each Class of the Class A-R,
Class X-1, Class X-2 and Class X-B Certificates, while they remain outstanding
in proportion to their relative Class Principal Amounts or Class Notional
Amounts, as applicable. 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 Initial
Mortgage Loans, including the right to all payments of principal and interest
received on or with respect to the Initial 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 Initial 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 Initial Mortgage Loans; and
(vi) the Depositor's security interest in any collateral pledged to secure the
Initial Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral relating to the Additional Collateral Mortgage Loans,
46
including, but not limited to, the pledge, control and guaranty agreements and
any related Limited Purpose Surety Bond 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 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 Initial Mortgage Loans or any other agreement or
instrument relating thereto except as specifically set forth therein.
In connection with such transfer and assignment of the Initial Mortgage
Loans, the Depositor does hereby deliver to, and deposit with, or cause to be
delivered to and deposited with, the related Custodian acting on the Trustee's
behalf, the following documents or instruments with respect to each Initial
Mortgage Loan (each, a "Trustee Mortgage File") so transferred and assigned:
(i) with respect to each Initial 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 Initial 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 Initial 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 Initial 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
2003-7, Mortgage Pass-Through Certificates, without recourse;"
(iv) with respect to each Initial 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;
47
(v) with respect to each Initial 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 Initial Mortgage Loan (other
than a Cooperative Loan), the original policy of title insurance (or a
true copy thereof) with respect to any such Initial Mortgage Loan, or,
if such policy has not yet been delivered by the insurer, the title
commitment or title binder to issue same;
(vii) if the Mortgage Note or Mortgage or any other
material document or instrument relating to the Initial 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); and
(viii) with respect to each Initial 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
48
(h) Any guarantees, if applicable.
The foregoing document delivery requirements with respect to each
Trustee Mortgage File set forth in this Section 2.01 shall equally apply to the
transfer and assignment to the Trust Fund of any Subsequent Mortgage Loan
pursuant to Section 2.05 hereof; provided that for purposes of applying such
requirements to Subsequent Mortgage Loans, references in this Section 2.01 to
"Initial Mortgage Loans" shall be replaced by "Subsequent Mortgage Loans" and
references to "Closing Date" shall be replaced by "Subsequent Transfer Date."
(b) The Depositor shall cause Assignments of Mortgage with respect
to each Initial 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 Initial 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 Initial Mortgage Loan.
(c) In instances where a title insurance policy is required to be
delivered to the Trustee or the applicable 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 related 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 Initial 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 related 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 the related 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.
(e) The requirements set forth in paragraphs (b), (c) and (d) of
this Section 2.01 shall equally apply upon the transfer and assignment to the
Trust Fund of any Subsequent Mortgage Loans pursuant to Section 2.05; provided
that for purposes of applying such requirements to Subsequent Mortgage Loans,
references therein to "Initial Mortgage Loans" shall be replaced by "Subsequent
Mortgage Loans" and references to "Cut-off Date" and "Closing Date" shall be
replaced by "Subsequent Cut-off Date" and "Subsequent Transfer Date,"
respectively.
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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 related Custodian on its behalf of the Trustee Mortgage
Files pertaining to the Initial Mortgage Loans listed on the Mortgage Loan
Schedule, subject to review thereof by the related Custodian on behalf of the
Trustee in accordance with Section 4(a) of the related Custody Agreement (forms
of which is attached hereto as Exhibit D). Each 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 related Custody Agreement.
(b) Within 270 days after the Closing Date, each 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 4A and 4B of the related
Custody Agreement.
(c) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee, any Custodian or the
Certificateholders of any unsatisfied duty, claim or other liability on any
Initial Mortgage Loan or to any Mortgagor.
(d) Each of the parties hereto acknowledges that the Custodians
shall perform the applicable review of the related Initial Mortgage Loans and
respective certifications as provided in the related 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 Agreements, Servicing
Agreements and the Mortgage Loan Purchase and Sale Agreement.
(f) The requirements set forth in paragraphs (a) through (d) of
this Section 2.02 with respect to the review of the documentation of each
Trustee Mortgage File shall equally apply to the transfer and assignment to the
Trust Fund of any Subsequent Mortgage Loans; provided that for purposes of
applying such requirements to Subsequent Mortgage Loans, any references to
"Initial Mortgage Loans" and "Closing Date" in this Section 2.02 shall be
replaced by "Subsequent Mortgage Loans" and "Subsequent Transfer Date,"
respectively.
In addition, upon the transfer of any Subsequent Mortgage Loan on a
Subsequent Transfer Date, the Depositor shall be required to deliver to the
Trustee the related Acknowledgements, together with the underlying Purchase
Agreement and Servicing Agreements related to the Subsequent Mortgage Loans,
unless such documents were previously delivered to the Trustee on the Closing
Date.
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
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Date (solely with respect to the Initial Mortgage Loans in the case of
paragraphs (vi) through (xi) below) and each Subsequent Transfer Date (solely
with respect to the Subsequent Mortgage Loans being transferred on such
Subsequent Transfer Date in the case of paragraphs (vi) through (xi) below) 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;
(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)
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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) 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;
(x) 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
(xi) 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 Initial Mortgage Loans as of the
Closing Date (and will be deemed to have made the same representations and
warranties with respect to the Subsequent Mortgage Loan as of the applicable
Subsequent Transfer Date). The Depositor, for the benefit of the Trustee and the
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Certificateholders hereby assigns any such rights against the Seller to the
Trustee and the Seller acknowledges that it has agreed to comply with the
provisions of this Section 2.04 in respect of a breach of any of such
representations and warranties. With respect to the representations and
warranties made pursuant to Section 2(b) of the Mortgage Loan Purchase and Sale
Agreement in clauses (I)(xvii) and (II)(xix) of Schedule A thereto, to the
extent that the representations and warranties contained in such clauses are
made to the best of the Seller's knowledge or as to which the Seller has no
knowledge, if it is discovered by the Depositor, the Seller, the Servicer or the
Trustee that the substance of such representation and warranty is inaccurate and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan then, notwithstanding the Seller's lack of knowledge with respect
to the substance of such representation and warranty being inaccurate at the
time the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty.
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 each Custodian's Final Trust Receipt as
required under the related Custody Agreement, that a document is missing from, a
related Trustee Mortgage File, or discovery by the Depositor, 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
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
53
(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 related
Custodian, on behalf of the Trustee, for such Replacement Mortgage Loan or
Loans, the related Mortgage Note, the related Mortgage, the related 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. Such Custodian shall acknowledge receipt for such Replacement
Mortgage Loan and, within 45 days thereafter, shall review such Mortgage
Documents as specified in the related 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
related 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, 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 the 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 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, as applicable, 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 related 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,
54
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 an Adverse REMIC Event. 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 an Adverse REMIC Event.
Section 2.05 Delivery of Subsequent Mortgage Loans.
(a) On each Subsequent Transfer Date occurring during the
Pre-Funding Period, provided that each condition set forth in this Section 2.05
is satisfied, the Depositor shall convey to the Trust Fund and the Trustee shall
purchase on behalf of the Trust Fund for inclusion in Pool 1 or Pool 2, as
applicable, at the applicable Transfer Price set forth in the related Subsequent
Transfer Date Notice, all Subsequent Mortgage Loans which satisfy the criteria
set forth in this Section 2.05 then offered for sale by the Depositor; provided,
however, that the related aggregate purchase price paid for the Subsequent
Mortgage Loans shall not exceed the Original Pre-Funded Amount related to Pool 1
or Pool 2, as applicable; provided, further, that in the case of Pool 1, the
aggregate purchase price paid for Subsequent Mortgage Loans which (x) constitute
One-Month LIBOR Loans shall not exceed the initial deposit made to the 1M
Sub-account of the Pool 1 Pre-Funding Account and (y) constitute Six-Month LIBOR
Loans shall not exceed the initial deposit made to the 6M Sub-account of the
Pool 1 Pre-Funding Account, in each case as provided in Section 4.02.
(b) Subject to satisfaction of the conditions set forth in Section
2.05(c), in consideration of the Securities Administrator's delivery on the
related Subsequent Transfer Date to the
55
Depositor or its designee, or upon the order of the Depositor, of the Transfer
Price for the related Subsequent Mortgage Loans from amounts on deposit in the
applicable Pre-Funding Account, the Depositor, on each Subsequent Transfer Date,
shall sell, transfer, assign, set over and otherwise convey to the Trustee on
behalf of the Trust Fund for inclusion in the related Mortgage Pool, without
recourse, but subject to the other terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to each Subsequent
Mortgage Loan (including all interest and principal thereon received after the
related Subsequent Cut-off Date) identified in the related Subsequent Transfer
Date Notice delivered by the Depositor prior to such Subsequent Transfer Date
and all items in the related Trustee Mortgage File. In connection therewith, the
Depositor shall amend the Mortgage Loan Schedule to reflect the inclusion of the
Subsequent Mortgage Loan in the applicable Mortgage Pool as part of the assets
of the Trust Fund. The Depositor shall promptly deliver to the Trustee and the
Master Servicer a copy of the Mortgage Loan Schedule as so amended.
(c) The obligation of the Securities Administrator to release
funds from the Pool 1 Pre-Funding Account or the Pool 2 Pre-Funding Account, as
applicable, in respect of any Subsequent Mortgage Loans is subject to
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) at least ten (10) days prior to the Subsequent
Transfer Date, the Depositor shall have delivered to the Trustee, the
Securities Administrator and the Master Servicer a duly executed
written Subsequent Transfer Date Notice which shall include a schedule
of Subsequent Mortgage Loans specifying the related Mortgage Pool to
which such Subsequent Mortgage Loans relate and the Transfer Price to
be released from the related Pre-Funding Account or Sub Account;
(ii) after giving effect to the acquisition of such
Subsequent Mortgage Loans, the Mortgage Loans shall conform to the
Subsequent Delivery Requirements applicable to such Mortgage Pool;
(iii) no Subsequent Mortgage Loan shall have been selected
in a manner adverse to the interest of Certificateholders;
(iv) the weighted average Mortgage Rate for all the
Mortgage Loans in the Trust Fund at the close of the Pre-Funding Period
shall not be more than 50 basis points lower than the weighted average
Mortgage Rate for the Initial Mortgage Loans transferred to the Trust
Fund on the Closing Date;
(v) the addition of the Subsequent Mortgage Loans shall
not result in the reduction, qualification or withdrawal of the then
current rating of the Certificates as evidenced by a letter from each
Rating Agency rating the Certificate delivered by the Depositor to the
Trustee and the Securities Administrator dated the applicable
Subsequent Transfer Date;
(vi) each Subsequent Mortgage Loan shall be underwritten
in accordance with the applicable underwriting guidelines for the
related originator;
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(vii) the Depositor shall have delivered to the Trustee and
the Securities Administrator a letter from an independent accountant
stating whether or not the characteristics of the Subsequent Mortgage
Loans conform to the characteristics of the Mortgage Loans required in
this Section 2.05(b);
(viii) as of each Transfer Date, neither the Depositor nor
the Seller shall be insolvent, nor will either of them be made
insolvent by such transfer;
(ix) the Pre-Funding Period shall not have ended;
(x) the Depositor shall have delivered to the Master
Servicer a copy of the related Servicing Agreement and executed
Acknowledgement (if not previously delivered to the Master Servicer on
or before the Closing Date) in respect of each such Subsequent Mortgage
Loan, and such loan level data, in electronic or other format
acceptable to the Master Servicer and the Depositor, as shall be
necessary for the proper master servicing of such Subsequent Mortgage
Loans by the Master Servicer;
(xi) the Depositor shall have delivered to the Trustee and
the Securities Administrator an Officer's Certificate confirming the
satisfaction of each condition precedent specified in the Section 2.05
and Opinions of Counsel with respect to corporate, bankruptcy and tax
matters relating to the transfer of Subsequent Mortgage Loans in the
form substantially similar to those delivered on the Closing Date
pursuant to the Underwriting Agreement; and
(xii) the Depositor shall have delivered to the Trustee,
the Master Servicer, the Securities Administrator and each Rating
Agency such additional information reasonably requested by any of them
with respect to the Subsequent Mortgage Loans to be sold to the Trust
on the Subsequent Transfer Date.
The Depositor shall cause the applicable Servicer to deposit in the
Custodial Account within two Business Days following each Subsequent Transfer
Date all collections in respect to the related Subsequent Mortgage Loans
received after the related Subsequent Cut-off Date.
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
57
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 of 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).
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
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and maintained in definitive, fully registered form in a denomination equal to
100% of the Percentage Interest of each such Class. The Class Class X-2 and
Class X-B 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 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 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
59
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.
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 or shall be effective
unless the Certificate Registrar, on behalf of the Trustee, has received (A) a
certificate substantially in the form of Exhibit J hereto (or Exhibit B, in the
case of a Residual Certificate) from such transferee or (B) an Opinion of
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Counsel satisfactory to the Certificate Registrar to the effect that the
purchase and holding of such a Certificate will not constitute or result in
prohibited transactions under Title I of ERISA or Section 4975 of the Code and
will not subject the Certificate Registrar, the Trustee, the Master Servicer,
the Depositor or the Securities Administrator 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 Title I of ERISA or Section 4975 of the
Code. Each Transferee of an ERISA-Restricted Certificate that is a Book-Entry
Certificate shall be deemed to have made the representations set forth in
Exhibit J. The preparation and delivery of the certificate and opinions referred
to above shall not be an expense of the Trust Fund, the Certificate Registrar,
the Trustee, the Master Servicer, the Depositor or the Securities Administrator.
Notwithstanding the foregoing, no opinion or certificate shall be
required for the initial issuance of the ERISA-Restricted Certificates. The
Certificate Registrar shall have no obligation to monitor transfers of
Book-Entry Certificates that are ERISA-Restricted Certificates and shall have no
liability for transfers of such Certificates in violation of the transfer
restrictions. The Certificate Registrar 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) and none of the Securities
Administrator, the Trustee or the Paying Agent shall have any liability for
making any payments due on such Certificate to the Holder thereof or taking any
other action with respect to such Holder under the provisions of this Agreement
so long as the transfer was registered by the Certificate Registrar in
accordance with the foregoing requirements. The Securities Administrator, on
behalf of the Trustee, shall be entitled, but not obligated, to recover from any
Holder of any ERISA-Restricted Certificate that was in fact a Plan or a Person
acting on behalf of a Plan any payments made on such ERISA-Restricted
Certificate at and after either such time. Any such payments so recovered by the
Securities Administrator, on behalf of the Trustee, shall be paid and delivered
by the Securities Administrator, on behalf of the Trustee, to the last preceding
Holder of such Certificate that is not such a Plan or Person acting on behalf of
a Plan.
(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
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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 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
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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
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
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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 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 the 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 the 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 the 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
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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 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
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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, as provided in the related Servicing Agreements, 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 2003-7
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
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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 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, as additional compensation
for its duties hereunder, 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 The Pre-Funding Accounts
(a) The Securities Administrator, as Paying Agent for the Trustee,
shall establish and maintain two Eligible Accounts, each to be held in trust for
the benefit of Certificateholders, the first such Eligible Account entitled
"Pool 1 Pre-Funding Account of HSBC Bank, USA, as Trustee, for the benefit of
Sequoia Mortgage Trust 2003-7 Holders of Mortgage Pass-Through Certificates" and
the second entitled "Pool 2 Pre-Funding Account of HSBC Bank, USA, as Trustee,
for the benefit of Sequoia Mortgage Trust 2003-7 Holders of Mortgage
Pass-Through Certificates." The Pooling 1 Pre-Funding Account shall be comprised
of two Sub Accounts, the first entitled the "1M Sub-account" and the second
entitled the "6M Sub-account."
(b) On the Closing Date, the Depositor will cause to be deposited to
the Pool 1 Pre-Funding Account the Original Pre-Funded Amount relating to Pool 1
and to the Pool 2 Pre-Funding Account the Original Pre-Funded Amount relating to
Pool 2. The Original Pre-Funded Amount relating to Pool 1 shall be further
allocated between the 1M Sub-account and the 6M Sub-account as follows:
$11,699,526.19 to the 1M Sub-account; and $27,087,938.69 to the 6M Sub-account.
(c) Amounts on deposit in the 1M Sub-account (exclusive of investment
earnings thereon) shall solely be applied to acquire Subsequent Mortgage Loans
for inclusion in Pool 1 which constitute One-Month LIBOR Loans. Amounts on
deposit in the 6M Sub-account (exclusive of investment earnings thereon) shall
solely be applied to acquire Subsequent Mortgage Loans for inclusion in Pool 1
which constitute Six-Month LIBOR Loans. Amounts on
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deposit in the Pool 2 Pre-Funding Account (exclusive of investment earnings
thereon) shall solely be applied to acquire Subsequent Mortgage Loans for
inclusion in Pool 2. Funds on deposit in either Pre-Funding Account (or Sub
Account) may not be commingled with funds on deposit in the other Pre-Funding
Account (or Sub Account).
(d) On any Subsequent Transfer Date, the Depositor shall instruct the
Securities Administrator, in writing, to withdraw funds from the applicable
Pre-Funding Account (specifying the applicable Sub Account in the case of Pool
1) in an amount equal to the Transfer Price for the Subsequent Mortgage Loans to
be acquired on such Subsequent Transfer Date, and to pay such amount to the
order of the Depositor. In no event shall the Securities Administrator withdraw
from the related Pre-Funding Account an amount in excess of the Original
Pre-Funded Amount (or portion thereof) deposited to such Account (or Sub Account
thereof) on the Closing Date.
(e) During the Pre-Funding Period, amounts on deposit in the
Pre-Funding Accounts may be invested in Permitted Investments by the Securities
Administrator at the direction of the Depositor, or in absence of direction from
the Depositor, in money market funds described in paragraph (ix) of the
definition of Permitted Investments in Article I. All such Permitted Investments
shall be made in the name of the Trustee (in its capacity as such) or its
nominee. Any investment earnings on such Permitted Investments held in the
Pre-Funding Accounts shall be immediately transferred to the Distribution
Account and constitute part of the Available Distribution Amount for
distribution to the related Certificateholders on the next succeeding
Distribution Date.
(f) On the Distribution Date immediately following the close of the
Pre-Funding Period, the Securities Administrator, as Paying Agent, shall
transfer any remaining Pool 1 Pre-Funded Amount or Pool 2 Pre-Funded Amount on
deposit in the related Pre-Funding Account (or Sub Account thereof) to the
Distribution Account for distribution to the Related Certificate Group as
principal on such Distribution Date in accordance with the priorities set forth
in Section 5.02 and terminate such Account.
(g) The Pre-Funding Accounts shall not be an asset of any REMIC created
under this Agreement.
Section 4.03 The Capitalized Interest Account.
(a) The Securities Administrator, as Paying Agent, for the Trustee,
shall establish and maintain an Eligible Account, to be held in trust for the
benefit of Certificateholders, entitled "Capitalized Interest Account of HSBC
Bank, USA, as Trustee, for the benefit of Sequoia Mortgage Trust 2003-7 Holders
of Mortgage Pass-Through Certificates." On the Closing Date, the Depositor shall
cause to be deposited in the Capitalized Interest Account the Original
Capitalized Interest Amount. On each Distribution Date, funds in the Capitalized
Interest Account equal to the Capitalized Interest Requirement for such
Distribution Date shall be withdrawn by the Securities Administrator from the
Capitalized Interest Account and deposited into the Distribution Account as
required by Section 5.02(a).
(b) During the Pre-Funding Period, amounts on deposit in the
Capitalized Interest Account may, at the direction of the Depositor, be invested
in Permitted Investments, and in the
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absence of such instructions shall be invested in money market funds as
described in paragraph (ix) of the definition of Permitted Investments in
Article I. All investment earnings on such Permitted Investments in the
Capitalized Interest Account shall be for the benefit of the Depositor. At the
close of the Pre-Funding period, all amounts, if any, remaining in the
Capitalized Interest Account shall be released to the Depositor and the
Securities Administrator shall terminate such Account.
(c) The Capitalized Interest Account shall not be the asset of any
REMIC created under this Agreement.
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 the 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 the 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 Aggregate Stated Principal Balance of the Mortgage Loans
in each Mortgage Pool and the applicable Net WAC of the Mortgage Loans in each
Mortgage Pool at the end of the related Prepayment Period;
(g) the Stated Principal Balance of the Mortgage Loans in each
Mortgage Pool 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 each Mortgage Pool for the following Distribution
Date;
(i) the Senior Prepayment Percentage and Subordinate Prepayment
Percentage for each Mortgage Pool for the following Distribution Date;
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(j) in the aggregate and with respect to each Mortgage Pool, 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) in the aggregate and with respect to each Mortgage Pool, the
amount of Advances for the related Due Period;
(l) in the aggregate and with respect to each Mortgage Pool, 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) in the aggregate and with respect to each Mortgage Pool, the
aggregate principal balance of the Subsequent Mortgage Loans acquired during the
preceding calendar month and on a cumulative basis since the Closing Date;
(n) in the aggregate and with respect to each Mortgage Pool, 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;
(o) in the aggregate and with respect to each Mortgage Pool, the
aggregate number and principal balance of any REO Properties as of the close of
business on the last day of the preceding Due Period;
(p) in the aggregate and with respect to each Mortgage Pool, the
amount of Realized Losses incurred during the preceding calendar month;
(q) in the aggregate and with respect to each Mortgage Pool, the
cumulative amount of Realized Losses incurred since the Closing Date;
(r) the Realized Losses, if any, allocated to each Class of
Certificates on that Distribution Date;
(s) the Certificate Interest Rate for each Class of Certificates
for that Distribution Date;
(t) the amount of any Principal Transfer Amounts or Interest
Transfer Amounts paid to an Undercollateralized Group or Principal Transfers
between Groups in the event of Rapid Prepayment Conditions;
(u) the amount, if any, remaining on deposit in each Pre-Funding
Account immediately prior to that Distribution Date; and
(v) the amount, if any, on deposit in the Capitalized Interest
Account for that Distribution Date.
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The Securities Administrator shall make such reports available each
month via the Master Servicer's website at http://www.ctslink.com. Assistance in
using the website may be obtained by calling the Master Servicer'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
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 the reasonable advance written request of any Certificateholder
that is a savings and loan, bank or insurance company, which request, if
received by the Trustee or any agent thereof, 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.
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
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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 the
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 Distribution Account.
(a) Subject to Sections 5.02(b), (c), (k) and (l), on each
Distribution Date, the Available Distribution Amount for the related Mortgage
Pool (in the case of the Components of the Class X-1 and Class X-2 Certificates
and the Senior Certificates other than the Class X Certificates) and the
Mortgage Pools in the aggregate (in the case of the Subordinate Certificates and
the Class X-B Certificates) shall be withdrawn by the Securities Administrator
from the Distribution Account allocated among the Classes of Senior
Certificates, Components related to such Classes and Subordinate Certificates in
the following order of priority:
(i) Concurrently, from the related Available Distribution
Amount, to the payment of the Interest Distribution Amount and any
accrued but unpaid Interest Shortfalls on each Class of Senior
Certificates; provided, however, that on each Distribution Date, the
amount of the Interest Distribution Amount that would otherwise be
payable to the related Pool NAS Component, related Pool Companion
Component or Class X-B Certificates will (A) in the case of amounts
otherwise payable to the related Pool NAS Component and related Pool
Companion Component, be deposited in the related Sub Account of the
Reserve Fund to the extent of any related Required Reserve Fund Deposit
for such Distribution Date in the manner described herein, (B) in the
case of amounts otherwise payable to the related Pool Companion
Component after the payment of amounts, if any, described in clause (A)
above, instead be paid to the related Pool NAS Component to the extent
necessary to reimburse the related Pool NAS Component for any prior
amounts not distributed to the related Pool NAS Component as a result
of any reductions on the Interest Distribution Amount of the related
Pool NAS Component resulting from Interest Shortfalls and (C) in the
case of amounts otherwise payable to the Class X-B Certificates, be
deposited in the Class B-1 Sub Account of the Reserve Fund to the
extent of any Class X-B Required Reserve Fund Deposit for such
Distribution Date;
(ii) Concurrently, to the Senior Certificates from the
Available Distribution Amount remaining in the related Mortgage Pool
after application of amounts pursuant to clause (i) above, as follows:
(a) sequentially to the Class A-R and Class A-1
Certificates, in that order, the Senior
Principal Distribution Amount for Pool 1,
until
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their respective Class Principal Amounts
have been reduced to zero; and
(b) to the Class A-2 Certificates, the Senior
Principal Distribution Amount for Pool 2,
until the Class Principal Amount of such
Class has been reduced to zero.
(iii) From the Available Distribution Amount from the
Mortgage Pools in the aggregate remaining after the application of
amounts pursuant to clauses (i) and (ii) above, to the Class B-1
Certificates, the Interest Distribution Amount and any Interest
Shortfalls, in each case, for such Class on such date;
(iv) From the Available Distribution Amount from the
Mortgage Pools in the aggregate remaining after application of amounts
pursuant to clauses (i) through (iii) above, to the Class B-1
Certificates, such Class' Subordinate Class Percentage of the
Subordinate Principal Distribution Amount for each Mortgage Pool, until
its Class Principal Amount has been reduced to zero;
(v) From the Class A-1 NAS Sub Account, Class A-1
Companion Sub Account, Class A-2 NAS Sub Account, Class A-2 Companion
Sub Account and Class B-1 Sub Account, as applicable, concurrently, for
payment to the Class A-1, Class A-2 and Class B-1 Certificates, as
applicable, any related Net WAC Shortfalls for such date;
(vi) To the Class X-1 Certificates, (A) from the Class A-1
Companion Sub Account of the Reserve Fund, the sum of all amounts
deposited to the Class A-1 NAS Sub Account in excess of the first
$1,000 deposited therein prior to such Distribution Date and not
otherwise reimbursed to the Pool 1 NAS Component, including interest on
such amounts, and (B) from the Class A-2 Companion Sub Account of the
Reserve Fund, the sum of all amounts deposited to the Class A-2 NAS Sub
Account in excess of the first $500 deposited therein prior to such
Distribution Date and not otherwise reimbursed to the Pool 2 NAS
Component, including interest on such amounts;
(vii) From the remaining Available Distribution Amount from
the Mortgage Pools in the aggregate remaining after application of
amounts pursuant to clauses (i) through (vi) in the following order of
priority:
(A) to the Class B-2 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case,
for such Class and date;
(B) to the Class B-2 Certificates such Class'
Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for each Mortgage Pool, until its Class
Principal Amount has been reduced to zero;
(C) to the Class B-3 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case,
for such Class and date;
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(D) to the Class B-3 Certificates, such Class'
Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for each Mortgage Pool, until its Class
Principal Amount has been reduced to zero;
(E) to the Class B-4 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case,
for such Class and date;
(F) to the Class B-4 Certificates, such Class'
Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for each Mortgage Pool, until its Class
Principal Amount has been reduced to zero;
(G) to the Class B-5 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case,
for such Class and date;
(H) to the Class B-5 Certificates, such Class'
Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for each Mortgage Pool, until its Class
Principal Amount has been reduced to zero;
(I) to the Class B-6 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case,
for such Class and date; and
(J) to the Class B-6 Certificates, such Class'
Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for each Mortgage Pool, until its Class
Principal Amount has been reduced to zero;
(viii) To the Class A-R Certificate and the Class LT-R
Certificate, any remaining amount of the Available Distribution Amount
from the Mortgage Pools in the aggregate allocated as provided in
Section 5.02(d).
(b) On each Distribution Date on and after the Credit Support
Depletion Date, the Available Distribution Amount for each Mortgage Pool shall
be combined and distributed to the remaining Classes of Certificates, on a pro
rata basis, first, to pay the Interest Distribution Amount and any accrued but
unpaid Interest Shortfalls; second, in reduction of the Certificate Principal
Amounts of the Certificates, pro rata (on the basis of their Class Principal
Amounts), until such Certificate Principal Amounts have been reduced to zero;
third, to pay any related Net WAC Shortfall; and fourth, to the Class A-R and
Class LT-R Certificate, any remaining Available Distribution Amount from such
Mortgage Pool.
(c) Notwithstanding the priority and allocation set forth in
Section 5.02(a)(v) and (x) 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
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Distribution Date and shall be distributed in the sequential order provided in
Section 5.02(a)(v) and (x) above.
(d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(x) 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) For purposes of distributions provided in paragraph (a), each
Mortgage Pool shall "relate" to the Senior Class or Classes of the applicable
Related Certificate Group.
(f) On any Distribution Date for which a Net WAC Shortfall exists
with respect to the Class A-1 Certificates, the Securities Administrator will
withdraw from the Class A-1 Companion Sub Account and the Class A-1 NAS Sub
Account, in that order, the amount for distribution to such Class equal to the
lesser of (1) the amount of such Net WAC Shortfall and (2) the amounts available
therefor on deposit in the related Sub Account as provided in Section
5.02(a)(vii).
(g) On any Distribution Date for which a Net WAC Shortfall exists
with respect to the Class A-2 Certificates, the Securities Administrator will
withdraw from the Class A-2 Companion Sub Account and the Class A-2 NAS Sub
Account, in that order, the amount for distribution to such Class equal to the
lesser of (1) the amount of such Net WAC Shortfall and (2) the amounts available
therefor on deposit in the related Sub Account as provided in Section
5.02(a)(vii).
(h) On any Distribution Date for which a Net WAC Shortfall exists
with respect to the Class B-1 Certificates, the Securities Administrator will
withdraw from the Class B-1 Sub Account, the lesser of (1) the amount of such
Net WAC Shortfall and (2) the amounts available therefor on deposit in the
related Sub Account as provided in Section 5.02(a)(vii).
(i) On any Distribution Date and with respect to the Class X-1
Certificates, to the extent that any amounts otherwise payable to the Pool 1 NAS
Component or Pool 2 NAS Component, as applicable, are used to make payments of
any related Required Reserve Fund Deposit, the Securities Administrator will
withdraw from the Class A-1 Companion Sub Account or Class A-2 Companion Sub
Account, as applicable, to the extent of amounts on deposit in such Sub Accounts
after withdrawals therefrom to cover any related Net WAC Shortfalls for such
Distribution Date or previous Distribution Dates, the amount of such deposits
for distribution on such Distribution Date as provided in Section 5.06.
(j) 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.
(k) Notwithstanding the priority of distributions set forth in
paragraph (a) above, if on any Distribution Date prior to the Credit Support
Depletion (1) either one of the Rapid Prepayment Conditions is satisfied on such
date and (2) the Certificate Principal Amount of the Senior Certificates
relating to one of the Mortgage Pools have been reduced to zero, then that
75
portion of the Available Distribution Amount for each Mortgage Pool described in
Section 5.02(a)(ii) that represents principal collections on the Mortgage Loans
shall be applied as an additional distribution to the remaining Classes of
Senior Certificates in reduction of, and in proportion to, the Class Principal
Amounts thereof; provided, however, that any such amounts distributable to the
Class A-R and Class A-1 Certificates shall be distributed sequentially thereto
in such order.
(l) If, on any Distribution Date, any Certificate Group would
constitute an Undercollateralized Group and the other Certificate Group
constitutes an Overcollateralized Group, then notwithstanding Section
5.02(a)(ii), the Available Distribution Amount for the Overcollateralized Group,
to the extent remaining following distributions of interest and principal to the
related Senior Certificates of that Certificate Group, shall be distributed up
to the sum of the Interest Transfer Amount and the Principal Transfer Amount for
the Undercollateralized Group to the Senior Certificates related to the
Undercollateralized Group in payment of accrued but unpaid interest, if any, and
then to such Senior Certificates as principal, in the same order and priority as
such Certificates would receive other distributions of principal.
(m) If, immediately after any Distribution Date, the amount on
deposit in any Sub Account of the Reserve Fund exceeds the initial deposit
therein, the Securities Administrator will distribute such excess to the Holders
of the Certificates that deposited such amounts in the relevant Sub Account.
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 experienced on the Mortgage Loans for the
related Distribution Date.
(b) On each Distribution Date, the principal portion of Realized
Losses shall be allocated as follows:
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 relating to the
Mortgage Pool which sustained such loss (allocated among the
related Senior Classes on a pro rata basis), in each case, until
the Class Principal Amount of each Class of Senior Certificates
is reduced to zero;
(c) On each Distribution Date, 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 on
such Distribution Date) exceeds the Aggregate Stated Principal Balance for the
following Distribution Date.
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(d) 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.
(e) In the event that there is a recovery of an amount in respect
of principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class to
which any portion of such Realized Loss had previously been allocated shall be
entitled to receive, on the Distribution Date in the month following the month
in which such recovery is received, its pro rata share (based on the amount of
Realized Losses previously allocated thereto) of such recovery, up to the amount
of the portion of such Realized Loss previously allocated to such Class. Any
such recovery allocated to a Class of Certificates shall not further reduce the
Certificate Principal Amount of such Certificate. Any such amounts not otherwise
allocated to any Class of Certificates pursuant to this subsection shall be
treated as Principal Prepayments for purposes of this Agreement.
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 related 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.
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, on such date, deposit $10,000.00. 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.
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(b) The Reserve Fund will be comprised of five Sub Accounts:
"Class A-1 NAS Sub Account", "Class A-1 Companion Sub Account", "Class A-2 NAS
Sub Account", "Class A-2 Companion Sub Account" and "Class B-1 Sub Account". On
each Distribution Date, (i) Current Interest that would otherwise be
distributable with respect to the Class X-1 Certificates will be deposited
instead in the Class A-1 NAS and Class A-2 NAS Sub Accounts, (ii) Current
Interest that would otherwise be distributable with respect to the Class X-2
Certificates will be deposited instead in the Class A-1 Companion and Class A-2
Companion Sub Accounts and (iii) Current Interest that would otherwise be
distributable with respect to the Class X-B Certificates will be deposited
instead in the Class B-1 Sub Account, in each case, to the extent of the
applicable Required Reserve Fund Deposit for such Class or Component.
(c) On any Distribution Date for which a Net WAC Shortfall exists
with respect to the Class A-1 Certificates, the Securities Administrator shall
withdraw, to the extent of available funds therein, from the Class A-1 Companion
Sub Account and the Class A-1 NAS Sub Account, in that order, the amount of such
Net WAC Shortfall for distribution on such Distribution Date pursuant to Section
5.02(f).
(d) On any Distribution Date for which a Net WAC Shortfall exists
with respect to the Class A-2 Certificates, the Securities Administrator shall
withdraw, to the extent of available funds therein, from the Class A-2 Companion
Sub Account and the Class A-2 NAS Sub Account, in that order, the amount of such
Net WAC Shortfall for distribution on such Distribution Date pursuant to Section
5.02(g).
(e) On any Distribution Date for which a Net WAC Shortfall exists
with respect to the Class B-1 Certificates, the Securities Administrator shall
withdraw, to the extent of available funds therein, from the Class B-1 Sub
Account the amount of such Net WAC Shortfall for distribution on such
Distribution Date pursuant to Section 5.02(h).
(f) On any Distribution Date and with respect to the Class X-1
Certificates, to the extent that any amounts otherwise payable to the Pool 1 NAS
Component or Pool 2 NAS Component, as applicable, are used to make payments of
any related Required Reserve Fund Deposit, the Securities Administrator will
withdraw from the Class A-1 Companion Sub Account or Class A-2 Companion Sub
Account, as applicable, to the extent of amounts on deposit in such Sub Accounts
after withdrawals therefrom to cover any related Net WAC Shortfalls for such
Distribution Date or previous Distribution Dates, the amount of such deposits
for distribution on such Distribution Date as provided in Section 5.02(i).
(g) Funds in each of the Sub Account shall be invested in
Permitted Investments. Any earnings on amounts in the Class A-1 NAS Sub Account
and Class A-2 NAS Sub Account shall be for the benefit of the Class X-1
Certificateholders; any earnings on amounts in the Class A-1 Companion Sub
Account and Class A-2 Companion Sub Account shall be for the benefit of the
Class X-2 Certificateholders; and any earnings on amounts in the Class B-1 Sub
Account shall be for the benefit of the Class X-B Certificateholders. The
Interest-Only Certificates shall evidence ownership of the related Sub Account
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 applicable Interest-Only Certificateholder(s) shall be liable for
any losses incurred on such investments. In the absence of written instructions
from the applicable Interest-Only Certificateholder as to investment of funds on
deposit in the related Sub Account, such
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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 applicable
Interest-Only Certificateholders.
(h) If, immediately after any Distribution Date, the amount on
deposit in any Sub Account of the Reserve Fund exceeds the initial deposit
therein, the Securities Administrator will distribute such excess to the Holders
of the Certificates that deposited such amounts in the relevant Sub Account
pursuant to Section 5.02(m).
(i) Upon termination of the Trust Fund any amounts remaining in
the related Sub Account shall be distributed to the applicable 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.
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(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 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 any 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
80
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 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.
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(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.
(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;
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(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 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
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perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to record this Agreement.
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
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(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 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 Agreements, 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 the 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 Agreements, 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 connection
88
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 Securities Administrator and the
Trustee.
(a) Compensation for the services of the Securities Administrator
hereunder shall be paid by the Master Servicer. 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.
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Section 6.14 Events of Default; Trustee To Act; Appointment of
Successor.
(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 (other than those referred to in (viii) and
(ix) below) 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
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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 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 herewith. The Master Servicer
shall cooperate with the Trustee and any successor master
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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 the
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 tax returns and such other returns as may be
required by applicable law relating to the Trust
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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 the Trust Fund and each REMIC
created hereunder, 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 the
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.
(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, 2004 (and, if applicable, prior to March 30 of each
year), 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, 2004 (and, if applicable, prior to March 30 of each year). 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
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Depositor reasonably deems appropriate to prepare and file all necessary reports
with the Commission. The Depositor shall have no responsibility to file any
items other than those specified in this section.
(d) On or before January 31 of each year, the Depositor, on behalf
of the Trust, shall provide the Securities Administrator with a written notice
listing all Distribution Date reports to the 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.
ARTICLE II
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
the 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 Certificate 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 Holder
of the Class LT-R Certificate elects to redeem the Certificates, it shall, no
later than 30 days prior to the Distribution Date selected for redemption (the
"Redemption Date"), deliver written notice 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.
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(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 Sections 7.02 and 7.03 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 written notice 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 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 each Custodian shall be reimbursed from the
Redemption Price for any Advances, Servicer Advances, accrued and unpaid
Servicing Fees and Master Servicing Fees or other amounts with respect to the
related Mortgage Loans that are reimbursable to such parties under this
Agreement, the related Servicing Agreement or the Custody Agreements.
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
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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.
(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 result in an Adverse REMIC Event:
(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.
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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 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
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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 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.
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(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 monitor 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. 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.
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(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 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.
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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.
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;
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(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;
(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
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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.
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
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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 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
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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 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
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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. In preparing such returns, the
Securities Administrator shall, with respect to each REMIC created hereunder
other than the Upper-Tier REMIC (each such REMIC, a "Non-Upper-Tier REMIC"): (i)
treat the accrual period for interests in such Non-Upper-Tier REMIC as the
calendar month; (ii) account for distributions made from such Non-Upper-Tier
REMIC as made on the first day of each succeeding calendar month; (iii) account
for income under the all-OID method at the Net WAC; (iv) use the aggregation
method provided in Treasury Regulation section 1.1275-2(c); and (v) account for
income and expenses related to such Non-Upper-Tier REMIC in the manner resulting
in the lowest amount of excess inclusion income possible accruing to the Holder
of the residual interest in such Non-Upper-Tier REMIC.
(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 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 result in 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
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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.
(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 as payments under a cap contract written by the Holders of the Class
X-1, Class X-2 and Class X-B Certificates in favor of the Holders of the LIBOR
Certificates. The Trustee and the Securities Administrator shall treat the
rights of the Holders of the Class X-1 Certificates to receive distributions
from the Reserve Fund to cover any related Required Reserve Fund Deposits as
payments under a cap contract written by the Holders of the Class X-2
Certificates in favor of the Holders of the Class X-1 Certificates. Thus, each
Class A-1, Class A-2 and Class B-1 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 zero value 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
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person" with respect to the Middle-Tier REMIC and 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 result in an
Adverse REMIC Event, (b) affect the distribution of interest or principal on the
Certificates or (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this
Agreement).
Section 10.03 Indemnification with Respect to Prohibited Transactions
or Loss of REMIC Status.
Upon the occurrence of an Adverse REMIC Event 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 an Adverse REMIC Event 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
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the status of any REMIC as a REMIC and any income generated for any REMIC by the
REO Property would not result in an Adverse REMIC Event.
(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 causing an Adverse REMIC Event. 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
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
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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, result in an
Adverse REMIC Event, 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 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 cause an Adverse
REMIC Event; 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.
112
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.
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 4.02.
Section 11.06 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
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., One Belvedere Place, Suite 330, Mill Valley, CA
94941, telecopy number (415) 381-1773, Attention: Sequoia Mortgage Trust 2003-7,
(b) in the case of the Seller, RWT Holdings, Inc., One Belvedere Place, Suite
300, telecopy number (415) 381-1773, Attention: Sequoia
113
Mortgage Trust 2003-7, (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 2003-7, 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 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:
114
(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;
(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 Services,
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 4.02. 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.
115
(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.
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.
116
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:_________________________________
Wendy Zhang
Title:
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,as Master Servicer
By:_________________________________
Name:
Title:
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Securities
Administrator
By:_________________________________
Name:
Title:
117
Solely for purposes of Section 2.04
accepted and agreed to by:
RWT HOLDINGS, INC.
By:_________________________________
John H. Isbrandtsen
Authorized Signatory
118
EXHIBIT A
FORMS OF CERTIFICATES
[See Tab # ]
A-1
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" 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. For these
purposes, a "disqualified organization" means the United
States, any state or political subdivision thereof, any
foreign government, any international organization, any agency
or instrumentality of any of the foregoing (other than an
instrumentality if all of its activities are subject to tax
and a majority of its board of directors is not selected by
such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to
persons in rural areas as described in Code Section
1381(a)(2)(C), any "electing large partnership" within the
meaning of Section 775 of the Code, or any organization (other
than a farmers' cooperative described in Code Section 521)
that is exempt from federal income tax unless such
organization is subject to the tax on unrelated business
income imposed by Code Section 511.
4. That the Purchaser either (x) is not, and on ________________
[date of transfer] will not be, an employee benefit plan or
other retirement arrangement subject to Section 406 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code ("Code"),
(collectively, a "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
B-1
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, the
Trustee, the Master Servicer, the Depositor and Securities
Administrator shall be entitled to rely, to the effect that
the purchase or holding of such Residual Certificate by the
Investor will not result in any non-exempt prohibited
transactions under Title I of ERISA or Section 4975 of the
Code and will not subject the Certificate Registrar, the
Trustee, the Depositor, the Master Servicer or the Securities
Administrator 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 or any of the above parties.
5. That the Purchaser hereby acknowledges that under the terms of
the Pooling and Servicing Agreement, dated as of November 1,
2003 (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 2003-7 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
B-2
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 such transfer of a
Residual Certificate will not be disregarded for federal
income tax purposes. "Non-U.S. Person" means an individual,
corporation, partnership or other person other than (i) a
citizen or resident of the United States; (ii) a corporation,
partnership or other entity created or organized in or under
the laws of the United States or any state thereof, including
for this purpose, the District of Columbia; (iii) an estate
that is subject to U.S. federal income tax regardless of the
source of its income; (iv) a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States
trustees have authority to control all substantial decisions
of the trust; and, (v) to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996
that are treated as United States persons prior to such date
and elect to continue to be treated as United States persons.
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 such 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.
B-3
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__.
B-4
EXHIBIT C
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
____________________________________
Date
Re: Sequoia Mortgage Trust 2003-7
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:
C-1
EXHIBIT D
FORM OF CUSTODY AGREEMENT
D-1
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.
E-1
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.
F-1
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.
G-1
EXHIBIT H
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Sequoia Mortgage Trust 2003-7
Mortgage Pass-Through Certificates
Reference is hereby made to the Pooling and Servicing Agreement, dated
as of November 1, 2003 (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: ___________, ____
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 2003-7 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 November 1, 2003, 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.
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.
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:
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 or other
retirement arrangement subject to Section 406 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"), (collectively, a "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, the Trustee, the Master Servicer, the Depositor
and the Securities Administrator shall be entitled to rely, to the
effect that the purchase or holding of such Certificate by the Investor
will not constitute or result in any non-exempt prohibited transactions
under Title I of ERISA or Section 4975 of the Code and will not subject
the Certificate Registrar, the Trustee, the Master Servicer, the
Depositor or the Securities Administrator 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 or the above parties.
3. The Investor hereby acknowledges that under the terms
of the Pooling and Servicing Agreement, dated as of November 1, 2003
(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.
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___.
J-2
EXHIBIT K
FORM OF LETTER OF REPRESENTATIONS
WITH THE DEPOSITORY TRUST COMPANY
K-1
EXHIBIT L
[RESERVED]
L-1
EXHIBIT M
FORM OF CERTIFICATION TO BE PROVIDED TO
DEPOSITOR BY THE SECURITIES ADMINISTRATOR
Sequoia Mortgage Trust 2003-7 (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
dministrator 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 November 1, 2003, 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]
M-1
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Securities Administrator
Dated:_____________________ By:_________________________________
Name:
Title:
M-2
SCHEDULE A
MORTGAGE LOAN SCHEDULE