-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ShVMIC8QB59MZSysAVAjUoiNdqFfzApMe9ycvbBI2FBN8MRv8RFE7kM24pPzn6Wo XuB4+oxC8xaAuer5wXgq+g== 0000891092-97-000193.txt : 19970604 0000891092-97-000193.hdr.sgml : 19970604 ACCESSION NUMBER: 0000891092-97-000193 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970603 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970603 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCESS FINANCIAL LENDING CORP CENTRAL INDEX KEY: 0001018147 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 411768416 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-07837 FILM NUMBER: 97618489 BUSINESS ADDRESS: STREET 1: 400 SOUTH HIGHWAY 169 SOUTH SUITE 400 STREET 2: PO BOX 26365 CITY: ST LOUIS PARK STATE: MN ZIP: 55426-0365 BUSINESS PHONE: 6125426632 MAIL ADDRESS: STREET 1: 400 SOUTH HIGHWAY 169 STREET 2: SUITE 400 CITY: ST LOUIS PARK STATE: MN ZIP: 55426-0365 8-K 1 FORM 8-K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) June 3, 1997 Access Financial Lending Corp. (Exact name of registrant as specified in its charter) Delaware 333-07837 41-1768416 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 400 Highway 169 South Suite 400 St. Louis Park, Minnesota 55426 (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code (612) 542-6500 No Change (Former name or former address, if changed since last report) - -------------------------------------------------------------------------------- Item 2. Acquisition or Disposition of Assets Description of the Certificates and the Mortgage Loans Access Financial Lending Corp. (the "Registrant") registered issuances of up to $1,500,000,000 principal amount of Mortgage Loan Pass-Through Certificates on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"), by a Registration Statement on Form S-3 (Registration File No. 333-07837) (as amended, the "Registration Statement"). Pursuant to the Registration Statement, Access Financial Mortgage Loan Trust 1997-2 (the "Trust") issued $185,188,000 in aggregate principal amount of its Mortgage Loan Pass-Through Certificates, Series 1997-2 (the "Certificates"), on May 29, 1997. This Current Report on Form 8-K is being filed to satisfy an undertaking to file copies of certain agreements executed in connection with the issuance of the Certificates, the forms of which were filed as Exhibits to the Registration Statement. The Certificates were issued pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") attached hereto as Exhibit 4.2, dated as of May 1, 1997, among Access Financial Lending Corp., as seller (the "Seller") and master servicer (the "Master Servicer"), Access Financial Receivables Corp. (the "Depositor") and The Chase Manhattan Bank, as trustee (the "Trustee"). The Certificates consist of four classes of fixed rate certificates, the Class A-2 Group I Certificates, the Class A- 3 Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I Certificates, and two classes of variable rate certificates, the Class A-1 Group I Certificates, and the Class A-6 Group II Certificates (collectively, the "Class A Certificates"). In addition to the Class A Certificates, the Trust will also issue a subordinate Class of Certificates (the "Class B Certificates") and one or more Classes of Residual Certificates. Only the Class A Certificates were issued pursuant to the Registration Statement. The Certificates initially evidence, in the aggregate, 100% of the undivided beneficial ownership interests in the Trust. The assets of the Trust consist primarily of a pool of fixed-rate, amortizing mortgage loans and adjustable rate amortizing mortgage loans which are secured by first or second liens on residential properties (the "Mortgage Loans"). Interest distributions on the Class A Certificates are based on the Certificate Principal Balance thereof and the then applicable Pass-Through Rate thereof. The Pass-Through Rate for the Class A-1 Group I Certificates will be equal to the lesser of (i) the London interbank offered rate for one-month United States dollar deposits ("LIBOR") plus 0.010% per annum or (ii) the weighted average net coupon rate for the fixed rate mortgage loans as of the payment date. The Pass-Through Rate for the Class A-2 Group I Certificates and the Class A-3 Group I Certificates will be 2 7.000%, and 7.300% per annum, respectively. The Pass-Through Rate for the Class A-4 Group I Certificates will be the lesser of (i) 7.675%, or (ii) the weighted average net coupon rate for the fixed rate mortgage loans as of the payment date. The Pass-Through Rate for the Class A-5 Group I Certificates will be 7.275% per annum. The Pass-Through Rate for the Class A-6 Group II Certificates will be equal to the lesser of (i) LIBOR plus 0.230% per annum and (ii) the weighted average net coupon rate of the adjustable rate mortgage loans. The aggregate principal amount of the Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I Certificates and the Class A-6 Group II Certificates was $39,812,000, $21,165,000, $10,000,000, $8,175,000, $10,000,000 and $96,036,000, respectively. The Class B Certificates represent a beneficial ownership interest in a portion of the interest payments on the Mortgage Loans. Distributions on the Class B Certificates are calculated as described in the Pooling and Servicing Agreement. As of the Closing Date, the Mortgage Loans possessed the characteristics described in the Prospectus dated November 7, 1996 and the Prospectus Supplement dated May 22, 1997, filed pursuant to Rule 424(b)(2) of the Act on May 28, 1997. 3 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Not applicable (b) Not applicable (c) Exhibits: 1.1 Underwriting Agreement, dated May 22, 1997, among Access Financial Lending Corp., Prudential Securities Incorporated and J.P. Morgan Securities Inc. 4.1 Purchase and Sale Agreement, dated as of May 1, 1997 between Access Financial Lending Corp. and Access Financial Receivables Corp. 4.2 Pooling and Servicing Agreement, dated as of May 1, 1997, among Access Financial Lending Corp., as seller and master servicer, Access Financial Receivables Corp., as transferor, and The Chase Manhattan Bank, as trustee. 10.1 Indemnification Agreement, dated as of May 22, 1997, among Access Financial Lending Corp., Access Financial Receivables Corp., Financial Security Assurance Inc., Prudential Securities Incorporated and J.P. Morgan Securities Inc. 4 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ACCESS FINANCIAL LENDING CORP. as Registrant and on behalf of ACCESS FINANCIAL MORTGAGE LOAN TRUST 1997-2 By:/s/ Dan J. Cheever ------------------------------- Name: Dan J. Cheever Title: Chief Executive Officer and Chief Financial Officer Dated: June 3, 1997 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 1.1 Underwriting Agreement, dated May 22, 1997, among Access Financial Lending Corp., Prudential Securities Incorporated and J.P. Morgan Securities Inc. 4.1 Purchase and Sale Agreement, dated as of May 1, 1997 between Access Financial Lending Corp. and Access Financial Receivables Corp. 4.2 Pooling and Servicing Agreement, dated as of May 1, 1997, among Access Financial Lending Corp., as seller and master servicer, Access Financial Receivables Corp., as transferor, and The Chase Manhattan Bank, as trustee. 10.1 Indemnification Agreement, dated as of May 22, 1997, among Access Financial Lending Corp., Access Financial Receivables Corp., Financial Security Assurance Inc., Prudential Securities Incorporated and J.P. Morgan Securities Inc. EX-1 2 EXHIBIT 1.1 UNDERWRITING AGREEMENT EXHIBIT 1.1 ACCESS FINANCIAL MORTGAGE LOAN TRUST 1997-2 $39,812,000 Class A-1 Group I Certificates, Variable Pass-Through Rate $21,165,000 Class A-2 Group I Certificates, 7.000% Pass-Through Rate $10,000,000 Class A-3 Group I Certificates, 7.300% Pass-Through Rate $ 8,175,000 Class A-4 Group I Certificates, 7.675% Pass-Through Rate $10,000,000 Class A-5 Group I Certificates, 7.275% Pass-Through Rate $96,036,000 Class A-6 Group II Certificates, Variable Pass-Through Rate UNDERWRITING AGREEMENT PRUDENTIAL SECURITIES INCORPORATED J.P. MORGAN SECURITIES INC. May 22, 1997 Dear Sirs: Access Financial Lending Corp., a corporation organized and existing under the laws of Delaware (the "Company"), agrees with you (the "Underwriters") as follows: Section 1. Issuance and Sale of Certificates. The Company has authorized the issuance and sale of Mortgage Loan Pass-Through Certificates, Series 1997-2, Class A-1 Group I Certificates in an aggregate principal amount of $39,812,000, Class A-2 Group I Certificates in an aggregate principal amount of $21,165,000, Class A-3 Group I Certificates in an aggregate principal amount of $10,000,000, Class A-4 Group I Certificates in an aggregate principal amount of $8,175,000, Class A-5 Group I Certificates in an aggregate principal amount of $10,000,000 and Class A-6 Group II Certificates in an aggregate principal amount of $96,036,000, (collectively, the "Offered Certificates"). The Offered Certificates, Class B Certificates and the Residual Certificates (the Class B Certificates and the Residual Certificates, collectively, the "Non-Offered Certificates") (the Non-Offered Certificates and the Offered Certificates, collectively, the "Certificates"), are to be issued by Access Financial Mortgage Loan Trust 1997-2 (the "Trust") pursuant to a Pooling and Servicing Agreement, to be dated as of May 1, 1997 (the "Pooling and Servicing Agreement"), among the Company, Access Financial Lending Corp., as master servicer (the "Master Servicer"), Access Financial Receivables Corp., as the transferor (the "Transferor") and The Chase Manhattan Bank, a New York banking corporation, as trustee (the "Trustee"). The Non-Offered Certificates are not to be sold hereunder. The Certificates evidence all of the beneficial ownership interests in the assets of the Trust consisting primarily of a pool of amortizing mortgage loans which are secured by first or second liens on residential properties (the "Mortgage Loans"). The Company will transfer all the Mortgage Loans to the Transferor pursuant to a Purchase and Sale Agreement dated as of May 1, 1997 (the "Purchase Agreement") between the Company and the Transferor. The Offered Certificates will have the benefit of a certificate insurance policy (the "Certificate Insurance Policy") issued by Financial Security Assurance, Inc., a monoline insurance company organized under the laws of New York (the "Certificate Insurer"). In connection with the issuance of the Certificate Insurance Policy, (i) the Company and the Certificate Insurer will execute and deliver an Insurance and Indemnity Agreement dated as of May 1, 1997 (the "Insurance Agreement") and (ii) the Company, the Transferor, the Underwriters and the Certificate Insurer will execute and deliver an Indemnification Agreement dated as of May 22, 1997 (the "Indemnification Agreement"). As used herein, the term "Company Agreements" means the Pooling and Servicing Agreement, the Sale Agreement, the Insurance Agreement, the Indemnification Agreement, any Sub-Servicing Agreements and this Agreement. As used herein, the term "Transferor Agreements" means the Pooling and Servicing Agreement, the Sale Agreement and the Indemnification Agreement. An election will be made to treat certain of the assets and Accounts of the Trust as "real estate mortgage investment conduits" ("REMICs") as such term is defined in the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code"). The Offered Certificates and the Class B Certificates will be designated as "regular interests" in a REMIC, and the Residual Certificates will be designated as "residual interests" in a REMIC. The offering of the Offered Certificates will be made by you, and the Company understands that you propose to make a public offering of the Offered Certificates for settlement on May 29, 1997, as you deem advisable. Defined terms used herein shall have their respective meanings as set forth in the Pooling and Servicing Agreement. 2 Section 2. Representations and Warranties. A. The Company represents and warrants to, and agrees with each of the Underwriters, that: (i) A Registration Statement on Form S-3 (No. 333-07837) has (a) been prepared by the Company on such Form in conformity with the requirements of the Securities Act of 1933, as amended (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the United States Securities and Exchange Commission (the "Commission") thereunder, (b) been filed with the Commission and (c) been declared effective by the Commission, and no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceeding for that purpose has been initiated or threatened, by the Commission. Copies of such Registration Statement have been delivered by the Company to the Underwriters. There are no contracts or documents of the Company which are required to be filed as exhibits to the Registration Statement pursuant to the Securities Act or the Rules and Regulations which have not been so filed or incorporated by reference therein on or prior to the Effective Date of the Registration Statement other than such documents or materials, if any, as the Underwriters deliver to the Company pursuant to Section 9D hereof for filing on Form 8-K. The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. As used herein, the term "Effective Date" means the date on and time at which the Registration Statement became effective, or the date on and the time at which the most recent post-effective amendment to such Registration Statement, if any, was declared effective by the Commission. The term "Registration Statement" means (i) the registration statement referred to in the preceding paragraph, including the exhibits thereto, (ii) all documents incorporated by reference therein pursuant to Item 12 of Form S-3 and (iii) any post-effective amendment filed and declared effective prior to the date of issuance of the Certificates. The term "Base Prospectus" means the prospectus included in the Registration Statement. The term "Prospectus Supplement " means the prospectus supplement dated the date hereof and specifically relating to the Offered Certificates (the "Prospectus Supplement"), as first filed with the Commission pursuant to Rule 424 of the Rules and Regulations. The term "Company Offering Materials" means, collectively, the Registration Statement, the Base Prospectus and the Prospectus Supplement except for the Underwriter Information. The term "Underwriter Information" means the information set forth under the caption "Underwriting" in the Prospectus Supplement and any information in the Prospectus Supplement relating to any potential market-making, over-allotment or price stabilization activities of the Underwriters. The term 3 "Prospectus" means, together, the Base Prospectus and the Prospectus Supplement. (ii) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will, when they become effective or are filed with the Commission, as the case may be, conform in all respects to the requirements of the Securities Act and the Rules and Regulations. The Company Offering Materials do not and will not, as of the Effective Date or filing date thereof and of any amendment thereto, as appropriate, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (iii) The documents incorporated by reference in the Company Offering Materials, when they were filed with the Commission conformed in all material respects to the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable, and the Rules and Regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; any further documents so filed and incorporated by reference in the Company Offering Materials, when such documents are filed with the Commission will conform in all material respects to the requirements of the Exchange Act and the Rules and Regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation is made as to documents deemed to be Derived Information except to the extent such documents reflect Company - Provided Information. (iv) Since the respective dates as of which information is given in the Company Offering Materials, or the Company Offering Materials as amended and supplemented, (x) there has not been any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business, management, financial condition, stockholders' equity, results of operations, regulatory situation or business prospects of the Company and (y) the Company has not entered into any transaction or agreement (whether or not in the ordinary course of business) material to the Company that, in either case, would reasonably be expected to materially adversely affect the interests of the holders of the Offered Certificates, otherwise than as set forth or contemplated in the Company Offering Materials, as so amended or supplemented. 4 (v) The Company is not aware of (x) any request by the Commission for any further amendment of the Registration Statement or the Prospectus or for any additional information, (y) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose or (z) any notification with respect to the suspension of the qualification of the Offered Certificates for the sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. (vi) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the business or financial condition of the Company and has all power and authority necessary to own or hold its properties, to conduct the business in which it is engaged and to enter into and perform its obligations under each Company Agreement and to cause the Certificates to be issued. (vii) There are no actions, proceedings or investigations pending before or threatened by any court, administrative agency or other tribunal to which the Company is a party or of which any of its properties is the subject (i) which if determined adversely to it is likely to have a material adverse effect individually, or in the aggregate, on the business or financial condition of the Company, (ii) asserting the invalidity of any Company Agreement, in whole or in part or the Certificates, (iii) seeking to prevent the issuance of the Certificates or the consummation by the Company of any of the transactions contemplated by any Company Agreement, in whole or in part, or (iv) which if determined adversely it is likely to materially and adversely affect the performance by the Company of its obligations under, or the validity or enforceability of, any Company Agreement, in whole or in part or the Certificates. (viii) Each Company Agreement has been, or, when executed and delivered will have been, duly authorized, validly executed and delivered by the Company and each Company Agreement constitutes, a valid and binding agreement of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that the enforceability hereof may be subject (x) to insolvency, reorganization, moratorium, receivership, conservatorship, or other similar laws, regulations or procedures of general applicability now or hereafter in effect relating to or affecting creditors' rights generally, (y) to general 5 principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law), and (z) with respect to rights of indemnity under this Agreement, to limitations of public policy under applicable securities laws. (ix) The issuance and delivery of the Certificates, and the execution, delivery and performance of each Company Agreement and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with or result in a breach of or violate any term or provision of or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, or other agreement or instrument to which the Company is a party, by which the Company may be bound or to which any of the property or assets of the Company or any of its subsidiaries may be subject, nor will such actions result in any violation of the provisions of the articles of incorporation or by-laws of the Company or any law, statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its respective properties or assets. (x) KPMG Peat Marwick is an independent public accountant with respect to the Company as required by the Securities Act and the Rules and Regulations. (xi) The direction by the Company to the Trustee to execute, authenticate, countersign, issue and deliver the Certificates will be duly authorized by the Company, and, assuming the Trustee has been duly authorized to do so, when executed, authenticated, countersigned, issued and delivered by the Trustee in accordance with the Pooling and Servicing Agreement, the Certificates will be validly issued and outstanding and will be entitled to the benefits of the Pooling and Servicing Agreement. (xii) No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body of the United States is required for the issuance and sale of the Certificates, or the consummation by the Company of the other transactions contemplated by this Agreement, except the registration under the Securities Act of the Offered Certificates and such consents, approvals, authorizations, registrations or qualifications as may have been obtained or effected or as may be required under securities or Blue Sky laws in connection with the purchase and distribution of the Offered Certificates by you. (xiii) The Company possesses all material licenses, certificates, authorities or permits issued by the appropriate state, Federal or foreign regulatory agencies or bodies necessary to conduct the business now conducted by it and as described in the Company Offering Materials (or is exempt 6 therefrom) and the Company has not received notice of any proceedings relating to the revocation or modification of such license, certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, is likely to materially and adversely affect the conduct of its business, operations, financial condition or income. (xiv) Neither the Company nor the Trust created by the Pooling and Servicing Agreement will conduct its operations while any of the Certificates are outstanding in a manner that would require the Company or the Trust to be registered as an "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act"), as in effect on the date hereof. (xv) Any taxes, fees and other governmental charges in connection with the execution, delivery and issuance of any Company Agreement, the Certificate Insurance Policies and the Certificates that are required to be paid by the Company at or prior to the Closing Date have been paid or will be paid at or prior to the Closing Date. (xvi) At the Closing Date, each of the representations and warranties of the Company set forth in any Company Agreement will be true and correct in all material respects. (xvii) (a) Following the conveyance of the Mortgage Loans to the Trust pursuant to the Pooling and Servicing Agreement, the Trust will own the Mortgage Loans free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or other security interest (collectively, "Liens") other than Liens created by the Pooling and Servicing Agreement, and (b) the Company will have the power and authority to sell such Mortgage Loans to the Trust. (xviii) As of the Cut-off Date, each of the Mortgage Loans will meet the eligibility criteria described in the Prospectus. (xix) Each of the Certificates, the Pooling and Servicing Agreement, any Sub-Servicing Agreement, the Indemnification Agreement and the Certificate Insurance Policies conforms in all material respects to the descriptions thereof contained in the Prospectus. Any certificate signed by an officer of the Company and delivered to you or your counsel in connection with an offering of the Offered Certificates shall be deemed, and shall state that it is, a representation and warranty as to 7 the matters covered thereby to each person to whom the representations and warranties in this Section 2A are made. Section 3. Purchase and Sale. The Underwriters' commitment to purchase the Offered Certificates pursuant to this Agreement shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. The Company agrees to instruct the Trust to issue the Offered Certificates to each Underwriter as set forth in Schedule 1 hereto, and each Underwriter agrees, severally and not jointly, to purchase the Offered Certificates set forth by its name on Schedule 1 hereto on the date of issuance thereof. The purchase prices for the Offered Certificates shall be as set forth on Schedule 1 hereto. Section 4. Delivery and Payment. Payment of the purchase price for, and delivery of, any Offered Certificates to be purchased by you shall be made at the office of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York, or at such other place as shall be agreed upon by you and the Company, at 10:00 a.m. New York City time on May 29, 1997 (the "Closing Date"), or at such other time or date as shall be agreed upon in writing by you and the Company. Payment shall be made by wire transfer of same day funds payable to the account designated by the Company. Each of the Offered Certificates so to be delivered shall be represented by one or more global certificates registered in the name of Cede & Co., as nominee for The Depository Trust Company. The Company agrees to have the Offered Certificates available for inspection, checking and packaging by the Underwriters in New York, New York, not later than 12:00 p.m. New York City time on the business day prior to the Closing Date. Section 5. Offering by Underwriters. It is understood that the Underwriters propose to offer the Offered Certificates for sale to the public as set forth in the Prospectus. Section 6. Covenants of the Company. The Company covenants with each of the Underwriters as follows: A. To cause to be prepared a Prospectus in a form approved by the Underwriters, to file such Prospectus pursuant to Rule 424(b) under the Securities Act within the time period prescribed by Rule 424(b) and to provide the Underwriters with evidence satisfactory to the Underwriters of such timely filing; to cause to be made no further amendment or any supplement to the Registration Statement or to the Prospectus prior to the 91st day following the Closing Date except as permitted herein; to advise the Underwriters, promptly after 8 it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective prior to the 91st day following the Closing Date or any supplement to the Prospectus or any amended Prospectus has been filed prior to the 91st day following the Closing Date and to furnish the Underwriters with copies thereof; to file promptly all reports and any global proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and, until the 91st day following the Closing Date; to promptly advise the Underwriters of its receipt of notice of the issuance by the Commission of any stop order or of: (i) any order preventing or suspending the use of the Prospectus; (ii) the suspension of the qualification of the Offered Certificates for offering or sale in any jurisdiction; (iii) the initiation of or threat of any proceeding for any such purpose; (iv) any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information. In the event of the issuance of any stop order or of any order preventing or suspending the use of the Prospectus or suspending any such qualification, the Company promptly shall use its best efforts to obtain the withdrawal of such order by the Commission. B. To furnish promptly to the Underwriters and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, and of each amendment thereto filed with the Commission, including all consents and exhibits filed therewith. C. To deliver promptly to the Underwriters such number of the following documents as the Underwriters shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case including exhibits); (ii) the Prospectus and any amended or supplemented Prospectus; and (iii) any document incorporated by reference in the Prospectus (including exhibits thereto). If the delivery of a prospectus is required at any time in connection with the offering or sale of the Offered Certificates and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, the Company shall notify the Underwriters and, upon the Underwriters' request based upon the advice of 9 counsel, shall file such document and prepare and furnish without charge to the Underwriters and to any dealer in securities as many copies as the Underwriters may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which corrects such statement or omission or effects such compliance. D. To cause to be filed promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Underwriters, be required by the Securities Act or requested by the Commission. E. To cause to be furnished to the Underwriters and counsel for the Underwriters, prior to filing with the Commission, and to obtain the consent of the Underwriters, which consent will not unreasonably be withheld, for the filing of the following documents relating to the Certificates: (i) any amendment to the Registration Statement or supplement to the Prospectus, or document incorporated by reference in the Prospectus, or (ii) Prospectus pursuant to Rule 424 of the Rules and Regulations. F. To cause to be made generally available to holders of the Offered Certificates as soon as practicable, but in any event not later than 90 days after the close of the period covered thereby, a statement of earnings of the Trust (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including Rule 158) and covering a period of at least twelve consecutive months beginning not later than the first day of the first fiscal quarter following the Closing Date. G. To use its best efforts, in cooperating with the Underwriters, to qualify the Offered Certificates for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate, and maintain or cause to be maintained such qualifications in effect for as long as may be required for the distribution of the Offered Certificates. The Company will cause the filing of such statements and reports as may be required by the laws of each jurisdiction in which the Offered Certificates have been so qualified. H. The Company will not, without the prior written consent of the Underwriters, contract to sell any mortgage pass-through certificates, mortgage pass-through notes or collateralized mortgage obligations or other similar securities either directly or indirectly for a period of five (5) business days prior to the later of termination of the syndicate or the Closing Date. 10 I. So long as the Offered Certificates shall be outstanding, the Company shall cause the Trustee, pursuant to the Pooling and Servicing Agreement, to deliver to the Underwriters as soon as such statements are furnished to the Trustee: (i) the annual statement as to compliance of the Master Servicer under the Pooling and Servicing Agreement delivered to the Trustee pursuant to Section 10.16 thereof; (ii) the annual statement of a firm of independent public accountants furnished to the Trustee pursuant to Section 10.17 of the Pooling and Servicing Agreement; and (iii) the monthly reports furnished to the Owners pursuant to Section 7.6 of the Pooling and Servicing Agreement. J. So long as any of the Offered Certificates are outstanding, the Company will furnish to the Underwriters (i) as soon as practicable after the end of the fiscal year of the Trust all documents required to be distributed to Certificateholders and other filings with the Commission pursuant to the Exchange Act, or any order of the Commission thereunder with respect to any securities issued by the Company that are (A) non-structured equity or debt offering of the Company or (B) the Offered Certificates and (ii) from time to time, any other information concerning the Company filed with any government or regulatory authority which is otherwise publicly available, as the Underwriters shall reasonably request in writing. K. To apply the net proceeds from the sale of the Offered Certificates in the manner set forth in the Prospectus. L. If, between the date hereof or, if earlier, the dates as of which information is given in the Prospectus and the Closing Date, to the knowledge of the Company, there shall have been any material change, or any development involving a prospective material change in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company, the Company will give prompt written notice thereof to the Underwriters. M. The Trustee will prepare, or cause to be prepared, and file, or cause to be filed, a timely election to treat the Trust Fund as a REMIC for Federal income tax purposes and will file, or cause to be filed, such tax returns and take such actions, all on a timely basis, as are required to elect and maintain such status. N. To the extent, if any, that the ratings provided with respect to the Offered Certificates by the rating agency or agencies that initially rate the Offered Certificates are conditional upon the furnishing of documents or the taking of any other actions by the Company, the Company shall use its 11 best efforts to furnish or cause to be furnished such documents and take any such other actions. Section 7. Conditions of the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Offered Certificates pursuant to this Agreement are subject to (i) the accuracy on and as of the Closing Date of the representations and warranties on the part of the Company herein contained, (ii) the accuracy of the statements of officers of the Company made pursuant hereto, (iii) the performance by the Company of all of its obligations hereunder, and the performance by the Company of all of its obligations under the Company Agreements and (iv) the following conditions as of the Closing Date: A. No stop order suspending the effectiveness of the Registration Statement shall have been issued, and no proceeding for that purpose shall have been initiated or threatened by the Commission. Any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus shall have been complied with. B. You shall have received the Transfer Agreement, the Pooling and Servicing Agreement, any Sub-Servicing Agreements, the Insurance Agreement, the Indemnification Agreement and the Offered Certificates in form and substance satisfactory to you and duly executed by the signatories required pursuant to the respective terms thereof. C. You shall have received from Dewey Ballantine, counsel for the Company and the Transferor, a favorable opinion, dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters to the effect that: (i) The issuance and sale of the Offered Certificates have been duly authorized and, when executed, authenticated, countersigned and delivered by the Trustee in accordance with the Pooling and Servicing Agreement and delivered and paid for pursuant to this Agreement, will be validly issued and outstanding and will be entitled to the benefits of the Pooling and Servicing Agreement. (ii) No authorization, approval, consent or order of, or filing with, any court or governmental agency or authority is necessary under the federal law of the United States or the laws of the State of New York in connection with the execution, delivery and performance by the Company of the Company Agreements, except such as may be required under the Act or the Rules and Regulations and Blue Sky or other state securities laws, filings with respect to the transfer of the Mortgage 12 Loans to the Trust pursuant to the Pooling and Servicing Agreement and such other approvals or consents as have been obtained. (iii) Each Company Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, except that as to enforceability such enforcement may (A) be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally, (B) be limited by general principles of equity (whether considered in a proceeding at law or in equity) and (C) the enforceability as to rights to indemnification may be subject to limitations of public policy under applicable laws. (iv) Each Transferor Agreement constitutes the legal, valid and binding obligation of the Transferor, enforceable against the Transferor in accordance with their respective terms, except that as to enforceability such enforcement may (A) be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally, (B) be limited by general principles of equity (whether considered in a proceeding at law or in equity) and (C) the enforceability as to rights to indemnification may be subject to limitations of public policy under applicable laws. (v) The Pooling and Servicing Agreement is not required to be qualified under the Trust Indenture Act of 1939, as amended. (vi) Neither the Company nor the Trust is required to be registered as an "investment company" under the Investment Company Act of 1940, as amended. (vii) The direction by the Company to the Trustee to execute, issue, countersign and deliver the Offered Certificates has been duly authorized and, when the Offered Certificates are executed and authenticated by the Trustee in accordance with the Pooling and Servicing Agreement and delivered and paid for pursuant to this Agreement, they will be validly issued and outstanding and entitled to the benefits provided by the Pooling and Servicing Agreement. (viii) Immediately prior to the transfer of the Mortgage Loans by the Company to the Transferor pursuant to the Sale Agreement, the Company was the sole owner of all right, title and interest in the Mortgage Loans and other property to be transferred to the Transferor. 13 (ix) The Company has full power and authority to sell and assign the property to be sold and assigned to and deposited with the Transferor and has duly authorized such sale and assignment to the Transferor by all necessary corporate action. (x) The Company has directed the Trustee in its capacity as Trustee of the Access Financial Loan Purchase Trust to transfer, assign, set over and otherwise convey without recourse, to the Transferor, all right, title and interest of the Company in and to each Mortgage Loan listed on the Mortgage Loan Schedule delivered by the Company on the Startup Day, and all of its right, title and interest in and to (A) scheduled payments of interest due on each Mortgage Loan after the Cut-Off Date, (B) scheduled payments of principal due, and unscheduled collections of principal received, on each Mortgage Loan on and after the Cut-off Date and (C) the Certificate Insurance Policy; such transfer of the Mortgage Loans set forth on the Mortgage Loan Schedule to the Transferor will be absolute and is intended by the Company and all parties hereto to be treated as a sale to the Trust. (xi) The Offered Certificates, the Pooling and Servicing Agreement, any Sub-Servicing Agreement and this Agreement each conform in all material respects with the respective descriptions thereof contained in the Registration Statement and the Prospectus. (xii) The statements in the Prospectus under the captions "Summary of Prospectus - Certain Federal Income Tax Considerations", "Summary of Prospectus - ERISA Considerations", "ERISA Considerations" and "Certain Federal Income Tax Considerations", "Summary - ERISA Considerations", "Summary - Federal Tax Aspects", "ERISA Considerations", "Certain Federal Tax Aspects" and "REMICS", to the extent that they constitute matters of law or legal conclusions with respect thereto, have been reviewed by such counsel and represent a fair and accurate summary of the matters addressed therein, under existing law and the assumptions stated therein. (xiii) The statements in the Prospectus under the caption "Certain Legal Aspects of Mortgage Loans and Related Matters", "Legal Investment Matters" and "Legal Investment Considerations" to the extent they constitute matters of law or legal conclusions, are correct in all material respects. (xiv) The Offered Certificates will, when issued, be properly characterized for Federal income tax purposes as indebtedness of the Company and the Trust created by the Pooling and Servicing Agreement and will not constitute 14 a "taxable mortgage pool" within the meaning of Section 7701(i) of the Code. (xv) Assuming compliance with all of the provisions of the Pooling and Servicing Agreement, the arrangement pursuant to which the Mortgage Loans will be administered by the Trustee and pursuant to which the Offered Certificates will be sold will be treated as a REMIC as defined by Section 860D of the Code and the Offered Certificates and the Class B Certificates will be treated as "regular interests" in a REMIC (or a combination of "regular interests" in a REMIC), and the Residual Certificates will be treated as "residual interests" in a REMIC on the date of issuance thereof and will continue to qualify as a REMIC for so long as such arrangement continues to comply with any applicable changes in the provisions of the Code and regulations issued thereunder. (xvi) The Registration Statement is effective under the Act and no stop order suspending the effectiveness of the Registration Statement has been issued, and to the best of such counsel's knowledge no proceeding for that purpose has been instituted or threatened by the Commission under the Act. (xvii) The conditions to the use by the Company of a registration statement on Form S-3 under the Act, as set forth in the General Instructions to Form S-3, have been satisfied with respect to the Registration Statement and the Prospectus. There are no contracts or documents which are required to be filed as exhibits to the Registration Statement pursuant to the Act or the Rules and Regulations thereunder which have not been so filed. (xviii) The Registration Statement at the time it became effective, and any amendments thereto at the time such amendment becomes effective (other than the information set forth in the financial statements and other financial and statistical information contained therein, as to which such counsel need express no opinion), complied as to form in all material respects with the applicable requirements of the Act and the Rules and Regulations thereunder. (xix) The execution, delivery and performance of each Company Agreement by the Company will not conflict with or violate any federal statute, rule, regulation or order of any federal governmental agency or body, or any federal court having jurisdiction over the Company or its properties or assets. (xx) The execution, delivery and performance of each Transferor Agreement by the Transferor will not conflict 15 with or violate any federal statute, rule, regulation or order of any federal governmental agency or body, or any federal court having jurisdiction over the Transferor or its properties or assets. In addition, such counsel shall state that such counsel has participated in conferences with officers and other representatives of each of the Company, the Transferor, any Sub-Servicer, the Certificate Insurer, the Trustee and the Underwriters at which the contents of the Registration Statement and the Prospectus and related matters were discussed and on the basis of the foregoing, no facts have come to such counsel's attention that have led such counsel to believe the Registration Statement, at the time it became effective and as of the date of such counsel's opinion contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, as of its date and as of the date of such counsel's opinion, contained or contains an untrue statement of material fact or omitted or omits to state a material fact necessary to make the statements therein not misleading; it being understood that such counsel need express no belief with respect to the financial statements, schedules and other financial and statistical data included in the Registration Statement or the Prospectus. D. The Company shall have delivered to the Underwriters a certificate, dated the Closing Date, of an authorized officer of the Company to the effect that the signer of such certificate has carefully examined this Agreement and the Prospectus and that: (i) the representations and warranties of the Company in each Company Agreement are true and correct in all material respects at and as of the Closing Date with the same effect as if made on the Closing Date, (ii) the Company has complied in all material respects with all the agreements and satisfied in all material respects all the conditions on its part to be performed or satisfied at or prior to the Closing Date, (iii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to such officer's knowledge, threatened, (iv) there has been no material adverse change in the condition (financial or other), earnings, business, properties or prospects of the Company, whether or not arising from transactions in the ordinary course of business, except as set forth or contemplated in the Prospectus and (v) nothing has come to such officer's attention that would lead such officer to believe that the Company Offering Materials contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 16 The Company shall attach to such certificate a true and correct copy of its certificate of incorporation, as appropriate, and bylaws which are in full force and effect on the date of such certificate and a certified true copy of the resolutions of its Board of Directors with respect to the transactions contemplated herein. E. The Transferor shall have delivered to the Underwriters a certificate, dated the Closing Date, of an authorized officer of the Transferor to the effect that the signer of such certificate has carefully examined this Agreement and the Prospectus and that: (i) the representations and warranties of the Transferor in each Transferor Agreement are true and correct in all material respects at and as of the Closing Date with the same effect as if made on the Closing Date and (ii) the Transferor has complied in all material respects with all the agreements and satisfied in all material respects all the conditions on its part to be performed or satisfied at or prior to the Closing Date. The Transferor shall attach to such certificate a true and correct copy of its certificate of incorporation, as appropriate, and bylaws which are in full force and effect on the date of such certificate and a certified true copy of the resolutions of its Board of Directors with respect to the transactions contemplated herein. F. The Underwriters shall have received from in-house counsel of the Company, a favorable opinion, dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with full corporate power to own its property or assets and to conduct its business as presently conducted by it and as described in the Prospectus, and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property or assets requires such qualification or where the failure to be so qualified would have a material adverse effect on its condition (financial or otherwise). (ii) Each Company Agreement has been duly authorized, executed and delivered by authorized officers or signers of the Company. (iii) The direction by the Company to the Trustee to execute, issue, countersign and deliver the Offered Certificates has been duly authorized by the Company. 17 (v) The execution, delivery and performance of each Company Agreement by the Company will not conflict with or result in a material breach of any of the terms or provisions of, or constitute a material default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company pursuant to the terms of the certificate of incorporation or the by-laws of the Company or any statute, rule, regulation or order of any governmental agency or body of the State of Minnesota, or any Minnesota state court having jurisdiction over the Company or its property or assets or any material agreement or instrument known to such counsel, to which the Company is a party or by which the Company or any of its property or assets is bound. (vii) No authorization, approval, consent or order of, or filing with, any court or governmental agency or authority of the State of Minnesota is necessary in connection with the execution, delivery and performance by the Company of any Company Agreement, except such as may be required under the Act or the Rules and Regulations and Blue Sky or other state securities laws, filings with respect to the transfer of the Mortgage Loans to the Transferor pursuant to the Sale Agreement and such other approvals or consents as have been obtained. (viii) To such counsel's knowledge, there are no legal or governmental proceedings pending to which the Company is a party or of which any property or assets of the Company is the subject, and no such proceedings are to the best of such counsel's knowledge threatened or contemplated by governmental authorities against the Company or the Trust, that, (A) are required to be disclosed in the Registration Statement or (B) (i) assert the invalidity against the Company of all or any part of any Company Agreement, (ii) seek to prevent the issuance of the Offered Certificates, (iii) could materially adversely affect the Company's obligations under any Company Agreement, or (iv) seek to affect adversely the federal or state income tax attributes of the Offered Certificates. G. The Underwriters shall have received from in-house counsel of the Transferor, a favorable opinion, dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters to the effect that: (i) The Transferor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with full 18 corporate power to own its property or assets and to conduct its business as presently conducted by it, and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property or assets requires such qualification or where the failure to be so qualified would have a material adverse effect on its condition (financial or otherwise). (ii) Each Transferor Agreement has been duly authorized, executed and delivered by authorized officers or signers of the Transferor. (v) The execution, delivery and performance of each Transferor Agreement by the Transferor will not conflict with or result in a material breach of any of the terms or provisions of, or constitute a material default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Transferor pursuant to the terms of the certificate of incorporation or the by-laws of the Transferor or any statute, rule, regulation or order of any governmental agency or body of the State of Minnesota, or any Minnesota state court having jurisdiction over the Transferor or its property or assets or any material agreement or instrument known to such counsel, to which the Transferor is a party or by which the Transferor or any of its property or assets is bound. (vii) No authorization, approval, consent or order of, or filing with, any court or governmental agency or authority of the State of Minnesota is necessary in connection with the execution, delivery and performance by the Transferor of any Transferor Agreement, except such as may be required under the Act or the Rules and Regulations and Blue Sky or other state securities laws, filings with respect to the transfer of the Mortgage Loans to the Trust pursuant to the Pooling and Servicing Agreement and such other approvals or consents as have been obtained. (viii) To such counsel's knowledge, there are no legal or governmental proceedings pending to which the Transferor is a party or of which any property or assets of the Transferor is the subject, and no such proceedings are to the best of such counsel's knowledge threatened or contemplated by governmental authorities against the Transferor or the Trust, that, (A) are required to be disclosed in the Registration Statement or (B) (i) assert the invalidity against the Transferor of all or any part of any Transferor Agreement, (ii) seek to prevent the issuance of the Offered Certificates, (iii) could materially adversely affect the Transferor's obligations 19 under any Transferor Agreement, or (iv) seek to affect adversely the federal or state income tax attributes of the Offered Certificates. H. The Underwriters shall have received from special counsel to the Certificate Insurer, reasonably acceptable to the Underwriters, a favorable opinion dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters, to the effect that: (i) The Certificate Insurer is a monoline insurance company licensed and authorized to transact insurance business and to issue, deliver and perform its obligations under its surety bonds under the laws of the State of New York. The Certificate Insurer (a) is a monoline insurance company validly existing and in good standing under the laws of the State of New York, (b) has the corporate power and authority to own its assets and to carry on the business in which it is currently engaged, and (c) is duly qualified and in good standing as a foreign corporation under the laws of each jurisdiction where failure so to qualify or to be in good standing would have a material and adverse effect on its business or operations. (ii) No litigation or administrative proceedings of or before any court, tribunal or governmental body are currently pending or, to the best of such counsel's knowledge, threatened against the Certificate Insurer, which, if adversely determined, would have a material and adverse effect on the ability of the Certificate Insurer to perform its obligations under the Certificate Insurance Policy. (iii) The Certificate Insurance Policy and the Indemnification Agreement constitute the irrevocable, valid, legal and binding obligations of the Certificate Insurer in accordance with their respective terms to the extent provided therein, enforceable against the Certificate Insurer in accordance with their respective terms, except as the enforceability thereof and the availability of particular remedies to enforce the respective terms thereof against the Certificate Insurer may be limited by applicable laws affecting the rights of creditors of the Certificate Insurer and by the application of general principles of equity. (iv) The Certificate Insurer, as an insurance company, is not eligible for relief under the United States Bankruptcy Code. Any proceedings for the liquidation, conservation or rehabilitation of the 20 Certificate Insurer would be governed by the provisions of the Insurance Law of the State of New York. (v) The statements set forth in the Prospectus under the caption "The Certificate Insurance Policy and the Certificate Insurer" are true and correct, except that no opinion is expressed as to financial statements or other financial information included in the Prospectus relating to the Certificate Insurer and, insofar as such statements constitute a summary of the Certificate Insurance Policy, accurately and fairly summarize the terms of the Certificate Insurance Policy. (vi) The Certificate Insurance Policy constitutes an insurance policy within the meaning of Section 3(a)(8) of the Act. (vii) Neither the execution or delivery by the Certificate Insurer of the Certificate Insurance Policy, the Insurance Agreement, the Indemnification Agreement, nor the performance by the Certificate Insurer of its obligations thereunder, will conflict with any provision of the certificate of incorporation or the amended by-laws of the Certificate Insurer nor, to the best of such counsel's knowledge, result in a breach of, or constitute a default under, any agreement or other instrument to which the Certificate Insurer is a party or by which any of its property is bound nor, to the best of such counsel's knowledge, violate any judgment, order or decree applicable to the Certificate Insurer of any governmental regulatory body, administrative agency, court or arbitrator located in any jurisdiction in which the Certificate Insurer is licensed or authorized to do business. I. The Underwriters shall have received from counsel to LSI Financial Group, Inc. ("LSI"), reasonably acceptable to the Underwriters, a favorable opinion dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters, to the effect that: (i) LSI has been duly incorporated and is validly existing as a corporation in good standing under the laws of its state of incorporation. (ii) LSI has full corporate power and authority to enter into and perform its obligations under the Sub-Servicing Agreement, including, but not limited to, its obligation to serve in the capacity of sub-servicer pursuant to the Sub-Servicing Agreement. 21 (iii) The Sub-Servicing Agreement has been duly authorized, executed and delivered by LSI and constitutes a legal, valid and binding obligation of LSI enforceable against LSI in accordance with its terms, except that as to enforceability such enforcement may (A) be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and (B) be limited by general principles of equity (whether considered in a proceeding at law or in equity). (iv) The execution, delivery and performance of the Sub-Servicing Agreement by LSI will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of LSI pursuant to the terms of the certificate of incorporation or the by-laws of LSI or any statute, rule, regulation or order of any governmental agency or body, or any court having jurisdiction over LSI or its property or assets or any agreement or instrument known to such counsel, to which LSI is a party or by which LSI or any of its property or assets is bound. (v) No authorization, approval, consent or order of, or filing with, any state or federal court or governmental agency or authority is necessary in connection with the execution, delivery and performance by LSI of the Sub-Servicing Agreement. J. The Underwriters shall have received a certificate of LSI signed by an authorized officer of LSI, dated the Closing Date to the effect that such officer has examined the information contained under the heading "The Sub-Servicer" with respect to LSI and the Sub-Servicing Agreement in the Prospectus and that such information does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. K. The Underwriters shall have received from Dewey Ballantine, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the validity of the Offered Certificates and such other related matters as the Underwriters may require. L. The Underwriters shall have received from counsel to the Trustee a favorable opinion dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters, to the effect that: 22 (i) The Trustee has been duly incorporated and is validly existing as a banking association in good standing under the laws of the state of New York. (ii) The Trustee has full corporate trust power and authority to enter into and perform its obligations under the Pooling and Servicing Agreement, including, but not limited to, its obligation to serve in the capacity of Trustee and to execute, issue, countersign and deliver the Offered Certificates. (iii) The Pooling and Servicing Agreement has been duly authorized, executed and delivered by the Trustee, and constitutes a legal, valid and binding obligation of the Trustee, enforceable against the Trustee, in accordance with its terms, except that as to enforceability such enforcement may (A) be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and (B) be limited by general principles of equity (whether considered in a proceeding at law or in equity). (iv) The Certificates have been duly authorized, executed and authenticated by the Trustee on the date hereof on behalf of the Trust in accordance with the Pooling and Servicing Agreement. (v) The execution, delivery and performance of the Pooling and Servicing Agreement and the Certificates by the Trustee will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Trustee pursuant to the terms of the articles of association or the by-laws of the Trustee or any statute, rule, regulation or order of any governmental agency or body, or any court having jurisdiction over the Trustee or its property or assets or any agreement or instrument known to such counsel, to which the Trustee is a party or by which the Trustee or any of its respective property or assets is bound. (vi) No authorization, approval, consent or order of, or filing with, any state or federal court or governmental agency or authority is necessary in connection with the execution, delivery and performance by the Trustee of the Pooling and Servicing Agreement and the Offered Certificates, as applicable. (vii) If the Trustee were acting as Master Servicer under the Pooling and Servicing Agreements on the date hereof, the Trustee would have the power and authority to 23 perform the obligations of the Master Servicer as provided in the Pooling and Servicing Agreement. M. The Trustee shall have furnished to the Underwriters a certificate of the Trustee, signed by one or more duly authorized officers of the Trustee, dated the Closing Date, as to the due authorization, execution and delivery of the Pooling and Servicing Agreement by the Trustee and the acceptance by the Trustee of the trusts created thereby and the due execution and delivery of the Certificates by the Trustee thereunder and such other matters as the Underwriters shall reasonably request. N. The Indemnification Agreement shall have been executed and delivered, in which the Certificate Insurer shall represent, among other representations, that (i) the information under the captions "Certificate Insurer" and "Certificate Insurance Policy" in the section entitled "Summary" and "The Certificate Insurance Policy and the Certificate Insurer" in the Prospectus Supplement was approved by the Certificate Insurer and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (ii) there has been no change in the financial condition of the Certificate Insurer since March 31, 1997, which would have a material adverse effect on the Certificate Insurer's ability to meet its obligations under the Certificate Insurance Policy. O. The Certificate Insurance Policy shall have been issued by the Certificate Insurer and shall have been duly countersigned by an authorized agent of the Certificate Insurer, if so required under applicable state law or regulation. P. The Offered Certificates shall have been rated "AAA" by Standard & Poor's Corporation ("S&P") and "Aaa" by Moody's Investors Service, Inc. ("Moody's"). Q. The Underwriters shall have received copies of letters dated as of the Closing Date, from S&P and Moody's stating the current ratings of the Offered Certificates as set forth in Section P. above. R. The Underwriters shall have received from Dewey Ballantine, counsel to the Company, a favorable opinion, dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters, as to true sale matters relating to the transaction, and the Underwriters shall be addressees of any opinions of counsel supplied to the rating organizations relating to the Certificates. 24 S. All proceedings in connection with the transactions contemplated by this Agreement, and all documents incident hereto, shall be reasonably satisfactory in form and substance to the Underwriters and counsel for the Underwriters, and the Underwriters and counsel for the Underwriters shall have received such other information, opinions, certificates and documents as they may reasonably request in writing. T. The Prospectus and any supplements thereto shall have been filed (if required) with the Commission in accordance with the rules and regulations under the Act and Section 2 hereof, and prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or shall be contemplated by the Commission or by any authority administering any state securities or Blue Sky law. If any condition specified in this Section 7 shall not have been fulfilled when and as required to be fulfilled, (i) this Agreement may be terminated by you by notice to the Company at any time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 8 and (ii) the provisions of Section 8, the indemnity set forth in Section 9, the contribution provisions set forth in Section 10 and the provisions of Sections 12 and 15 shall remain in effect. Section 8. Payment of Expenses. The Company agrees to pay the following expenses incident to the performance of the Company's obligations under this Agreement, (i) the filing of the Registration Statement and all amendments thereto, (ii) the duplication and delivery to you, in such quantities as you may reasonably request, of copies of this Agreement, (iii) the preparation, issuance and delivery of the Certificates, (iv) the fees and disbursements of Dewey Ballantine, counsel for the Underwriters and special counsel to the Company and the Transferor, (v) the fees and disbursements of KPMG Peat Marwick, accountants of the Company (excluding fee and disbursements of KPMG Peat Marwick related to providing comfort in connection with the Derived Information), (vi) the qualification of the Offered Certificates under securities and Blue Sky laws and the determination of the eligibility of the Offered Certificates for investment in accordance with the provisions hereof, including filing fees and the fees and disbursements of Dewey Ballantine, counsel to the Underwriters, in connection therewith and in connection with the preparation of any Blue Sky survey, (vii) the printing and delivery to you, in such quantities as you may reasonably request, of copies of the Registration Statement and Prospectus and all amendments and supplements thereto, and of any Blue Sky survey, (viii) the duplication and delivery to 25 you, in such quantities as you may reasonably request, of copies of the Pooling and Servicing Agreement and the other transaction documents, (ix) the fees charged by nationally recognized statistical rating agencies for rating the Offered Certificates, (x) the fees and expenses of the Trustee and its counsel and (xi) the fees and expenses of the Certificate Insurer and its counsel. If this Agreement is terminated by you in accordance with the provisions of Section 7, the Company shall reimburse you for all reasonable third-party out-of-pocket expenses, including the reasonable fees and disbursements of Dewey Ballantine, your counsel. Section 9. Indemnification. A. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls each Underwriter within the meaning of the Securities Act or the Exchange Act, from and against any and all loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Offered Certificates), to which each Underwriter or any such controlling person may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Company Offering Materials or (ii) the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and shall reimburse each Underwriter and each such controlling person promptly upon demand for any documented legal or documented other expenses reasonably incurred by each Underwriter or such controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the foregoing indemnity with respect to any untrue statement contained in or omission from a prospectus shall not inure to the benefit of each Underwriter if the Company shall sustain the burden of proving that the person asserting against such Underwriter the loss, liability, claim, damage or expense purchased any of the Offered Certificates which are the subject thereof and was not sent or given a copy of the appropriate Prospectus (or the appropriate Prospectus as amended or supplemented), if required by law, at or prior to the written confirmation of the sale of such Offered Certificates to such person and the untrue statement contained in or omission from such preliminary prospectus was corrected in the appropriate Prospectus (or the appropriate Prospectus as amended or supplemented). 26 The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to the Underwriters or any controlling person of any of the Underwriters. B. Each Underwriter severally, and not jointly, agrees to indemnify and hold harmless the Company, the directors and the officers of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act against any and all loss, claim, damage or liability, or any action in respect thereof, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Underwriter Information or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse the Company promptly on demand, and any such director, officer or controlling person for any documented legal or other documented expenses reasonably incurred by the Company, or any director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which each Underwriter may otherwise have to the Company or any such director, officer or controlling person. C. Promptly after receipt by any indemnified party under this Section 9 of notice of any claim or the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, promptly notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 9 except to the extent it has been materially prejudiced by such failure; and provided, further, that the failure to notify any indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 9. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to 27 assume the defense thereof with counsel reasonably satisfactory to the indemnified party, unless such indemnified party reasonably objects to such assumption on the ground that there may be legal defenses available to it which are different from or in addition to those available to such indemnifying party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, except to the extent provided in the next following paragraph, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any fees and expenses of counsel subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation. Any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless: (i) the employment thereof has been specifically authorized by the indemnifying party in writing; (ii) such indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party and in the reasonable judgment of such counsel it is advisable for such indemnified party to employ separate counsel; or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to local counsel) at any time for all such indemnified parties, which firm shall be designated in writing by the Underwriters, if the indemnified parties under this Section 9 consist of the Underwriters or any of its controlling persons, or by the Company, if the indemnified parties under this Section 9 consist of the Company or any of the Company's directors, officers or controlling persons, but in either case reasonably satisfactory to the indemnified party. Each indemnified party, as a condition of the indemnity agreements contained in Sections 9A and B, shall use its best efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action 28 effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which such indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. Notwithstanding the foregoing, if (x) the indemnified party has made a proper request to the indemnifying party for the payment of the indemnified party's legal fees and expenses, as permitted hereby, and (y) such request for payment has not been honored within thirty days, then, for so long as such request thereafter remains unhonored, the indemnifying party shall be liable for any settlement entered into by the indemnified party whether or not the indemnifying party consents thereto. D. The Underwriters agree to provide the Company no later than the date on which the Prospectus Supplement is required to be filed pursuant to Rule 424 with a copy of any Derived Information (defined below) for filing with the Commission on Form 8-K. E. Each Underwriter, severally and not jointly, agrees, assuming all Company-Provided Information (defined below) is accurate and complete in all material respects, to indemnify and hold harmless the Company, its officers and directors and each person who controls the Company within the meaning of the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Derived Information provided by such Underwriter, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by him, her or it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. The obligations of each Underwriter under this 29 Section 9(E) shall be in addition to any liability which each Underwriter may otherwise have. The procedures set forth in Section 9C shall be equally applicable to this Section 9E. F. For purposes of this Agreement, the term "Derived Information" means such portion, if any, of the information delivered to the Company pursuant to Section 9D for filing with the Commission on Form 8-K as: (i) is not contained in the Prospectus without taking into account information incorporated therein by reference; and (ii) does not constitute Company-Provided Information. "Company-Provided Information" means any computer tape furnished to the Underwriters by the Company concerning the assets comprising the Trust. Section 10. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 9 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Underwriters (each, a "Contributing Party") shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by such Contributing Party (i) in such proportion as is appropriate to reflect the relative benefits received by such Contributing Party from the offering of the Offered Certificates or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of such Contributing Party in connection with the statements or omissions which resulted in the losses, liabilities, claims, damages and expenses as well as any other relevant equitable considerations; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Contributing Party and the Contributing Parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission and other equitable considerations. Notwithstanding the provisions of Section 9 or of this Section 10, neither Underwriter shall be required to be responsible for any amount in excess of the amount by which 30 the total re-offering price at which the Offered Certificates underwritten by it and distributed and offered to the public exceeds the amount paid hereunder by such Underwriter for the Offered Certificates. For purposes of this Section 10, each person, if any, who controls you within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as each of the Underwriters and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 10 were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 10 shall be deemed to include, for purposes of this Section 10, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Section 11. Termination. This Agreement shall be subject to termination in the absolute discretion of the Underwriters, by notice given to the Company prior to delivery of and payment for the Offered Certificates if prior to such time (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Trust or the Company which, in the reasonable judgment of the Underwriters, materially impairs the investment quality of the Certificates or makes it impractical or inadvisable to market the Offered Certificates; (ii) the Offered Certificates have been placed on credit watch by S&P or Moody's with negative implications; (iii) trading in securities generally on the New York Stock Exchange or the National Association of Securities Dealers National Market System shall have been suspended or limited, or minimum prices shall have been established on such exchange or market system; (iv) a banking moratorium shall have been declared by either Federal or New York State authorities; or (v) there shall have occurred any outbreak or material escalation of hostilities or other calamity or crisis, the effect of which makes it, in the reasonable judgment of the Underwriters, impractical or inadvisable to proceed with the completion of the sale and payment for the Offered Certificates. Upon such notice being given, the parties to this Agreement shall (except for any liability arising before or in relation to such termination) be released and discharged from their respective obligations under this Agreement. 31 Section 12. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or contained in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of you or controlling person of you, or by or on behalf of the Company or any officers, directors or controlling persons and shall survive delivery of any Offered Certificates to you or any controlling person. Section 13. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication to: The Underwriters: Prudential Securities Incorporated One New York Plaza 15th Floor New York, New York 10292-2015 Fax: (212) 778-7401 J.P. Morgan Securities Inc. 60 Wall Street, 18th Floor New York, New York 10260-0060 Fax: (212) 648-5251 The Company: Access Financial Lending Corp. 400 Highway 169 South, Suite 400 Post Office Box 26365 St. Louis Park, MN 55426-0365 Attention: General Counsel Fax: (612) 542-6510 Section 14. Parties. This Agreement shall inure to the benefit of and be binding upon you and the Company, and their respective successors or assigns. Nothing expressed or mentioned in this Agreement is intended nor shall it be construed to give any person, firm or corporation, other than the parties hereto or thereto and their respective successors and the controlling persons and officers and directors referred to in Sections 9 and 10 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties and their respective successors and said controlling persons and officers and directors and their heirs and legal representatives (to the extent of their rights as specified herein and therein) and except as provided above for the benefit of no other person, firm or corporation. No purchaser of Offered Certificates 32 from you shall be deemed to be a successor by reason merely of such purchase. SECTION 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH SUCH LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. Section 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but together they shall constitute but one instrument. Section 17. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of or affect the meaning or interpretation of, this Agreement. Section 18. Default of Underwriters. If either Underwriter defaults in its obligations to purchase the Offered Certificates offered to it hereunder (such Underwriter, the "Defaulting Underwriter"), then the remaining Underwriter (the "Performing Underwriter") shall have the option, but not the obligation, to purchase all, but not less than all, of the Offered Certificates offered to the Defaulting Underwriter. If the Performing Underwriter elects not to exercise such option, then this Agreement will terminate without liability on the part of the Performing Underwriter. Nothing contained herein shall relieve the Defaulting Underwriter from any and all liabilities to the Company and the Performing Underwriter resulting from the default of the Defaulting Underwriter. [remainder of page deliberately left blank] 33 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and the Company in accordance with its terms. Very truly yours, ACCESS FINANCIAL LENDING CORP. By: ______________________________ Name: Dan J. Cheever Title: Chief Executive Officer and Chief Financial Officer CONFIRMED AND ACCEPTED, as of the date first above written: PRUDENTIAL SECURITIES INCORPORATED By: ______________________________ Name: Title: J.P. MORGAN SECURITIES INC. By: ______________________________ Name: Title: [Underwriting Agreement] Schedule 1 Underwriting Class A-1 --------------------------------- Purchase Price Percentage Proceeds (excluding Principal (excluding Underwriter accrued interest) Amount accrued interest) ----------- ----------------- --------- ----------------- Prudential 99.75% $19,906,000 $19,856,235.00 Securities Incorporated J.P. Morgan 99.75% 19,906,000 19,856,235.00 Securities Inc. ----------- -------------- TOTAL $39,812,000 $39,712,470.00 =========== ============== Class A-2 --------------------------------- Purchase Price Percentage Proceeds (excluding Principal (excluding Underwriter accrued interest) Amount accrued interest) ----------- ----------------- --------- ----------------- Prudential 99.75% $10,582,500 $10,556,043.75 Securities Incorporated J.P. Morgan 99.75% 10,582,500 10,556,043.75 Securities Inc. ----------- -------------- TOTAL $21,165,000 $21,112,087.50 =========== ============== Class A-3 --------------------------------- Purchase Price Percentage Proceeds (excluding Principal (excluding Underwriter accrued interest) Amount accrued interest) ----------- ----------------- --------- ----------------- Prudential 99.75% $ 5,000,000 $4,987,500.00 Securities Incorporated J.P. Morgan 99.75% 5,000,000 4,987,500.00 Securities Inc. ----------- ------------- TOTAL $10,000,000 $9,975,000.00 =========== ============= Class A-4 --------------------------------- Purchase Price Percentage Proceeds (excluding Principal (excluding Underwriter accrued interest) Amount accrued interest) ----------- ----------------- --------- ----------------- Prudential 99.75% $4,087,500 $4,077,281.25 Securities Incorporated J.P. Morgan 99.75% 4,087,500 4,077,281.25 Securities Inc. ---------- ------------- TOTAL $8,175,000 $8,154,562.50 ========== ============= Class A-5 --------------------------------- Purchase Price Percentage Proceeds (excluding Principal (excluding Underwriter accrued interest) Amount accrued interest) ----------- ----------------- --------- ----------------- Prudential 99.75% $ 5,000,000 $4,987,500.00 Securities Incorporated J.P. Morgan 99.75% 5,000,000 4,987,500.00 Securities Inc. ----------- ------------- TOTAL $10,000,000 $9,975,000.00 =========== ============= Class A-6 --------------------------------- Purchase Price Percentage Proceeds (excluding Principal (excluding Underwriter accrued interest) Amount accrued interest) ----------- ----------------- --------- ----------------- Prudential 99.75% $48,018,000 $47,897,955.00 Securities Incorporated J.P. Morgan 99.75% 48,018,000 $47,897,955.00 Securities Inc. ----------- ------------- TOTAL $96,036,000 $95,795,910.00 =========== ============== EX-4 3 EXHIBIT 4.1 PURCHASE AND SALE AGREEMENT PURCHASE AND SALE AGREEMENT Between ACCESS FINANCIAL LENDING CORP., as the Seller and ACCESS FINANCIAL RECEIVABLES CORP., as the Purchaser Dated as of May 1, 1997 TABLE OF CONTENTS Page ARTICLE ONE DEFINITIONS.................................................. 1 Section 1.01. Definitions............................................. 1 ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS............................................... 1 Section 2.01. Agreement to Purchase................................... 1 Section 2.02. Purchase Price.......................................... 2 Section 2.03. Conveyance of Mortgage Loans; Possession of Mortgage Loan Files....................... 2 Section 2.04. Transfer of Mortgage Loans; Assignment of Agreement................................. 2 Section 2.05. Examination of Mortgage Loan Files...................... 2 Section 2.06. Books and Records....................................... 3 Section 2.07. Cost of Delivery and Recordation of Documents............................................... 3 ARTICLE THREE REPRESENTATIONS AND WARRANTIES............................... 3 Section 3.01. Representations and Warranties as to the Seller........................................... 3 Section 3.02. Representations and Warranties of the Purchaser........................................... 4 ARTICLE FOUR THE SELLER................................................... 5 Section 4.01. Covenants of the Seller................................. 5 ARTICLE FIVE MISCELLANEOUS................................................ 6 Section 5.01. Notices................................................. 6 Section 5.02. Severability of Provisions.............................. 6 Section 5.03. Agreement of Seller..................................... 6 Section 5.04. Survival................................................ 6 Section 5.05. Effect of Headings and Table of Contents................................................ 7 Section 5.06. Successors and Assigns.................................. 7 Section 5.07. Confirmation of Intent; Grant of Security Interest....................................... 7 Section 5.08. Miscellaneous........................................... 8 Section 5.09. Amendments.............................................. 8 Section 5.10. Third-Party Beneficiaries............................... 8 Section 5.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...................... 8 Section 5.12. Execution in Counterparts............................... 9 Exhibit A - Mortgage Loan Schedule i This Purchase and Sale Agreement, dated as of May 1, 1997, between ACCESS FINANCIAL LENDING CORP., a Delaware corporation, its successors and assigns (the "Seller"), and ACCESS FINANCIAL RECEIVABLES CORP., a Delaware corporation and its successors and assigns (the "Purchaser"). W I T N E S S E T H: WHEREAS, Exhibit A attached hereto (the "Mortgage Loan Schedule") and made a part hereof lists certain mortgage loans (the "Mortgage Loans") owned by the Seller that the Seller desires to sell to the Purchaser and that the Purchaser desires to purchase; WHEREAS, it is the intention of the Seller and the Purchaser that, immediately following the Seller's conveyance of the Mortgage Loans to Purchaser on the Startup Day, (a) the Purchaser shall convey the Mortgage Loans to a trust (the "Trust") pursuant to a Pooling and Servicing Agreement, dated as of May 1, 1997 (the "Pooling and Servicing Agreement"), among the Seller, Access Financial Lending Corp., as master servicer (the "Master Servicer"), the Purchaser, as transferor and The Chase Manhattan Bank, as trustee (the "Trustee") and (b) the Trustee shall issue certificates evidencing beneficial ownership interests in the property of the Trust formed by the Pooling and Servicing Agreement; NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereto agree as follows: ARTICLE ONE DEFINITIONS Section 1.01. Definitions. Capitalized terms used herein that are not otherwise defined shall have the respective meanings ascribed thereto in the Pooling and Servicing Agreement. ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS Section 2.01. Agreement to Purchase. (a) Subject to the terms and conditions of this Agreement, the Seller agrees to sell, and the Purchaser agrees to purchase on the Startup Day, the Mortgage Loans. The Mortgage Loan Schedule shall conform to the requirements of the Purchaser and to the definition of "Mortgage Loan Schedule" under the Pooling and Servicing Agreement. (b) The closing for the purchase and sale of the Mortgage Loans shall take place at the offices of Dewey Ballantine, New York, New York, at 10:00 a.m., New York time, on May 29, 1997 or such other place and time as the parties shall agree (such time being herein referred to as the "Startup Day"). Section 2.02. Purchase Price. On the Startup Day, as full consideration for the Seller's sale of the Mortgage Loans to the Purchaser, the Purchaser will deliver to the Seller an amount in cash equal to the Seller's book value of the Mortgage Loans, as certified to the Purchaser by the Seller. Section 2.03. Conveyance of Mortgage Loans; Possession of Mortgage Loan Files. (a) On the Startup Day, the Seller will direct the Trustee in its capacity as trustee of Access Financial Lending Loan Purchase Trust to transfer, assign, set over and otherwise convey without representation, warranty or recourse, to the Purchaser, all right, title and interest of the Seller in and to each Mortgage Loan listed on the Mortgage Loan Schedule delivered by the Seller on the Startup Day, and all its right, title and interest in and to (i) scheduled payments of interest due on each Mortgage Loan after the Cut-Off Date, (ii) scheduled payments of principal due, and unscheduled collections of principal received, on each Mortgage Loan on and after the Cut-Off Date, and (iii) its Insurance Policies (the "Conveyed Property"); such transfer of the Mortgage Loans set forth on the Mortgage Loan Schedule to the Purchaser is absolute and is intended by the parties hereto to be treated as a sale to the Purchaser. (b) Pursuant to the Pooling and Servicing Agreement, the Purchaser shall, on the Startup Day, assign all of its right, title and interest in and to the Conveyed Property together with its rights hereunder to the Trust. Section 2.04. Transfer of Mortgage Loans; Assignment of Agreement. The Seller hereby acknowledges and agrees that the Purchaser may assign its interest under this Agreement to the Trust as may be required to effect the purposes of the Pooling and Servicing Agreement, without further notice to, or consent of, the Seller, and the Trust shall succeed to such of the rights and obligations of the Purchaser hereunder as shall be so assigned. The Purchaser shall, pursuant to the Pooling and Servicing Agreement, assign all of its right, title and interest in and to the Conveyed Property to the Trustee for the benefit of the Certificateholders. Section 2.05. Examination of Mortgage Loan Files. Prior to the Startup Day, the Seller shall make the Mortgage Loan Files available to the Purchaser or its designee for examination at the Trustee's offices or at such other place as 2 the Seller shall reasonably specify. Such examination may be made by the Purchaser or its designee at any time on or before the Startup Day. If the Purchaser or its designee makes such examination prior to the Startup Day and identifies any Mortgage Loans that do not conform to the requirements of the Purchaser as described in this Agreement, such Mortgage Loans shall be deleted from the Schedule of Mortgage Loans and may be replaced, prior to the Startup Day, by Qualified Replacement Mortgage acceptable to the Purchaser. The Purchaser may, at its option and without notice to the Seller, purchase the Mortgage Loans without conducting any partial or complete examination. The fact that the Purchaser or the Trustee has conducted or has failed to conduct any partial or complete examination of the Files shall not affect the rights of the Purchaser or the Trustee to demand repurchase or other relief as provided in this Agreement. Section 2.06. Books and Records. The sale of each Mortgage Loan shall be reflected on the Seller's accounting and other records, balance sheet and other financial statements as a sale of assets by the Seller to the Purchaser. The Seller shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Mortgage Loan which shall be clearly marked to reflect the ownership of each Mortgage Loan by the Trustee for the benefit of the Certificateholders. Section 2.07. Cost of Delivery and Recordation of Documents. The costs relating to the delivery and recordation of the documents specified in this Article Two in connection with the Mortgage Loans shall be borne by the Seller. ARTICLE THREE REPRESENTATIONS AND WARRANTIES Section 3.01. Representations and Warranties as to the Seller. The Seller hereby represents and warrants to the Purchaser, as of the Startup Day, that: (a) Organization and Good Standing. The Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged. The Seller is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a material adverse effect on the business, properties, assets, or condition (financial or other) of the Seller. 3 (b) Authorization; Binding Obligations. The Seller has the power and authority to make, execute, deliver and perform this Agreement and all of the transactions contemplated under this Agreement, and to create the Trust and cause it to make, execute, deliver and perform its obligations under this Agreement and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and to cause the Trust to be created. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of the Seller enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (c) No Consent Required. The Seller is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement. (d) No Violations. The execution, delivery and performance of this Agreement by the Seller will not violate any provision of any existing law or regulation or any order or decree of any court or the Certificate of Incorporation or Bylaws of the Seller, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Seller is a party or by which the Seller may be bound. (e) Litigation. No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Seller threatened, against the Seller or any of its properties or, with respect to this Agreement, the Certificates which, if adversely determined, would in the opinion of the Seller have a material adverse effect on the transactions contemplated by this Agreement. Section 3.02. Representations and Warranties of the Purchaser. The Purchaser hereby represents, warrants and covenants to the Seller, as of the date of execution of this Agreement and the Startup Day, that: (a) The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) The Purchaser has the corporate power and authority to purchase each Mortgage Loan and to execute, deliver and perform, and to enter into and consummate all the transactions contemplated by this Agreement; 4 (c) This Agreement has been duly and validly authorized, executed and delivered by the Purchaser, and, assuming the due authorization, execution and delivery hereof by the Seller, constitutes the legal, valid and binding agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law); (d) No consent, approval, authorization or order of or registration or filing with, or notice to, any governmental authority or court is required for the execution, delivery and performance of or compliance by the Purchaser with this Agreement or the consummation by the Purchaser of any of the transactions contemplated hereby, except such as have been made on or prior to the Startup Day; and (e) None of the execution and delivery of this Agreement, the purchase of the Mortgage Loans from the Seller, the consummation of the other transactions contemplated hereby, or the fulfillment of or compliance with the terms and conditions of this Agreement, (i) conflicts or will conflict with the charter or bylaws of the Purchaser or conflicts or will conflict with or results or will result in a breach of, or constitutes or will constitute a default or results or will result in an acceleration under, any term, condition or provision of any indenture, deed of trust, contract or other agreement or other instrument to which the Purchaser is a party or by which it is bound and which is material to the Purchaser, or (ii) results or will result in a violation of any law, rule, regulation, order, judgment or decree of any court or governmental authority having jurisdiction over the Purchaser. ARTICLE FOUR THE SELLER Section 4.01. Covenants of the Seller. The Seller hereby agrees to do all acts, transactions, and things and to execute and deliver all agreements, documents, instruments, and papers by and on behalf of the Seller as the Purchaser or its counsel may reasonably request in order to consummate the sale and transfer of the Mortgage Loans to the Purchaser and the subsequent sale and transfer thereof to the Trustee, and the rating, issuance and sale of the Certificates. 5 ARTICLE FIVE MISCELLANEOUS Section 5.01. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered to or mailed by registered mail, postage prepaid, or transmitted by telex or telegraph and confirmed by a similar mailed writing, addressed to the Seller at Access Financial Lending Corp., 400 Highway 169 South, Suite 400, St. Louis Park, MN 55426-0365, Attention: President, or to such other address as the Seller may designate in writing to the Purchaser and if to the Purchaser, addressed to the Purchaser at Access Financial Receivables Corp., 400 Highway 169 South, Suite 410, St. Louis Park, MN 55426-0365, Attention: President, or to such other address as the Purchaser may designate in writing to the Seller. Section 5.02. Severability of Provisions. Any part, provision, representation, warranty or covenant of this Agreement which is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any part, provision, representation, warranty or covenant of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto waive any provision of law which prohibits or renders void or unenforceable any provision hereof. Section 5.03. Agreement of Seller. The Seller agrees to execute and deliver such instruments and take such actions as the Purchaser may, from time to time, reasonably request in order to effectuate the purpose and to carry out the terms of this Agreement. Section 5.04. Survival. The parties to this Agreement agree that the representations, warranties and agreements made by each of them herein and in any certificate or other instrument delivered pursuant hereto shall be deemed to be relied upon by the other party hereto, notwithstanding any investigation heretofore or hereafter made by such other party or on such other party's behalf, and that the representations, warranties and agreements made by the parties hereto in this Agreement or in any such certificate or other 6 instrument shall survive the delivery of and payment for the Mortgage Loans. Section 5.05. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 5.06. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as expressly permitted by the terms hereof, this Agreement may not be assigned, pledged or hypothecated by any party hereto to a third Person without the written consent of the other party to this Agreement; provided, however, that the Purchaser may assign its rights hereunder without the consent of the Seller. Section 5.07. Confirmation of Intent; Grant of Security Interest. It is the express intent of the parties hereto that the conveyance of the Mortgage Loans by the Seller to the Purchaser as contemplated by this Agreement be, and be treated for all purposes as, a sale by the Seller to the Purchaser of the Mortgage Loans. It is, further, not the intention of the parties that such conveyance be deemed a pledge of the Mortgage Loans by the Seller to the Purchaser to secure a debt or other obligation of the Seller. However, in the event that, notwithstanding the intent of the parties, the Mortgage Loans are held to continue to be property of the Seller then (a) this Agreement shall also be deemed to be a security agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of the Mortgage Loans provided for herein shall be deemed to be a grant by the Seller to the Purchaser of a security interest in all of the Seller's right, title and interest in and to the Mortgage Loans and all amounts payable on the Mortgage Loans in accordance with the terms thereof and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property; (c) the possession by the Purchaser of Mortgage Loans and such other items of property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be "possession by the secured party" for purposes of perfecting the security interest pursuant to Section 9-305 of the Uniform Commercial Code; and (d) notifications to Persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Purchaser for the purpose of perfecting such security interest under applicable law. Any assignment of the interest of the Purchaser pursuant to any provision hereof shall also be deemed to be an assignment of any security interest created hereby. The Seller and the Purchaser shall, to the extent 7 consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans, such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such throughout the term of this Agreement. Section 5.08. Miscellaneous. This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof. Section 5.09. Amendments. (a) This Agreement may be amended from time to time by the Seller and the Purchaser by written agreement without notice to or consent of the Certificateholders to cure any ambiguity, to correct or supplement any provisions herein, to comply with any changes in the Code, or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with the provisions of this Agreement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, at the expense of the party requesting the change, delivered to the Trustee, adversely affect in any material respect the interests of any Certificateholder; provided, further, that no such amendment shall 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 change the rights or obligations of any other party hereto without the consent of such party. (b) It shall not be necessary for the consent of Certificateholders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof. Section 5.10. Third-Party Beneficiaries. The parties agree that the Trustee is an intended third-party beneficiary of this Agreement to the extent necessary to enforce the rights and to obtain the benefit of the remedies of the Purchaser under this Agreement which are assigned to the Trustee for the benefit of the Certificateholders pursuant to the Pooling and Servicing Agreement and to the extent necessary to obtain the benefit of the enforcement of the obligations and covenants of the Seller under Sections 3.05 and 4.01 of this Agreement. Section 5.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK. 8 (b) THE PURCHASER AND THE SELLER EACH HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 5.01 OF THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE PURCHASER AND THE SELLER EACH HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE PURCHASER AND THE SELLER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION. (c) THE PURCHASER AND THE SELLER EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN Mortgage Loan, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. Section 5.12. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 9 IN WITNESS WHEREOF, the parties hereto have caused their names to be signed by their respective officers thereunto duly authorized as of the date first above written. ACCESS FINANCIAL LENDING CORP. By: ____________________________________ Name: Dan J. Cheever Title: Chief Executive Officer and Chief Financial Officer ACCESS FINANCIAL RECEIVABLES CORP. By: ____________________________________ Name: Dan J. Cheever Title: Chief Financial Officer [Purchase and Sale Agreement] EXHIBIT A MORTGAGE LOAN SCHEDULE A-1 EX-4 4 EXHIBIT 4.2 POOLING AND SERVICING AGREEMENT EXECUTION COPY POOLING AND SERVICING AGREEMENT Relating to ACCESS FINANCIAL MORTGAGE LOAN TRUST 1997-2 Among ACCESS FINANCIAL LENDING CORP., as Seller and Master Servicer, ACCESS FINANCIAL RECEIVABLES CORP., as the Transferor, and THE CHASE MANHATTAN BANK as Trustee Dated as of May 1, 1997 TABLE OF CONTENTS (Not a Part of this Agreement) Page Parties..................................................................... 1 Recitals.................................................................... 1 ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION................................ 1 1.1. Definitions..................................................... 1 Account ....................................................... 2 Accrual Period.................................................. 2 Affiliate....................................................... 2 Agreement....................................................... 2 Appraised Value................................................. 2 Auction Sale.................................................... 2 Authorized Officer.............................................. 2 Available Funds................................................. 2 Base Group I Principal Distribution Amount..................................................... 3 Base Group II Principal Distribution Amount..................................................... 3 Business Day.................................................... 3 Certificate..................................................... 3 Certificate Account............................................. 3 Certificate Insurance Policy.................................... 3 Certificate Insurer............................................. 4 Certificate Insurer Default..................................... 4 Certificate Insurer Premium Rate................................ 4 Certificate Principal Balance................................... 4 Certificateholder............................................... 4 Class ....................................................... 4 Class A Certificate Principal Balance........................... 5 Class A Certificates............................................ 5 Class A Distribution Account.................................... 5 Class A Group I Certificates.................................... 5 Class A Group I Distribution Account............................ 5 Class A Group II Distribution Account........................... 5 Class A-1 Distribution Amount................................... 5 Class A-1 Group I Certificates.................................. 5 Class A-1 Interest Carry-Forward Amount......................... 5 Class A-1 Interest Distribution Amount.......................... 6 Class A-1 Pass-Through Rate..................................... 6 Class A-1 Principal Balance..................................... 6 Class A-1 Principal Distribution Amount......................... 6 Class A-1 Termination Date...................................... 6 Class A-2 Distribution Amount................................... 6 Class A-2 Group I Certificates.................................. 6 Class A-2 Interest Carry-Forward Amount......................... 6 Class A-2 Interest Distribution Amount.......................... 7 Class A-2 Pass-Through Rate..................................... 7 i Page Class A-2 Principal Balance..................................... 7 Class A-2 Principal Distribution Amount......................... 7 Class A-2 Termination Date...................................... 7 Class A-3 Distribution Amount................................... 7 Class A-3 Group I Certificates.................................. 7 Class A-3 Interest Carry-Forward Amount......................... 7 Class A-3 Interest Distribution Amount.......................... 8 Class A-3 Pass-Through Rate..................................... 8 Class A-3 Principal Balance..................................... 8 Class A-3 Principal Distribution Amount......................... 8 Class A-3 Termination Date...................................... 8 Class A-4 Distribution Amount................................... 8 Class A-4 Group I Certificates.................................. 9 Class A-4 Interest Carry-Forward Amount......................... 9 Class A-4 Interest Distribution Amount.......................... 9 Class A-4 Pass-Through Rate..................................... 9 Class A-4 Principal Balance..................................... 9 Class A-4 Principal Distribution Amount......................... 9 Class A-5 Distribution Amount................................... 9 Class A-5 Group I Certificates.................................. 9 Class A-5 Interest Carry-Forward Amount......................... 10 Class A-5 Interest Distribution Amount.......................... 10 Class A-5 Lockout Distribution Amount........................... 10 Class A-5 Lockout Percentage.................................... 10 Class A-5 Lockout Pro Rata Distribution Amount..................................................... 10 Class A-5 Pass-Through Rate..................................... 10 Class A-5 Principal Balance..................................... 10 Class A-5 Principal Distribution Amount......................... 11 Class A-6 Distribution Amount................................... 11 Class A-6 Formula Interest Shortfall............................ 11 Class A-6 Formula Pass-Through Rate............................. 11 Class A-6 Full Distribution Amount.............................. 11 Class A-6 Full Interest Distribution Amount..................................................... 11 Class A-6 Interest Carry-Forward Amount......................... 11 Class A-6 Interest Distribution Amount.......................... 12 Class A-6 Pass-Through Rate..................................... 12 Class A-6 Principal Balance..................................... 12 Class A-6 Principal Distribution Amount......................... 12 Class A-6 Group II Certificates................................. 12 Class B Certificates............................................ 12 Class B Carry-Forward Amount.................................... 12 Class B Distribution Account.................................... 12 Class B Distribution Amount..................................... 12 Class B Interest................................................ 13 Class B Interest Distribution Amount............................ 13 Class B Principal Balance....................................... 13 Class B-S Certificate........................................... 14 Class LT-1 Certificates......................................... 14 Class LT-2 Certificates......................................... 14 ii Page Class LT-3 Certificates......................................... 14 Class LT-4 Certificates......................................... 14 Class LT-5 Certificates......................................... 14 Class LT-6 Certificates......................................... 14 Class LT-7 Certificates......................................... 14 Class LT-8 Certificates......................................... 14 Class LT-9 Certificates......................................... 14 Class RL Certificates........................................... 14 Class RU Certificates........................................... 15 Code............................................................ 15 Compensating Interest........................................... 15 Coupon Rate..................................................... 15 Cumulative Loss Percentage...................................... 15 Cumulative Net Realized Losses.................................. 15 Cut-Off Date.................................................... 15 Delinquency Advance............................................. 15 Delinquency Percentage.......................................... 15 Delinquent...................................................... 15 Delivery Order.................................................. 16 Depository...................................................... 16 Designated Depository Institution............................... 16 Designated Residual Holder...................................... 16 Determination Date.............................................. 16 Disqualified Organization....................................... 16 Distribution Accounts........................................... 17 Eligible Investments............................................ 17 Event of Default................................................ 17 Excess Spread Rate.............................................. 17 Excess Spread Trigger........................................... 17 FDIC............................................................ 17 FHLMC........................................................... 17 File............................................................ 17 First Mortgage Loan............................................. 17 Fiscal Agent.................................................... 17 FNMA............................................................ 17 Group........................................................... 17 Group I ....................................................... 18 Group I Allocable Losses........................................ 18 Group I Available Funds......................................... 18 Group I Certificates............................................ 18 Group I Cumulative Net Realized Losses.......................... 18 Group I Excess Subordinated Amount.............................. 18 Group I Insured Distribution Amount............................. 18 Group I Insured Interest Distribution Amount..................................................... 18 Group I Insured Payment......................................... 19 Group I Insured Principal Distribution Amount..................................................... 19 Group I Interest Distribution Amount............................ 19 Group I Interest Remittance Amount.............................. 19 Group I Monthly Remittance...................................... 19 iii Page Group I Mortgage Loans.......................................... 19 Group I Pool Principal Balance.................................. 19 Group I Premium Amount.......................................... 19 Group I Principal Distribution Amount........................... 20 Group I Principal Remittance Amount............................. 20 Group I Shortfall Amount........................................ 20 Group I Specified Subordinated Amount........................... 20 Group I Stepped Down Required Subordinated Percentage................................ 20 Group I Subordinated Amount..................................... 20 Group I Subordination Deficiency Amount......................... 20 Group I Subordination Deficit................................... 21 Group I Subordination Increase Amount........................... 21 Group I Subordination Reduction Amount.......................... 21 Group I Total Available Funds................................... 21 Group I Trustee's Fee........................................... 21 Group II ....................................................... 21 Group II Allocable Losses....................................... 21 Group II Available Funds........................................ 22 Group II Certificates........................................... 22 Group II Cumulative Net Realized Losses......................... 22 Group II Excess Subordinated Amount............................. 22 Group II Insured Distribution Amount............................ 22 Group II Insured Interest Distribution Amount..................................................... 22 Group II Insured Payment........................................ 22 Group II Insured Principal Distribution Amount..................................................... 22 Group II Interest Distribution Amount........................... 22 Group II Interest Remittance Amount............................. 23 Group II Monthly Remittance..................................... 23 Group II Mortgage Loans......................................... 23 Group II Pool Principal Balance................................. 23 Group II Premium Amount......................................... 23 Group II Principal Distribution Amount.......................... 23 Group II Principal Remittance Amount............................ 23 Group II Shortfall Amount....................................... 24 Group II Specified Subordinated Amount.......................... 24 Group II Stepped Down Required Subordinated Percentage.................................... 24 Group II Subordinated Amount.................................... 24 Group II Subordination Deficiency Amount..................................................... 24 Group II Subordination Deficit.................................. 24 Group II Subordination Increase Amount.......................... 25 Group II Subordination Reduction Amount......................... 25 Group II Total Available Funds.................................. 25 Group II Trustee's Fee.......................................... 25 Highest Lawful Rate............................................. 25 Insurance and Indemnity Agreement............................... 25 Indemnification Agreement....................................... 25 iv Page Insurance Policy................................................ 25 Insurance Proceeds.............................................. 25 Insured Distribution Amount..................................... 26 Insured Payment................................................. 26 Interest Advance................................................ 26 Interest Advance Reimbursement Amount........................... 26 Interest Determination Date..................................... 26 Late Payment Rate............................................... 26 LIBOR ....................................................... 26 Liquidated Loan................................................. 26 Liquidation Expenses............................................ 27 Liquidation Proceeds............................................ 27 Loan Purchase Price............................................. 27 Loan-to-Value Ratio............................................. 27 London Business Day............................................. 27 Lower Tier Distribution Amount.................................. 27 Lower-Tier Interests............................................ 28 Lower-Tier REMIC................................................ 28 Lower Tier Required Subordinate Amount.......................... 28 Lower Tier Subordinated Amount.................................. 28 Master Servicer................................................. 28 Master Servicer's Trust Receipt................................. 28 Master Servicing Fee............................................ 28 Monthly Remittance.............................................. 28 Moody's ....................................................... 28 Mortgage ....................................................... 28 Mortgage Loan................................................... 29 Mortgage Loan Group............................................. 29 Mortgage Loan Schedules......................................... 29 Mortgagor....................................................... 29 Net Insurance Proceeds.......................................... 29 Net Liquidation Proceeds........................................ 30 Net Pool Balance................................................ 30 Net Proceeds.................................................... 30 Net Realized Loss............................................... 30 Net Released Mortgage Property Proceeds......................... 30 Net Weighted Average Coupon Rate................................ 30 Nonrecoverable Advances......................................... 30 Note............................................................ 30 Officer's Certificate........................................... 31 Operative Documents............................................. 31 Original Group I Pool Principal Balance......................... 31 Original Group II Pool Principal Balance.................................................... 31 Original Pool Principal Balance................................. 31 Original Principal Balance...................................... 31 Outstanding..................................................... 31 Owner........................................................... 32 Payment Date.................................................... 32 Percentage Interest............................................. 32 Person.......................................................... 32 v Page Pool Delinquency Rate........................................... 32 Pool Principal Balance.......................................... 32 Pool Rolling Three Month Delinquency Rate....................................................... 32 Preference Amount............................................... 32 Premium Amount.................................................. 34 Prepayment...................................................... 34 Prepayment Interest Shortfalls.................................. 34 Preservation Expenses........................................... 34 Principal and Interest Account.................................. 34 Principal Balance............................................... 34 Principal Distribution Amount................................... 35 Principal Remittance Amounts.................................... 35 Prohibited Transaction.......................................... 35 Property ....................................................... 35 Prospectus...................................................... 35 Prospectus Supplement........................................... 35 Qualified Liquidation........................................... 35 Qualified Mortgage.............................................. 35 Qualified Replacement Mortgage.................................. 35 Rating Agency................................................... 36 Record Date..................................................... 36 Reference Banks................................................. 37 Register ....................................................... 37 Registration Statement.......................................... 37 Reimbursable Advances........................................... 37 Reimbursement Amount............................................ 37 Released Mortgaged Property Proceeds............................ 37 Relief Act Shortfalls........................................... 37 Remaining Group I Principal Distribution Amount..................................................... 37 REMIC........................................................... 38 REMIC Provisions................................................ 38 REMIC Trust..................................................... 38 Remittance Date................................................. 38 Remittance Period............................................... 38 REO Property.................................................... 38 Replacement Cut-Off Date........................................ 38 Representation Letter........................................... 38 Reserve Interest Rate........................................... 38 Residual Certificate............................................ 39 Rolling Delinquency Percentage.................................. 39 Rolling Loss Percentage......................................... 39 S&P............................................................. 39 Sale Agreement.................................................. 39 Second Mortgage Loan............................................ 39 Seller.......................................................... 39 Seller Optional Termination Date................................ 39 Senior Lien..................................................... 39 Servicing Advance............................................... 39 Servicing Standards............................................. 39 vi Page Startup Day..................................................... 40 Step-Down Cumulative Loss Test.................................. 40 Step-Down Rolling Delinquency Test.............................. 40 Step-Down Rolling Loss Test..................................... 40 Step-Down Trigger............................................... 40 Step-Up Cumulative Loss Test.................................... 40 Step-Up Rolling Delinquency Test................................ 40 Step-Up Rolling Loss Test....................................... 40 Step-Up Trigger................................................. 40 Sub-Servicer.................................................... 40 Sub-Servicing Agreement......................................... 40 Subordination Deficiency Amount................................. 40 Substitution Amount............................................. 40 Supplemental Certificates....................................... 40 Supplemental Interest Payment Account........................... 41 Supplemental Interest Payment Amount............................ 41 Supplemental Interest Trust..................................... 41 Tax Matters Person.............................................. 41 Trigger Event................................................... 41 Trust ....................................................... 41 Trust Estate.................................................... 41 Trustee ....................................................... 41 Trustee's Fee................................................... 42 Underwriters.................................................... 42 Underwriting Agreement.......................................... 42 Unregistered Certificate........................................ 42 Upper-Tier REMIC................................................ 42 1.2. Use of Words and Phrases........................................ 42 1.3. Captions; Table of Contents..................................... 42 1.4. Opinions........................................................ 42 1.5. Calculations.................................................... 43 ARTICLE II THE TRUST............................................... 43 2.1. Establishment of the Trust...................................... 43 2.2. Office.......................................................... 43 2.3. Purpose and Powers.............................................. 43 2.4. Appointment of the Trustee; Declaration of Trust................................................... 43 2.5. Expenses of the Trust........................................... 44 2.6. Ownership of the Trust.......................................... 44 2.7. Receipt of Trust Estate......................................... 44 2.8. Miscellaneous REMIC Provisions.................................. 44 ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER, THE MASTER SERVICER AND THE TRANSFEROR; CONVEYANCE OF MORTGAGE LOANS............................... 46 vii Page 3.1. Representations and Warranties of the Seller, the Master Servicer and the Transferor...................................................... 46 3.2. Covenants of the Seller to Take Certain Actions with Respect to the Mortgage Loans in Certain Situations..................................... 55 3.3. Conveyance of the Mortgage Loans and Qualified Replacement Mortgages................................. 67 3.4. Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification by Trustee........................................ 70 3.5. Cooperation Procedures.......................................... 73 ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES..................... 74 4.1. Issuance of Certificates........................................ 74 4.2. Sale of Certificates............................................ 74 ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS................... 74 5.1. Terms........................................................... 74 5.2. Forms........................................................... 75 5.3. Execution, Authentication and Delivery.......................... 75 5.4. Registration and Transfer of Certificates.................................................... 75 5.5. Mutilated, Destroyed, Lost or Stolen Certificates.................................................... 78 5.6. Persons Deemed Owners........................................... 79 5.7. Cancellation.................................................... 79 5.8. Limitation on Transfer of Ownership Rights.......................................................... 79 5.9. Assignment of Rights............................................ 80 ARTICLE VI COVENANTS................................. 80 6.1. Distributions................................................... 80 6.2. Money for Distributions to be Held in Trust; Withholding.............................................. 81 6.3. Protection of Trust Estate...................................... 81 6.4. Performance of Obligations...................................... 82 6.5. Negative Covenants.............................................. 82 6.6. No Other Powers................................................. 83 6.7. Limitation of Suits............................................. 83 6.8. Unconditional Rights of Owners to Receive Distributions........................................... 84 6.9. Rights and Remedies Cumulative.................................. 84 6.10. Delay or Omission Not Waiver.................................... 84 6.11. Control by Owners............................................... 85 viii Page ARTICLE VII ACCOUNTS, FLOW OF FUNDS, DISTRIBUTIONS AND REPORTS..................................... 85 7.1. Collection of Money............................................. 85 7.2. Establishment of Accounts....................................... 85 7.3. Flow of Funds................................................... 86 7.4. Investment of Accounts.......................................... 90 7.5. Eligible Investments............................................ 90 7.6. Reports by Trustee.............................................. 92 7.7. Drawings under the Certificate Insurance Policy and Reports by Trustee................................... 96 7.8. Allocation of Realized Losses................................... 98 7.9. Supplemental Interest Payments.................................. 98 ARTICLE VIII TERMINATION OF TRUST............................ 99 8.1. Termination of Trust............................................ 99 8.2. Termination Upon Option of the Seller...........................100 8.3. Auction Sale....................................................101 8.4. Disposition of Proceeds.........................................102 ARTICLE IX THE TRUSTEE................................102 9.1. Certain Duties and Responsibilities.............................102 9.2. Removal of Trustee for Cause....................................105 9.3. Certain Rights of the Trustee...................................106 9.4. Not Responsible for Recitals or Issuance of Certificates.................................................107 9.5. May Hold Certificates...........................................107 9.6. Money Held in Trust.............................................107 9.7. Compensation and Reimbursement..................................108 9.8. Corporate Trustee Required; Eligibility.........................108 9.9. Resignation and Removal; Appointment of Successor.......................................................108 9.10. Acceptance of Appointment by Successor Trustee.........................................................110 9.11. Merger, Conversion, Consolidation or Succession to Business of the Trustee...........................110 9.12. Reporting; Withholding..........................................111 9.13. Liability of the Trustee........................................111 9.14. Appointment of Co-Trustee or Separate Trustee.........................................................112 ARTICLE X SERVICING AND ADMINISTRATION OF MORTGAGE LOANS........................113 10.1. General Servicing Procedures....................................113 ix Page 10.2. Collection of Certain Mortgage Loan Payments........................................................116 10.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers......................................117 10.4. Successor Sub-Servicers.........................................117 10.5. Liability of Master Servicer....................................117 10.6. No Contractual Relationship Between Sub-Servicer and Trustee or the Owners..........................118 10.7. Assumption or Termination of Sub-Servicing Agreement by Trustee..............................118 10.8. Principal and Interest Account..................................118 10.9. Delinquency Advances and Servicing Advances........................................................122 10.10. Compensating Interest...........................................123 10.11. Maintenance of Insurance........................................123 10.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.........................................124 10.13. Realization Upon Defaulted Mortgage Loans...........................................................125 10.14. Trustee to Cooperate; Release of Files..........................127 10.15. Master Servicing Compensation...................................128 10.16. Annual Statement as to Compliance...............................129 10.17. Annual Independent Certified Public Accountants' Reports............................................129 10.18. Access to Certain Documentation and Information Regarding the Mortgage Loans; Confidentiality..........................................129 10.19. Assignment of Agreement.........................................130 10.20. Inspections by Certificate Insurer and Account Parties; Errors and Omissions Insurance.......................................................130 10.21. Financial Statements............................................131 10.22. REMIC...........................................................131 10.23. The Designated Depository Institution...........................131 10.24. Appointment of Custodian........................................131 ARTICLE XI EVENTS OF DEFAULT; REMOVAL OF MASTER SERVICER; MERGER...........132 11.1. Removal of Master Servicer; Resignation of Master Servicer..............................................132 11.2. Trigger Events; Removal of Master Servicer........................................................137 11.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer........................................................138 ARTICLE XII MISCELLANEOUS...............................138 12.1. Compliance Certificates and Opinions............................138 x Page 12.2. Form of Documents Delivered to the Trustee.........................................................139 12.3. Acts of Owners..................................................140 12.4. Notices, etc. to Trustee........................................141 12.5. Notices and Reports to Owners; Waiver of Notices.........................................................141 12.6. Rules by Trustee and Seller.....................................141 12.7. Successors and Assigns..........................................142 12.8. Severability....................................................142 12.9. Benefits of Agreement...........................................142 12.10. Legal Holidays..................................................142 12.11. Governing Law...................................................142 12.12. Counterparts....................................................142 12.13. Usury...........................................................142 12.14. Amendment.......................................................143 12.15. REMIC Status; Taxes.............................................144 12.16. Additional Limitation on Action and Imposition of Tax...............................................146 12.17. Appointment of Tax Matters Person...............................146 12.18. Reports to the Securities and Exchange Commission......................................................146 12.19. Notices.........................................................147 12.20. Grant of Security Interest......................................148 12.21. Indemnification.................................................149 ARTICLE XIII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER.............152 13.1. Rights of the Certificate Insurer to Exercise Rights of the Owners of the Class A Certificates............................................152 13.2. Trustee to Act Solely with Consent of the Certificate Insurer.........................................153 13.3. Trust Fund and Accounts Held for Benefit of the Certificate Insurer......................................153 13.4. Claims Upon the Policy; Policy Payments Account.........................................................153 13.5. Effects of Payments by the Certificate Insurer.........................................................155 13.6. Notices to the Certificate Insurer..............................155 13.7. Third-Party Beneficiary.........................................155 EXHIBIT A-1 -- Form of Class A-1 Group I Certificate EXHIBIT A-2 -- Form of Class A-2 Group I Certificate EXHIBIT A-3 -- Form of Class A-3 Group I Certificate EXHIBIT A-4 -- Form of Class A-4 Group I Certificate EXHIBIT A-5 -- Form of Class A-5 Group I Certificate EXHIBIT A-6 -- Form of Class A-6 Group II Certificate EXHIBIT B-1 -- Form of Class B Certificate EXHIBIT B-2 -- Form of Class B-S Certificate xi EXHIBIT C-1 -- Form of Class RL Certificate EXHIBIT C-2 -- Form of Class RU Certificate EXHIBIT D -- Form of Transfer Certificate EXHIBIT E -- Form of Residual Certificate Tax Matters Transfer Certificate EXHIBIT F -- Form of Master Servicer's Trust Receipt EXHIBIT G -- Form of Liquidation Report EXHIBIT H -- Form of Delivery Order EXHIBIT I -- Officer's Certificate EXHIBIT J -- Form of Certificate Regarding Prepaid Loans EXHIBIT K -- Form of Initial Trustee Certification EXHIBIT L -- Form of Interim Trustee Certification EXHIBIT M -- Form of Final Trustee Certification EXHIBIT N -- Auction Procedures EXHIBIT O -- Form of Trustee Request for Class A-6 Formula Interest Shortfall xii POOLING AND SERVICING AGREEMENT, relating to ACCESS FINANCIAL MORTGAGE LOAN TRUST 1997-2, dated as of May 1, 1997, among ACCESS FINANCIAL LENDING CORP., a Delaware corporation, as the seller (in such capacity, the "Seller") and as the master servicer (in such capacity, the "Master Servicer"), ACCESS FINANCIAL RECEIVABLES CORP., a Delaware corporation, as the transferor (the "Transferor") and THE CHASE MANHATTAN BANK, a New York banking corporation, in its capacity as trustee (the "Trustee"). WHEREAS, the Seller wishes to establish a trust and two sub-trusts and provide for the allocation and sale of the beneficial interests therein and the maintenance and distribution of the trust estate; WHEREAS, the Seller has conveyed the Mortgage Loans to the Transferor pursuant to the Sale Agreement; WHEREAS, the Transferor wishes to convey the Mortgage Loans to the Trust; WHEREAS, the Master Servicer has agreed to service the Mortgage Loans, which constitute the principal assets of the trust estate; WHEREAS, all things necessary to make the Certificates, when executed and authenticated by the Trustee, valid instruments, and to make this Agreement a valid agreement, in accordance with their and its terms, have been done; and WHEREAS, The Chase Manhattan Bank, a New York banking corporation, is willing to serve in the capacity of Trustee hereunder. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Seller, the Master Servicer, the Transferor and the Trustee hereby agree as follows: ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION Section 1.1. Definitions. For all purposes of this Agreement, the following terms shall have the meanings set forth below, unless the context clearly indicates otherwise: "Account": The Certificate Account, each Principal and Interest Account and each Distribution Account including any sub-Accounts created pursuant to Section 7.2. "Accrual Period": With respect to the Class A-2 Group I, A-3 Group I, A-4 Group I and A-5 Group I Certificates and any Payment Date, the period from and including the second day of the calendar month immediately preceding such Payment Date to and including the first day of the calendar month in which such Payment Date occurs; with respect to the Class A-1 Group I and A-6 Group II Certificates and any Payment Date, the period from and including the prior Payment Date (or, in the case of the first Payment Date, from and including the Startup Day) to and including the day immediately preceding such Payment Date. "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. "Agreement": This Pooling and Servicing Agreement, as it may be amended from time to time, and including the Exhibits hereto. "Appraised Value": The appraised value of any Property based upon the appraisal made at the time of the origination of the related Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money mortgage, the sales price of the Property at such time of origination, if such sales price is less than such appraised value. "Auction Sale": The Trustee's solicitation of bids for the purchase of all Mortgage Loans in the Trust pursuant to Section 8.3 hereof. "Authorized Officer": With respect to any Person, any person who is authorized to act for such Person in matters relating to this Agreement, and whose action is binding upon such Person and, with respect to the Seller, the Master Servicer, the Transferor and the Trustee, initially including those individuals whose names appear on the lists of Authorized Officers delivered on the Startup Day. "Available Funds": With respect to Group I, the Group I Available Funds, and with respect to Group II, the Group II Available Funds. 2 "Base Group I Principal Distribution Amount": As to any Payment Date, an amount equal to (x) the sum, without duplication, of (i) the principal portion of all scheduled and unscheduled payments received by the Master Servicer on the Group I Mortgage Loans during the related Remittance Period, including any Prepayments and any Net Proceeds, (ii) the principal portion of all Substitution Amounts and the principal portion of all Loan Purchase Prices deposited into the Principal and Interest Accounts with respect to the Group I Mortgage Loans on the related Remittance Date, and (iii) the proceeds received by the Trustee with respect to the Group I Mortgage Loans in connection with any termination of the Trust pursuant to Article VIII hereof, to the extent such proceeds relate to principal, minus (y) the amount of any Group I ----- Subordination Reduction Amount for such Payment Date. "Base Group II Principal Distribution Amount": As to any Payment Date, an amount equal to (x) the sum, without duplication, of (i) the principal portion of all scheduled and unscheduled payments received by the Master Servicer on the Group II Mortgage Loans during the related Remittance Period, including any Prepayments and any Net Proceeds, (ii) the principal portion of all Substitution Amounts and the principal portion of all Loan Purchase Prices deposited into the Principal and Interest Accounts with respect to the Group II Mortgage Loans on the related Remittance Date, and (iii) the proceeds received by the Trustee with respect to the Group II Mortgage Loans in connection with any termination of the Trust pursuant to Article VIII hereof, to the extent such proceeds relate to principal, minus (y) the amount of any Group II Subordination Reduction Amount for such Payment Date. "Business Day": Any day that is not a Saturday, Sunday or other day on which commercial banking institutions in the State of New York, the state in which the principal corporate office or bank of the Master Servicer is located or in the state in which the principal corporate trust office of the Trustee is located, which initially is New York, New York are authorized or obligated by law or executive order to be closed. "Certificate": Any one of the Class A-1 Group I Certificates, Class A-2 Group I Certificates, Class A-3 Group I Certificates, Class A-4 Group I Certificates, Class A-5 Group I Certificates, Class A-6 Group II Certificates, Class B Certificates, Class B-S Certificates or the Residual Certificates. "Certificate Account": The account designated as the Certificate Account pursuant to Section 7.2 hereof. "Certificate Insurance Policy": The financial guaranty insurance policy number 50590-N issued by the 3 Certificate Insurer to the Trustee for the benefit of the Owners of the Class A Certificates. "Certificate Insurer": Financial Security Assurance Inc., a New York monoline insurance company. "Certificate Insurer Default": The existence and continuance of any of the following: (a) the Certificate Insurer shall have failed to make a required payment when due under the Certificate Insurance Policy; (b) the Certificate Insurer shall have (i) filed a petition or commenced any case or proceeding under any provision or chapter of the United States Bankruptcy Code, the New York State Insurance Law or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation, or reorganization, (ii) made a general assignment for the benefit of its creditors or (iii) had an order for relief entered against it under the United States Bankruptcy Code, the New York State Insurance Law or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation, or reorganization that is final and nonappealable; or (c) a court of competent jurisdiction, the New York Department of Insurance or any other competent regulatory authority shall have entered a final and nonappealable order, judgment or decree (i) appointing a custodian, trustee, agent, or receiver for the Certificate Insurer or for all or any material portion of its property or (ii) authorizing the taking of possession by a custodian, trustee, agent, or receiver of the Security Insurer or of all or any material portion of its property. "Certificate Insurer Premium Rate": 0.23% per annum. "Certificate Principal Balance": The Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance, the Class A-6 Principal Balance, or the Class B Principal Balance, as the case may be. "Certificateholder": As of any date and with respect to any Certificate, the Person in whose name such Certificate is registered on the Register on such date. "Class": All of the Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I Certificates, the Class A- 4 6 Group II Certificates, the Class B Certificates, or all of the Residual Certificates, as applicable. "Class A Certificate Principal Balance": The sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance, and the Class A-6 Principal Balance. "Class A Certificates": Collectively, the Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I Certificates, and the Class A-6 Group II Certificates. "Class A Distribution Account": The Class A Group I Distribution Account or the Class A Group II Distribution Account, as the case may be. "Class A Group I Certificates": All of the Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates and the Class A-5 Group I Certificates. "Class A Group I Distribution Account": The Class A Group I Distribution Account created pursuant to Section 7.2 hereof. "Class A Group II Distribution Account": The Class A Group II Distribution Account created pursuant to Section 7.2 hereof. "Class A-1 Distribution Amount": As of any Payment Date, the sum of (i) the Class A-1 Principal Distribution Amount for such Payment Date, (ii) the Class A-1 Interest Distribution Amount for such Payment Date and (iii) the Class A-1 Interest Carry-Forward Amount for such Payment Date. "Class A-1 Group I Certificates": Those certificates in substantially the form set forth in Exhibit A-1 hereto. "Class A-1 Interest Carry-Forward Amount": As of any Payment Date, the sum of (i) the amount, if any, by which (x) the Class A-1 Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution, made to the Owners of the Class A-1 Group I Certificates pursuant to Section 7.3(c)(i)(A) hereof on such immediately preceding Payment Date and allocable to the Class A-1 Interest Distribution Amount on such immediately preceding Payment Date and (ii) interest on the amount, if any, described in clause (i) at one-twelfth of the Class A-1 5 Pass-Through Rate from such immediately preceding Payment Date. "Class A-1 Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on the Class A-1 Principal Balance immediately prior to such Payment Date. "Class A-1 Pass-Through Rate": The lesser of (i) LIBOR as of the second to last Business Day prior to the immediately preceding Payment Date (or prior to the Startup Day, in the case of the initial Payment Date) plus 0.10% per annum or (ii) the Net Weighted Average Coupon Rate for the Group I Mortgage Loans for such Payment Date. "Class A-1 Principal Balance": The original Class A-1 Principal Balance of $39,812,000 reduced by the sum of all amounts previously distributed to the Owners of the Class A-1 Group I Certificates in respect of principal on all previous Payment Dates, but shall not be reduced below zero. "Class A-1 Principal Distribution Amount": With respect to any Payment Date on or prior to the Class A-1 Termination Date, an amount equal to the lesser of (x) the Remaining Group I Principal Distribution Amount for such Payment Date and (y) the amount necessary to reduce the Class A-1 Principal Balance (as it was immediately prior to such Payment Date) to zero. On the Class A-1 Termination Date any portion of the Remaining Group I Principal Distribution Amount for such Payment Date remaining on such Payment Date following the reduction to zero of the Class A-1 Principal Balance shall be distributed as the initial principal distribution on the Class A-2 Group I Certificates. "Class A-1 Termination Date": The Payment Date on which the Class A-1 Principal Balance is reduced to zero. "Class A-2 Distribution Amount": As of any Payment Date, the sum of (i) the Class A-2 Principal Distribution Amount for such Payment Date, (ii) the Class A-2 Interest Distribution Amount for such Payment Date and (iii) the Class A-2 Interest Carry-Forward Amount for such Payment Date. "Class A-2 Group I Certificates": Those certificates in substantially the form set forth in Exhibit A-2 hereto. "Class A-2 Interest Carry-Forward Amount": As of any Payment Date, the sum of (i) the amount, if any, by which (x) the Class A-2 Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution, made to the Owners of the Class A-2 Group I Certificates pursuant to Section 7.3(c)(i)(B) hereof 6 on such immediately preceding Payment Date and allocable to the Class A-2 Interest Distribution Amount on such immediately preceding Payment Date and (ii) interest on the amount, if any, described in clause (i) at one-twelfth of the Class A-2 Pass-Through Rate from such immediately preceding Payment Date. "Class A-2 Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on the Class A-2 Principal Balance immediately prior to such Payment Date. "Class A-2 Pass-Through Rate": 7.000% per annum. "Class A-2 Principal Balance": The original Class A-2 Principal Balance of $21,165,000 reduced by the sum of all amounts previously distributed to the Owners of the Class A-2 Group I Certificates in respect of principal on all previous Payment Dates, but shall not be reduced below zero. "Class A-2 Principal Distribution Amount": With respect to any Payment Date following the Class A-1 Termination Date, an amount equal to the lesser of (x) the Remaining Group I Principal Distribution Amount for such Payment Date and (y) the amount necessary to reduce the Class A-2 Principal Balance (as it was immediately prior to such Payment Date) to zero. On the Class A-1 Termination Date any portion of the Remaining Group I Principal Distribution Amount for such Payment Date remaining on such Payment Date following the reduction to zero of the Class A-1 Principal Balance shall be distributed as the initial principal distribution on the Class A-2 Group I Certificates. On the Class A-2 Termination Date any portion of the Remaining Group I Principal Distribution Amount remaining on such Payment Date following the reduction to zero of the Class A-2 Principal Balance shall be distributed as the initial principal distribution on the Class A-3 Group I Certificates. "Class A-2 Termination Date": The Payment Date on which the Class A-2 Principal Balance is reduced to zero. "Class A-3 Distribution Amount": As of any Payment Date, the sum of (i) the Class A-3 Principal Distribution Amount for such Payment Date, (ii) the Class A-3 Interest Distribution Amount for such Payment Date and (iii) the Class A-3 Interest Carry-Forward Amount for such Payment Date. "Class A-3 Group I Certificates": Those certificates in substantially the form set forth in Exhibit A-3 hereto. "Class A-3 Interest Carry-Forward Amount": As of any Payment Date, the sum of (i) the amount, if any, by which 7 (x) the Class A-3 Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution made to the Owners of the Class A-3 Group I Certificates pursuant to Section 7.3(c)(i)(C) hereof on such immediately preceding Payment Date and allocable to the Class A-3 Interest Distribution Amount on such immediately preceding Payment Date and (ii) interest on the amount, if any, described in clause (i) at one-twelfth of the Class A-3 Pass-Through Rate from such immediately preceding Payment Date. "Class A-3 Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-3 Pass-Through Rate on the Class A-3 Principal Balance immediately prior to such Payment Date. "Class A-3 Pass-Through Rate": 7.300% per annum. "Class A-3 Principal Balance": The original Class A-3 Principal Balance of $10,000,000 reduced by the sum of all amounts previously distributed to the Owners of the Class A-3 Group I Certificates in respect of principal on all previous Payment Dates, but shall not be reduced below zero. "Class A-3 Principal Distribution Amount": With respect to any Payment Date following the Class A-2 Termination Date, an amount equal to the lesser of (x) the Remaining Group I Principal Distribution Amount for such Payment Date and (y) the amount necessary to reduce the Class A-3 Principal Balance (as it was immediately prior to such Payment Date) to zero. On the Class A-2 Termination Date any portion of the Remaining Group I Principal Distribution Amount for such Payment Date remaining on such Payment Date following the reduction to zero of the Class A-2 Principal Balance shall be distributed as the initial principal distribution on the Class A-3 Group I Certificates. On the Class A-3 Termination Date any portion of the Remaining Group I Principal Distribution Amount remaining on such Payment Date following the reduction to zero of the Class A-3 Principal Balance shall be distributed as the initial principal distribution on the Class A-4 Group I Certificates. "Class A-3 Termination Date": The Payment Date on which the Class A-3 Principal Balance is reduced to zero. "Class A-4 Distribution Amount": As of any Payment Date, the sum of (i) the Class A-4 Principal Distribution Amount for such Payment Date, (ii) the Class A-4 Interest Distribution Amount for such Payment Date and (iii) the Class A-4 Interest Carry-Forward Amount for such Payment Date. 8 "Class A-4 Group I Certificates": Those certificates in substantially the form set forth in Exhibit A-4 hereto. "Class A-4 Interest Carry-Forward Amount": As of any Payment Date, the sum of (i) the amount, if any, by which (x) the Class A-4 Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution, made to the Owners of the Class A-4 Group I Certificates pursuant to Section 7.3(c)(i)(D) hereof on such immediately preceding Payment Date and allocable to the Class A-4 Interest Distribution Amount on such immediately preceding Payment Date and (ii) interest on the amount, if any, described in clause (i) at one-twelfth of the Class A-4 Pass-Through Rate from such immediately preceding Payment Date. "Class A-4 Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-4 Pass-Through Rate on the Class A-4 Principal Balance immediately prior to such Payment Date. "Class A-4 Pass-Through Rate": 7.675% per annum. "Class A-4 Principal Balance": The original Class A-4 Principal Balance of $8,175,000 reduced by the sum of all amounts previously distributed to the Owners of the Class A-4 Group I Certificates in respect of principal on all previous Payment Dates, but shall not be reduced below zero. "Class A-4 Principal Distribution Amount": With respect to any Payment Date following the Class A-3 Termination Date, an amount equal to the lesser of (x) the Remaining Group I Principal Distribution Amount for such Payment Date and (y) the amount necessary to reduce the Class A-4 Principal Balance (as it was immediately prior to such Payment Date) to zero. On the Class A-3 Termination Date any portion of the Remaining Group I Principal Distribution Amount for such Payment Date remaining on such Payment Date following the reduction to zero of the Class A-3 Principal Balance shall be distributed as the initial principal distribution on the Class A-4 Group I Certificates. "Class A-5 Distribution Amount": As of any Payment Date, the sum of (i) the Class A-5 Principal Distribution Amount for such Payment Date, (ii) the Class A-5 Interest Distribution Amount for such Payment Date and (iii) the Class A-5 Interest Carry-Forward Amount for such Payment Date. "Class A-5 Group I Certificates": Those certificates in substantially the form set forth in Exhibit A-5 hereto. 9 "Class A-5 Interest Carry-Forward Amount": As of any Payment Date, the sum of (i) the amount, if any, by which (x) the Class A-5 Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution, made to the Owners of the Class A-5 Group I Certificates pursuant to Section 7.3(c)(i)(E) hereof on such immediately preceding Payment Date and allocable to the Class A-5 Interest Distribution Amount on such immediately preceding Payment Date and (ii) interest on the amount, if any, described in clause (i) at one-twelfth of the Class A-5 Pass-Through Rate from such immediately preceding Payment Date. "Class A-5 Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-5 Pass-Through Rate on the Class A-5 Principal Balance immediately prior to such Payment Date. "Class A-5 Lockout Distribution Amount": With respect to any Payment Date, the product of (i) the applicable Class A-5 Lockout Percentage for such Payment Date and (ii) the Class A-5 Lockout Pro Rata Distribution Amount for such Payment Date. "Class A-5 Lockout Percentage": For each Payment Date shall be as follows: Payment Dates Lockout Percentage ------------- ------------------ June 1997 - May 2000 0% June 2000 - May 2002 45% June 2002 - May 2003 80% June 2003 - May 2004 100% June 2004 and thereafter 140% "Class A-5 Lockout Pro Rata Distribution Amount": For any Payment Date will be an amount equal to the product of (x) a fraction, the numerator of which is the Certificate Principal Balance of the Class A-5 Certificates immediately prior to such Payment Date and the denominator of which is the aggregate Certificate Principal Balance of the Group I Certificates immediately prior to such Payment Date and (y) the Group I Principal Distribution Amount for such Payment Date. "Class A-5 Pass-Through Rate": 7.275% per annum. "Class A-5 Principal Balance": The original Class A-5 Principal Balance of $10,000,000 reduced by the sum of all amounts previously distributed to the Owners of the Class A-5 Group I Certificates in respect of principal on all previous Payment Dates, but shall not be reduced below zero. 10 "Class A-5 Principal Distribution Amount": With respect to any Payment Date prior to the Class A-4 Termination Date, the Class A-5 Lockout Distribution Amount. With respect to the Payment Date occurring on the Class A-4 Termination Date, the sum of (i) the Class A-5 Lockout Distribution Amount and (ii) any portion of the Remaining Group I Principal Distribution Amount remaining on such Payment Date following the reduction to zero of the Class A-4 Principal Balance. With respect to any Payment Date after the Class A-4 Termination Date, the lesser of (x) the Group I Principal Distribution Amount and (y) the amount necessary to reduce the Class A-5 Principal Balance to zero. "Class A-6 Distribution Amount": As of any Payment Date, the sum of (i) the Class A-6 Principal Distribution Amount for such Payment Date, (ii) the Class A-6 Interest Distribution Amount for such Payment Date and (iii) the Class A-6 Interest Carry-Forward Amount for such Payment Date. "Class A-6 Formula Interest Shortfall": As defined in Section 7.9(a) hereof. "Class A-6 Formula Pass-Through Rate": As of any Payment Date, the rate described in clause (i) of the definition of "Class A-6 Pass-Through Rate". "Class A-6 Full Distribution Amount": With respect to any Payment Date, the sum of (x) the Class A-6 Full Interest Distribution Amount for such Payment Date and (y) the Class A-6 Principal Distribution Amount for such Payment Date. "Class A-6 Full Interest Distribution Amount": With respect to any Payment Date, the Class A-6 Interest Distribution Amount for such Payment Date calculated using the Class A-6 Formula Pass-Through Rate for such Payment Date rather than the Class A-6 Pass-Through Rate for such Payment Date plus, if the full amount of the Class A-6 Formula Interest Shortfall, if any, was not funded on any prior Payment Date and remains unpaid on such Payment Date, such amount, together with interest thereon (from the Payment Date on which such Class A-6 Formula Interest Shortfall was calculated) at the Class A-6 Formula Pass-Through Rate for such Payment Date. "Class A-6 Interest Carry-Forward Amount": As of any Payment Date, the sum of (i) the amount, if any, by which (x) the Class A-6 Interest Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution, made to the Owners of the Class A-6 Group II Certificates pursuant to Section 7.3(c)(ii) hereof on such immediately preceding Payment Date and allocable to the Class A-6 Interest Distribution Amount on such immediately preceding Payment Date and (ii) interest on the amount, if 11 any, described in clause (i) at one-twelfth of the Class A-6 Pass-Through Rate from such immediately preceding Payment Date. "Class A-6 Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-6 Pass-Through Rate on the Class A-6 Principal Balance immediately prior to such Payment Date. "Class A-6 Pass-Through Rate": With respect to any Payment Date and Accrual Period, the lesser of (i) LIBOR as of the second to last Business Day prior to the immediately preceding Payment Date (or prior to the Startup Day, in the case of the initial Payment Date) plus 0.23% per annum, or (ii) the Net Weighted Average Coupon Rate for the Group II Mortgage Loans for such Payment Date and less (x) 0% on the 1st through the 12th Payment Dates or (y) 0.50% on the 13th Payment Date and thereafter. "Class A-6 Principal Balance": The original Class A-6 Principal Balance of $96,036,000 reduced by the sum of all amounts previously distributed to the Owners of the Class A-6 Group II Certificates in respect of principal on all previous Payment Dates, but shall not be reduced below zero. "Class A-6 Principal Distribution Amount": With respect to any Payment Date, an amount equal to the lesser of (x) the Group II Principal Distribution Amount for such Payment Date and (y) the amount necessary to reduce the Class A-6 Principal Balance (as it was immediately prior to such Payment Date) to zero. "Class A-6 Group II Certificates": Those certificates in substantially the form set forth in Exhibit A-6 hereto. "Class B Certificates": Those certificates in substantially the form set forth in Exhibit B-1 hereto. "Class B Carry-Forward Amount": As of any Payment Date, the amount, if any, by which (x) the Class B Distribution Amount as of the immediately preceding Payment Date exceeded (y) the amount of the actual distribution to the Owners of the Class B Certificates made pursuant to Section 7.3(c)(iv) hereof on such immediately preceding Payment Date. "Class B Distribution Account": The Class B Distribution Account created pursuant to Section 7.2 hereof. "Class B Distribution Amount": As of any Payment Date, the sum of (i) the Class B Interest Distribution Amount for such Payment Date, (ii) the Group I Subordination 12 Reduction Amount for such Payment Date and the Group II Subordination Reduction Amount, if any, described in Section 7.3(b)(iii)(E) hereof and (iv) the Class B Carry-Forward Amount, if any, as of such Payment Date. "Class B Interest": As of any Payment Date, the product of (x) the Class B Pass-Through Rate, times the actual number of days in the related Remittance Period divided by 365 (or 366, as appropriate), and (y) the Net Pool Balance as of the opening of business on the first day of such Remittance Period. "Class B Interest Distribution Amount": As of any Payment Date, the Class B Interest for such Payment Date minus the sum of (i) the amount of any Group I Subordination Increase Amount actually paid to the Owners of the Class A Group I Certificates on such Payment Date as all or a portion of (x) the Group I Insured Distribution Amount on such Payment Date, pursuant to Section 7.3(b)(iii)(B) hereof or (y) the Group I Subordination Increase Amount on such Payment Date pursuant to Section 7.3(b)(iii)(E) hereof and (ii) the amount of any Class B Interest actually paid to the Owners of the Class A-5 Group II Certificates as all or a portion of (x) the Group II Insured Distribution Amount on such Payment Date, pursuant to Section 7.3(b)(iii)(B) hereof or (y) the portion of any Group II Subordination Increase Amount allocated to the Class A Group II Distribution Account with respect to a Group II Subordination Deficiency on such Payment Date, pursuant to Section 7.3(b)(iii)(E) hereof. "Class B Pass-Through Rate": With respect to any Payment Date, the weighted average of the interest rates borne by the LT-1, LT-2, LT-3, LT-4, LT-5 and LT-7 Lower Tier Interests for the immediately preceding Remittance Period minus two times the weighted average of the interest rates borne by the LT-6, LT-8, and LT-9 Lower Tier Interests for such Remittance Period, with the rate on the LT-9 Lower Tier Interest deemed to be zero for purposes of this calculation. "Class B Principal Balance": As of the Startup Day, zero. The Class B Principal Balance shall be (x) increased on each Payment Date by the amounts, if any, of the Class B Interest (i) actually paid to the Owners of the Class A Group I Certificates on such Payment Date as all or a portion of the Group I Principal Distribution Amount or as all or a portion of the Group I Subordination Increase Amount on such Payment Date pursuant to Sections 7.3(b)(iii)(A) and 7.3(b)(iii)(E) hereof, and (ii) actually paid to the Owners of the Class A-6 Group II Certificates on such Payment Date as all or a portion of the Group II Principal Distribution Amount or as all or a portion of the Group II Subordination Deficiency Amount on such Payment Date, pursuant to Sections 7.3(b)(iii)(A) and 7.3(b)(iii)(E) hereof and (y) decreased on each Payment Date 13 by the amounts of (i) any Group I Subordination Reduction Amount or any Group II Subordination Reduction Amount paid to the Owners of the Class B Certificates on such Payment Date pursuant to Section 7.3(b)(iii)(G) hereof and (ii) the amount of any Group I Allocable Losses and Group II Allocable Losses allocated as a reduction of the Class B Principal Balance on such Payment Date pursuant to Section 7.8(a) hereof. The Class B Principal Balance shall in no event be less than zero. "Class B-S Certificate": Any of those Certificates representing the right to receive excess amounts in the Supplemental Interest Payment Account, and designated as a "Class B-S Certificate" on the face thereof, in the form of Exhibit B-2 hereto. "Class LT-1 Certificates" or "LT-1": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-2 Certificates" or "LT-2": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-3 Certificates" or "LT-3": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-4 Certificates" or "LT-4": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-5 Certificates" or "LT-5": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-6 Certificates" or "LT-6": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-7 Certificates" or "LT-7": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-8 Certificates" or "LT-8": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class LT-9 Certificates" or "LT-9": The uncertificated class of interests in the Lower-Tier REMIC, as described in and designated in Section 2.8 hereof. "Class RL Certificates": Those certificates representing certain residual rights to distributions from the 14 Lower-Tier REMIC in substantially the form set forth as Exhibit C-1 hereto. "Class RU Certificates": Those certificates representing certain residual rights to distributions from the Upper-Tier REMIC in substantially the form set forth as Exhibit C-2 hereto. "Code": The Internal Revenue Code of 1986, as amended. "Compensating Interest": As defined in Section 10.10 of this Agreement. "Coupon Rate": With respect to any Note and Remittance Period, the rate of interest borne by such Note at the opening of business on the first day of such Remittance Period. "Cumulative Loss Percentage": As to any Payment Date and the Mortgage Loans, the percentage equivalent of the fraction obtained by dividing (i) the Cumulative Net Realized Losses by (ii) the Original Pool Principal Balance. "Cumulative Net Realized Losses": As of any Payment Date, the sum of all Net Realized Losses with respect to the Mortgage Loans experienced on all prior Payment Dates. "Cut-Off Date": The close of business on May 1, 1997. "Delinquency Advance": As defined in Section 10.9(a) of this Agreement. "Delinquency Percentage": As of the last day of any Remittance Period and with respect to the Mortgage Loans, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Principal Balances of all Mortgage Loans that are 60 or more days delinquent, in foreclosure or converted to REO Properties as of such last day of such Remittance Period, and the denominator of which is the Pool Principal Balance as of the last day of such Remittance Period. "Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon is not made by the close of business on the day such payment is scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has not been received by the close of business on the corresponding day of the month immediately succeeding the month in which such payment was due, or, if there is no such corresponding day (e.g., as when a 30-day month follows a 31-day month in which a payment was due on the 31st day of such month) then on the 15 last day of such immediately succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and so on. "Delivery Order": The Delivery Order from the Seller to the Trustee directing the Trustee to issue the Certificates on the Startup Day, in substantially the form of Exhibit H hereto. "Depository": The Depository Trust Company, 55 Water Street, New York, New York 10041, and any successor depository hereafter named. "Designated Depository Institution": With respect to any Account, an institution whose deposits are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, the long-term deposits of which shall be rated A or better by S&P and A1 or better by Moody's and in one of the two highest short-term rating categories by S&P and the highest short-term rating category by Moody's, unless otherwise approved in writing by the Certificate Insurer and each Rating Agency, and which is any of the following: (i) a federal savings and loan association duly organized, validly existing and in good standing under the federal banking laws, (ii) an institution duly organized, validly existing and in good standing under the applicable banking laws of any state, (iii) a national banking association duly organized, validly existing and in good standing under the federal banking laws, or (iv) approved in writing by the Certificate Insurer and the Rating Agencies and, in each case acting or designated by the Master Servicer or the Trustee as the depository institution for such Account; provided, however, that any such institution, association or subsidiary shall have combined capital, surplus and individual profits of at least $100,000,000. Notwithstanding the foregoing, an Account may be held by an institution otherwise meeting the preceding requirements except that the only applicable rating requirement shall be that the unsecured and uncollateralized debt obligations thereof shall be rated Baa2 or better by Moody's and BBB or better by S&P if such institution has capital and surplus of not less than $50,000,000 and has trust powers and the Account is held by such institution in its trust capacity and not in its commercial capacity. "Designated Residual Holder": Access Financial Receivables Corp. "Determination Date": The second Business Day preceding each Payment Date. "Disqualified Organization": "Disqualified Organization" shall have the meaning set forth from time to time in the definition thereof at Section 860E(e)(5) of the Code (or any successor statute thereto) and applicable to the Trust. 16 "Distribution Accounts": The Class A Group I Distribution Account, the Class A Group II Distribution Account and the Class B Distribution Account. "Eligible Investments": Those investments so designated pursuant to Section 7.5 hereof. "ERISA": As defined in Section 5.8(a) hereof. "Event of Default": As defined in Section 11.1 of this Agreement. "Excess Spread Rate": With respect to any Group II Mortgage Loan and for any Payment Date, the Coupon Rate thereof as of the beginning of the related Remittance Period minus the sum of (i) the rate at which the Master Servicing Fee is calculated, (ii) the rate at which the Trustee's Fees are calculated, (iii) the Class A-6 Pass-Through Rate applicable to such Payment Date and (iv) the product of (A) the related Certificate Insurer Premium Rate and (B) a fraction, the numerator of which is the Class A-6 Principal Balance and the denominator of which is the Group II Pool Principal Balance. "Excess Spread Trigger": As such term is defined in the Insurance and Indemnity Agreement. "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 pursuant to the Emergency Home Finance Act of 1970, as amended, or any successor thereof. "File": The documents pertaining to a particular Mortgage Loan pursuant to Section 3.3(b) hereof and any additional documents required to be added to the File pursuant to this Agreement. "First Mortgage Loan": A Mortgage Loan which constitutes a first priority mortgage lien with respect to any Property as indicated on the Mortgage Loan Schedules. "Fiscal Agent": As defined in the Insurance Agreement. "FNMA": The Federal National Mortgage Association, a federally-chartered and privately-owned corporation existing under the Federal National Mortgage Association Charter Act, as amended, or any successor thereof. "Group": Group I or Group II, as the case may be. 17 "Group I": The group of Mortgage Loans that are the Group I Mortgage Loans. "Group I Allocable Losses": As defined in Section 7.8(a) hereof. "Group I Available Funds": As of any Payment Date, the amount on deposit in the Certificate Account with respect to the Group I Mortgage Loans on such Payment Date after making the deposits to the Certificate Account pursuant to Sections 7.3(a)(i) hereof on such Payment Date. The term "Group I Available Funds" does not include Insured Payments and does not include any amounts that cannot be distributed to the Owners of the Certificates by the Trustee as a result of proceedings under the United States Bankruptcy Code. "Group I Certificates": Any of the Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates, and the Class A-5 Group I Certificates. "Group I Cumulative Net Realized Losses": As of any Payment Date, the sum of all Net Realized Losses with respect to the Group I Mortgage Loans experienced on all prior Payment Dates. "Group I Excess Subordinated Amount": With respect to any Payment Date, the excess, if any, of (x) the Group I Subordinated Amount that would apply on such Payment Date after taking into account the payment of the Group I Principal Distribution Amount on such Payment Date (except for any distributions of related Group I Subordination Reduction Amounts on such Payment Date) over (y) the Group I Specified Subordinated Amount for such Payment Date. "Group I Insured Distribution Amount": With respect to any Payment Date, the sum of (i) Group I Insured Interest Distribution Amount for such Payment Date and (ii) the Group I Insured Principal Distribution Amount for such Payment Date. "Group I Insured Interest Distribution Amount": With respect to any Payment Date, the sum of (i) the Class A-1 Interest Distribution Amount, (ii) the Class A-2 Interest Distribution Amount, (iii) the Class A-3 Interest Distribution Amount, (iv) the Class A-4 Interest Distribution Amount, (v) the Class A-5 Interest Distribution Amount, (vi) the Class A-1 Interest Carry-Forward Amount, (vii) the Class A-2 Interest Carry-Forward Amount, (viii) the Class A-3 Interest Carry-Forward Amount, (ix) the Class A-4 Interest Carry-Forward Amount and (x) the Class A-5 Interest Carry-Forward Amount, in each case for such Payment Date. 18 "Group I Insured Payment": As of any Payment Date, the sum of (x) the Group I Shortfall Amount for such Payment Date and (y) any Preference Amounts with respect to the Group I Certificates with respect to which the affected Owners have complied with the provisions of Section 7.3(g) hereof during the related Remittance Period. "Group I Insured Principal Distribution Amount": With respect to any Payment Date, the Group I Subordination Deficit for such Payment Date. "Group I Interest Distribution Amount": As of any Payment Date, the sum of the Class A-1 Interest Distribution Amount, the Class A-2 Interest Distribution Amount, the Class A-3 Interest Distribution Amount, the Class A-4 Interest Distribution Amount and the Class A-5 Interest Distribution Amount. "Group I Interest Remittance Amount": For any Remittance Date, the amount equal to (x) the sum, without duplication, of (i) the aggregate interest portions of the payments (whether or not collected) becoming due on the Group I Mortgage Loans during the immediately preceding Remittance Period and (ii) Compensating Interest with respect to the Group I Mortgage Loans minus (y) the aggregate Master Servicing Fee due to the Master Servicer with respect to Group I Mortgage Loans for such Remittance Period to the extent not previously paid to, or withheld by, the Master Servicer. "Group I Monthly Remittance": The sum of (i) the Group I Interest Remittance Amount and the Group I Principal Remittance Amount required to be remitted to the Trustee on each Remittance Date and (ii) the amount of any Substitution Amounts and Loan Purchase Prices on deposit in the Principal and Interest Account with respect to the Group I Mortgage Loans on such Remittance Date. "Group I Mortgage Loans": The Mortgage Loans held by the Trust and assigned to Group I, as indicated on the related Mortgage Loan Schedule, as supplemented and amended from time to time. "Group I Pool Principal Balance": As of any date of determination, the aggregate Principal Balances of all of the Group I Mortgage Loans as of the close of business on such date. "Group I Premium Amount": With respect to each Payment Date, an amount equal to the product of (x) one twelfth of the Certificate Insurer Premium Rate and (y) the sum of the Certificate Principal Balances of the Class A Group I Certificates as of the close of business on the last day of the preceding Remittance Period. 19 "Group I Principal Distribution Amount": As of any Payment Date, the lesser of (A) the Group I Available Funds less the Group I Interest Distribution Amount, the Group I Trustee's Fee and the Group I Premium Amount and (B) the sum of (i) the Base Group I Principal Distribution Amount, (ii) the Group I Subordination Deficit, and (iii) the Group I Subordination Increase Amount. "Group I Principal Remittance Amount": For any Remittance Date, without duplication, the amount equal to the sum of (i) the aggregate principal portions of the payments received by the Master Servicer with respect to the Group I Mortgage Loans during the immediately preceding Remittance Period and (ii) any Prepayments, Net Proceeds (but only to the extent that such Net Proceeds do not exceed the Principal Balance of the related Mortgage Loan), in each case described in clauses (i) and (ii) only to the extent collected on the Group I Mortgage Loans during the preceding Remittance Period. "Group I Shortfall Amount": As of any Payment Date, the excess, if any, of (x) the Group I Insured Distribution Amount, as of such Payment Date over (y) the Group I Total Available Funds on deposit in the Class A Group I Distribution Account at 12 noon on the related Determination Date. "Group I Specified Subordinated Amount": As such term is defined in the Insurance and Indemnity Agreement. "Group I Stepped Down Required Subordinated Percentage": As such term is defined in the Insurance and Indemnity Agreement. "Group I Subordinated Amount": With respect to any Payment Date, the excess, if any, of (x) the Group I Pool Principal Balance as of the close of business on the last day of the preceding Remittance Period over (y) the sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance and the Class A-5 Principal Balance as of such Payment Date (after taking into account the payment on such Payment Date of the amount set forth in clause (x) of the definition of "Base Group I Principal Distribution Amount", and the Group I Subordination Deficit except for any portions thereof related to payment of Group I Insured Payments applied as payments of the Group I Principal Distribution Amount on such Payment Date or on any prior Payment Date and not previously reimbursed to the Certificate Insurer pursuant to Section 7.3 hereof). "Group I Subordination Deficiency Amount": As of any Payment Date, the excess, if any, of (i) the Group I Specified Subordinated Amount applicable to such Payment Date over (ii) the Group I Subordinated Amount applicable to such 20 Payment Date prior to taking into account the payment of any related Group I Subordination Increase Amounts on such Payment Date. "Group I Subordination Deficit": As of any Payment Date, the excess, if any, of (x) the sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance and the Class A-5 Principal Balance after taking into account the amount otherwise payable as the Group I Principal Distribution Amount on such Payment Date (i.e., the sum of (i) the Base Group I Principal Distribution Amount and (ii) the Group I Subordination Increase Amount), over (y) the Group I Pool Principal Balance as of the close of business on the last day of the preceding Remittance Period. "Group I Subordination Increase Amount": With respect to any Payment Date, the lesser of (x) the Group I Subordination Deficiency Amount as of such Payment Date and (y) the portion of the Class B Interest allocable to Group I pursuant to Section 7.3(b)(iii)(E) as of such Payment Date. "Group I Subordination Reduction Amount": With respect to any Payment Date, an amount equal to the lesser of (x) the Group I Excess Subordinated Amount and (y) the amount described in clause (x) of the definition of Base Group I Principal Distribution Amount, in each case as of such Payment Date. "Group I Total Available Funds": As of any Payment Date, the amount on deposit in the Class A Group I Distribution Account on such Payment Date after making the allocations, transfers and disbursements from the Certificate Account pursuant to Section 7.3(b) hereof on such Payment Date. The term "Group I Total Available Funds" does not include Insured Payments and does not include any amounts that cannot be distributed to the Owners of the Certificates by the Trustee as a result of proceedings under the United States Bankruptcy Code. "Group I Trustee's Fee": With respect to any Payment Date, the product of (i) one-twelfth of 0.0075% and (ii) the Group I Pool Principal Balance as of the last day of the preceding Remittance Period. "Group II": The group of Mortgage Loans that are the Group II Mortgage Loans. "Group II Allocable Losses": As defined in Section 7.8(b) hereof. "Group II Available Funds": As of any Payment Date, the amount on deposit in the Certificate Account with respect 21 to the Group II Mortgage Loans on such Payment Date after making the deposit to the Certificate Account pursuant to Section 7.3(a)(ii) hereof on such Payment Date. The term "Group II Available Funds" does not include Insured Payments and does not include any amounts that cannot be distributed to the Owners of the Certificates by the Trustee as a result of proceedings under the United States Bankruptcy Code. "Group II Certificates": Any of the Class A-5 Group II Certificates. "Group II Cumulative Net Realized Losses": As of any Payment Date, the sum of all Net Realized Losses with respect to the Group II Mortgage Loans experienced on all prior Payment Dates. "Group II Excess Subordinated Amount": With respect to any Payment Date, the excess, if any, of (x) the Group II Subordinated Amount that would apply on such Payment Date after taking into account the payment of the Group II Principal Distribution Amount on such Payment Date (except for any distributions of related Group II Subordination Reduction Amounts on such Payment Date) over (y) the Group II Specified Subordinated Amount for such Payment Date. "Group II Insured Distribution Amount": With respect to any Payment Date, the sum of (i) Group II Insured Interest Distribution Amount for such Payment Date and (ii) the Group II Insured Principal Distribution Amount for such Payment Date. "Group II Insured Interest Distribution Amount": With respect to any Payment Date, the sum of (i) the Class A-6 Interest Distribution Amount and (ii) the Class A-6 Interest Carry-Forward Amount. "Group II Insured Payment": As of any Payment Date, the sum of (x) the Group II Shortfall Amount for such Payment Date and (y) any Preference Amounts with respect to the Class A-6 Group II Certificates with respect to which the affected Owners have complied with the provisions of Section 7.3(g) hereof during the related Remittance Period. "Group II Insured Principal Distribution Amount": With respect to any Payment Date, the Group II Subordination Deficit for such Payment Date. "Group II Interest Distribution Amount": As of any Payment Date, interest accrued during the related Accrual Period at the Class A-6 Pass-Through Rate on the Class A-6 Principal Balance immediately prior to such Payment Date. 22 "Group II Interest Remittance Amount": For any Remittance Date, the amount equal to (x) the sum, without duplication, of (i) the aggregate interest portions of the payments (whether or not collected) becoming due on the Group II Mortgage Loans during the immediately preceding Remittance Period and (ii) Compensating Interest with respect to the Group II Mortgage Loans minus (y) the aggregate Master Servicing Fee due to the Master Servicer with respect to the Group II Mortgage Loans for such Remittance Period to the extent not previously paid to, or withheld by, the Master Servicer. "Group II Monthly Remittance": The sum of (i) the Group II Interest Remittance Amount and the Group II Principal Remittance Amount required to be remitted to the Trustee on each Remittance Date and (ii) the amount of any Substitution Amounts and Loan Purchase Prices on deposit in the Principal and Interest Account with respect to the Group II Mortgage Loans on such Remittance Date. "Group II Mortgage Loans": The Mortgage Loans held by the Trust and assigned to Group II, as indicated on the related Mortgage Loan Schedule, as supplemented and amended from time to time. "Group II Pool Principal Balance": As of any date of determination, the aggregate Principal Balances of all of the Group II Mortgage Loans as of the close of business on such date. "Group II Premium Amount": With respect to each Payment Date, an amount equal to the product of (x) one twelfth of the Certificate Insurer Premium Rate and (y) the Certificate Principal Balance of the Class A-6 Group II Certificates as of the close of business on the last day of the preceding Remittance Period. "Group II Principal Distribution Amount": As of any Payment Date, the lesser of (A) the Group II Available Funds less the Group II Interest Distribution Amount, the Group II Trustee's Fee and the Group II Premium Amount and (B) the sum of (i) the Base Group II Principal Distribution Amount, (ii) the Group II Subordination Deficit, and (iii) the Group II Subordination Increase Amount in each case for such Payment Date. "Group II Principal Remittance Amount": For any Remittance Date, without duplication, the amount equal to the sum of (i) the aggregate principal portions of the payments received by the Master Servicer with respect to the Group II Mortgage Loans during the immediately preceding Remittance Period and (ii) any Prepayments, Net Proceeds (but only to the extent that such Net Proceeds do not exceed the Principal 23 Balance of the related Mortgage Loan), in each case described in clauses (i) and (ii) only to the extent collected on the Group II Mortgage Loans during the preceding Remittance Period. "Group II Shortfall Amount": As of any Payment Date, the excess, if any, of (x) the Group II Insured Distribution Amount, as of such Payment Date, over (y) the Group II Total Available Funds on deposit in the Class A-6 Group II Distribution Account at 12 noon on the related Determination Date. "Group II Specified Subordinated Amount": As such term is defined in the Insurance and Indemnity Agreements. "Group II Stepped Down Required Subordinated Percentage": As such term is defined in the Insurance and Indemnity Agreements. "Group II Subordinated Amount": With respect to any Payment Date, the excess, if any, of (x) the Group II Pool Principal Balance as of the close of business on the last day of the preceding Remittance Period over (y) the Class A-6 Group II Principal Balance as of such Payment Date (after taking into account the payment on such Payment Date of the amount set forth in clause (x) of the definition of "Base Group II Principal Distribution Amount", and the Group II Subordination Deficit except for any portion thereof related to payment of Group II Insured Payments applied as payments of the Group II Principal Distribution Amount on such Payment Date or on any prior Payment Date and not previously reimbursed to the Certificate Insurer pursuant to Section 7.3 hereof). "Group II Subordination Deficiency Amount": As of any Payment Date, the excess, if any, of (i) the Group II Specified Subordinated Amount applicable to such Payment Date over (ii) the Group II Subordinated Amount applicable to such Payment Date prior to taking into account the payment of any related Group II Subordination Increase Amounts on such Payment Date. "Group II Subordination Deficit": As of any Payment Date, the excess, if any, of (x) the Class A-6 Group II Principal Balance after taking into account the amount otherwise payable as the Group II Principal Distribution Amount on such Payment Date (i.e., the sum of (i) the Base Group II Principal Distribution Amount and (ii) the Group II Subordination Increase Amount), over (y) the Group II Pool Principal Balance as of the close of business on the last day of the preceding Remittance Period. 24 "Group II Subordination Increase Amount": With respect to any Payment Date, the lesser of (x) the Group II Subordination Deficiency Amount as of such Payment Date and (y) the portion of the Class B Interest allocable to Group II pursuant to Section 7.3(b)(iii)(E) as of such Payment Date. "Group II Subordination Reduction Amount": With respect to any Payment Date, an amount equal to the lesser of (x) the Group II Excess Subordinated Amount for such Payment Date and (y) the amount described in clause (x) of the definition of Base Group II Principal Distribution Amount for such Payment Date. "Group II Total Available Funds": As of any Payment Date, the amount on deposit in the Class A Group II Distribution Account on such Payment Date after making the allocations, transfers and disbursements from the Certificate Account pursuant to Section 7.3(b) hereof on such Payment Date. The term "Group II Total Available Funds" does not include Insured Payments and does not include any amounts that cannot be distributed to the Owners of the Certificates by the Trustee as a result of proceedings under the United States Bankruptcy Code. "Group II Trustee's Fee": With respect to any Payment Date, the product of (i) one-twelfth of 0.0075% and (ii) the Group II Pool Principal Balance as of the last day of the preceding Remittance Period. "Highest Lawful Rate": As defined in Section 12.13. "Insurance and Indemnity Agreement": The Insurance and Indemnity Agreement dated as of May 1, 1997 among the Certificate Insurer, the Seller and the Transferor. "Indemnification Agreement": The Indemnification Agreement dated as of May 22, 1997 among the Seller, the Master Servicer, the Transferor, the Underwriters and the Certificate Insurer. "Insurance Policy": Any hazard or title insurance policy relating to a Mortgage Loan. "Insurance Proceeds": The proceeds of any Insurance Policy relating to a Mortgage Loan, a Property or an REO Property, net of proceeds to be applied to the repair of the Property or released to the Mortgagor and net of expenses reimbursable therefrom, but excluding any Insured Payment. "Insured Distribution Amount": The Group I Insured Distribution Amount or the Group II Insured Distribution Amount, as the case may be. 25 "Insured Payment": The Group I Insured Payment or the Group II Insured Payment, as the case may be. "Interest Advance": As defined in Section 7.9(a) hereof. "Interest Advance Reimbursement Amount": As defined in Section 7.9(b) hereof. "Interest Determination Date": With respect to any Accrual Period for the Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the second London Business Day preceding the first day of such Accrual Period. "Late Payment Rate": As defined in the Insurance and Indemnity Agreement. "LIBOR": With respect to any Accrual Period for the Class A-1 Group I Certificates or the Class A-6 Group II Certificates, the rate determined by the Trustee on the related Interest Determination Date on the basis of the offered rates of the Reference Banks for one-month U.S. dollar deposits, as such rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination Date. On each Interest Determination Date, LIBOR for the related Accrual Period will be established by the Trustee as follows: (i) If on such Interest Determination Date two or more Reference Banks provide such offered quotations, LIBOR for the related Accrual Period shall be the arithmetic mean of such offered quotations (rounded upwards if necessary to the nearest whole multiple of 1/16%). (ii) If on such Interest Determination Date fewer than two Reference Banks provide such offered quotations, LIBOR for the related Accrual Period shall be the higher of (i) LIBOR as determined on the previous Interest Determination Date and (ii) the Reserve Interest Rate. "Liquidated Loan": As to any Payment Date, (i) any Mortgage Loan as to which the Master Servicer has determined, in accordance with the servicing procedures specified herein, during the related Remittance Period that all Liquidation Proceeds which it expects to recover from or on account of such Mortgage Loan have been recovered or (ii) any Mortgage Loan as to which the related REO Property has been held by the Trust for 270 days. Any such determination shall be evidenced by an Officer's Certificate in the form of Exhibit I to this Agreement. 26 "Liquidation Expenses": Expenses which are incurred by the Master Servicer in connection with the liquidation of any defaulted Mortgage Loan, such expenses, including, without limitation, legal fees and expenses, and any unreimbursed Servicing Advances expended by the Master Servicer pursuant to Sections 10.9(b) and 10.13 of this Agreement with respect to the related Mortgage Loan. "Liquidation Proceeds": With respect to any Liquidated Loan, any amounts (including the proceeds of any Insurance Policy) recovered by the Master Servicer in connection with such Liquidated Loan, whether through trustee's sale, foreclosure sale or otherwise, and including, without limitation, sale proceeds received upon the sale of REO Property. "Loan Purchase Price": With respect to any Mortgage Loan purchased from the Trust on a Remittance Date pursuant to Sections 3.2, 3.3, 3.4, or 10.13(f) hereof, an amount equal to the Principal Balance of such Mortgage Loan as of the date of purchase (after giving effect to the related Monthly Remittance remitted by the Master Servicer on such Remittance Date), plus interest on the outstanding Principal Balance thereof as of the beginning of the preceding Remittance Period computed at the related Coupon Rate less the rate at which the Master Servicing Fee is calculated, plus the aggregate amounts of (i) all unreimbursed Reimbursable Advances and (ii) all Delinquency Advances which the Master Servicer has theretofore failed to remit with respect to such Mortgage Loan. "Loan-to-Value Ratio": As of any particular date (i) with respect to any First Mortgage Loan, the ratio of (A) the original principal balance of the Note relating to such First Mortgage Loan to (B) the Appraised Value and (ii) with respect to any Second Mortgage Loan, the ratio of (A) an amount equal to the sum of (a) the remaining principal balance of the Senior Lien note relating to such First Mortgage Loan and (b) the original principal balance of the Note relating to such Second Mortgage Loan to (B) the Appraised Value as of the date of origination of such Second Mortgage Loan. "London Business Day": A day on which banks are open for dealing in foreign currency and exchange in London and New York City. "Lower Tier Distribution Amount": As of any Payment Date, the sum of (i) the Group I Available Funds and (ii) the Group II Available Funds. "Lower-Tier Interests": As defined in Section 2.8(c) hereof. 27 "Lower-Tier REMIC": The segregated pool of assets held by the Trust consisting of the Mortgage Loans. "Lower Tier Required Subordinate Amount": With respect to any Distribution Date, an amount equal to the product of (a) the product of (i) 0.50 and (ii) the sum of the principal balances of LT-6, LT-8 and LT-9 divided by the Pool Principal Balance then outstanding and (b) the sum of the Group I and Group II Specified Subordinated Amounts. "Lower Tier Subordinated Amount": As of any date of determination, (i) 0.50 times the sum of the principal balances of LT-6, LT-8, and LT-9 minus (ii) the sum of the principal balances of LT-6 and LT-8, in each case as of such date of determination. "Master Servicer": Access Financial Lending Corp., a Delaware corporation. "Master Servicer's Trust Receipt": The Master Servicer's trust receipt in the form set forth in Exhibit F hereto. "Master Servicing Fee": With respect to any Mortgage Loan, an amount retained by the Master Servicer from collections of interest on the Mortgage Loans as compensation for its servicing duties relating to such Mortgage Loan pursuant to Section 10.15 hereof and equal to 0.45% per annum of the then outstanding principal amount of such Mortgage Loan as of the first day of each Remittance Period payable on a monthly basis; provided, that if the Seller is no longer the Master Servicer, such rate may be increased to a rate not in excess of 0.50% and if the Trustee is acting as Master Servicer such rate shall be equal to 0.50%. "Maximum LT-9 Interest Deferral Amount": With respect to any Distribution Date, the excess of (i) accrued interest at the stated interest rate applicable to LT-9 for such Distribution Date on a balance equal to the principal balance of LT-9 minus the Lower Tier Subordinated Amount, in each case for such Distribution Date over (ii) interest on LT-6 and LT-8 for such Distribution Date. "Monthly Remittance": The Group I Monthly Remittance or the Group II Monthly Remittance, as the case may be. "Moody's": Moody's Investors Service, Inc. "Mortgage": The mortgage, deed of trust or other instrument creating a first or second lien on an estate in fee simple interest in real property securing a Note. "Mortgage Loan": Each of the mortgage loans sold by the Seller to the Trust on the Startup Day, together with any 28 Qualified Replacement Mortgages substituted therefor by the Seller in accordance with Section 3.2, 3.3 or 3.4 hereof as from time to time are held as a part of the Trust Estate, the Mortgage Loans originally so held being identified in the related Mortgage Loan Schedule. The term "Mortgage Loan" includes the terms "First Mortgage Loan" and "Second Mortgage Loan". The term "Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to a foreclosure or which relates to a Property which is REO Property prior to such Property's disposition by the Trust. Any mortgage loan which, although intended by the parties hereto to have been, and which purportedly was, transferred and assigned to the Trust by the Seller, in fact was not transferred and assigned to the Trust for any reason whatsoever, including, without limitation, the incorrectness of the statement set forth in Section 3.3(b)(i) hereof with respect to such mortgage loan, shall nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement. "Mortgage Loan Group": Each of Group I and Group II. "Mortgage Loan Schedules": The schedules of Mortgage Loans, separated by Mortgage Loan Group and by Sub-Servicer, listing each Mortgage Loan conveyed on the Startup Day and setting forth as to each Mortgage Loan the following information: (i) the name of the Mortgagor, (ii) the street address of the Property, (iii) the town or city in which the Property is located, (iv) the Principal Balance as of the Cut-Off Date, (v) the account number, (vi) the original principal amount, (vii) the current Coupon Rate, (viii) the first date on which a scheduled monthly payment is due under the Note, (ix) the original stated maturity date of the Note, (x) the State in which the Property is located, (xi) the zip code of the Property, (xii) the Loan-to-Value Ratio, (xiii) the Loan-to-Value Ratio of any Second Mortgage Loan calculated by disregarding the amount described in clause (ii)(a) of the definition of "Loan-to-Value Ratio", (xiv) whether the Property is owner-occupied or non-owner occupied, (xv) whether the Property is a single family residence, two-to-four family residence, a condominium, a townhouse or a rowhouse and (xvi) if such Mortgage Loan is a "balloon loan", the amortization terms (e.g., 30 year amortization due in 15 years). "Mortgagor": The obligor on a Note. "Net Insurance Proceeds": As to any Mortgage Loan, Insurance Proceeds net of unreimbursed Reimbursable Advances relating thereto. In no event shall Net Insurance Proceeds with respect to any Mortgage Loan be less than zero. "Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds net of unreimbursed Reimbursable 29 Advances relating to such Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less than zero. "Net Pool Balance": As of any Payment Date, the sum of the Pool Principal Balance less the sum of the principal balances of the Class LT-6, LT-8, and LT-9 Certificates. "Net Proceeds": The sum of, without duplication, Net Liquidation Proceeds, Net Insurance Proceeds and Net Released Mortgage Property Proceeds. "Net Realized Loss": With respect to any Liquidated Loan the excess, if any, of (x) the Principal Balance thereof at the time the Mortgage Loan became a Liquidated Loan over (y) the related Net Liquidation Proceeds. "Net Released Mortgage Property Proceeds": As to any Mortgage Loan, Released Mortgage Property Proceeds net of unreimbursed Reimbursable Advances relating thereto. In no event shall Net Released Mortgage Property Proceeds with respect to any Mortgage Loan be less than zero. "Net Weighted Average Coupon Rate": With respect to any Mortgage Loan Group and Remittance Period, the weighted average Coupon Rates (weighted by Principal Balances) of the related Mortgage Loans, calculated at the opening of business on the first day of such Remittance Period, less the rate at which the Master Servicing Fee is then calculated and less the Trustee Fee and Certificate Insurer Premium Rate. "Nonrecoverable Advances": With respect to any Mortgage Loan, any Servicing Advance or Delinquency Advance proposed to be made by the Master Servicer in respect of a Mortgage Loan or REO Property which, in the good faith business judgment of the Master Servicer, would not be ultimately recoverable from late collections, Insurance Proceeds, Liquidation Proceeds or Released Mortgage Property Proceeds on such Mortgage Loan or REO Property or otherwise. Notwithstanding anything to the contrary contained in this Agreement, no Delinquency Advance or Servicing Advance shall be required to be made by the Master Servicer if such Delinquency Advance or Servicing Advance would, if made, constitute a Nonrecoverable Advance. "Note": The note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan. "Officer's Certificate": A certificate signed by any Authorized Officer of any Person delivering such certificate and delivered to the Trustee. 30 "Operative Documents": This Agreement, the Sale Agreement, the Insurance and Indemnity Agreement, the Underwriting Agreement, and the Indemnification Agreement. "Original Group I Pool Principal Balance": The aggregate Principal Balances of all Group I Mortgage Loans as of the Cut-Off Date, i.e., $89,156,666.34. "Original Group II Pool Principal Balance": The aggregate Principal Balances of all Group II Mortgage Loans as of the Cut-Off Date, i.e., $96,040,213.85. "Original Pool Principal Balance": The aggregate Principal Balances of all Mortgage Loans as of the Cut-Off Date, i.e., $185,196,880.19. "Original Principal Balance": With respect to each Note, the outstanding principal amount of such Note as of the Cut-Off Date. "Outstanding": With respect to all Certificates of a Class, as of any date of determination, all such Certificates theretofore executed and delivered hereunder except: (i) Certificates theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Certificates or portions thereof for which full and final payment of money in the necessary amount has been theretofore deposited with the Trustee in trust for the Owners of such Certificates; (iii) Certificates in exchange for or in lieu of which other Certificates have been executed and delivered pursuant to this Agreement, unless proof satisfactory to the Trustee is presented that any such Certificates are held by a bona fide purchaser; (iv) Certificates alleged to have been destroyed, lost or stolen for which replacement Certificates have been issued as provided for in Section 5.5 hereof; and (v) With respect to voting rights, any Class A Certificates held by the Seller, the Master Servicer, the Transferor or any affiliate of any thereof, unless all other Class A Certificates have been paid in full. Any Certificates in which the Certificate Insurer has an interest pursuant to its right of subrogation shall be "Outstanding Certificates". 31 "Owner": The Person in whose name a Certificate is registered in the Register. "Payment Date": The 18th day of each month (or, if such day is not a Business Day, the next following Business Day), commencing in the month following the Startup Day. "Percentage Interest": As to any Class A Certificate or Class B Certificate, that percentage, expressed as a fraction, the numerator of which is the original principal balance of such Certificate as of the Cut-Off Date and the denominator of which is the original principal balance of all Certificates of the same Class as of the Cut-Off Date; as to any Residual Certificate, that Percentage Interest set forth on such Residual Certificate. "Person": Any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pool Delinquency Rate": With respect to any Remittance Period, the fraction, expressed as a percentage, equal to (x) the aggregate Principal Balances of all Mortgage Loans 60 or more days Delinquent as of the close of business on the last day of such Remittance Period over (y) the Pool Principal Balance as of the close of business on the last day of such Remittance Period. "Pool Principal Balance": As to any Payment Date, the aggregate Principal Balance of the Mortgage Loans as of the close of business on the last day of the related Remittance Period. "Pool Rolling Three Month Delinquency Rate": As of any Payment Date the fraction, expressed as a percentage, equal to the average of the Pool Delinquency Rates for each of the three (or one and two, in the case of the first and second Payment Dates), immediately preceding Remittance Periods. "Preference Amount": As to any Payment Date: (i) with respect to the Class A-1 Group I Certificates, any amounts included in previous distributions to Class A-1 Group I Certificateholders of Class A-1 Distribution Amounts (exclusive of Group I Insured Payments) which are recovered from such Class A-1 Group I Certificateholders as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction and which have not theretofore been repaid to such Class A-1 Group I Certificateholders provided such 32 Class A-1 Group I Certificateholders have complied with the provisions of Section 7.3(f); (ii) with respect to the Class A-2 Group I Certificates, any amounts included in previous distributions to Class A-2 Group I Certificateholders of Class A-2 Distribution Amounts (exclusive of Group I Insured Payments) which are recovered from such Class A-2 Group I Certificateholders as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction and which have not heretofore been repaid to such Class A-2 Group I Certificateholders provided such Class A-2 Group I Certificateholders have complied with the provisions of Section 7.3(f); (iii) with respect to the Class A-3 Group I Certificates, any amounts included in previous distributions to Class A-3 Group I Certificateholders of Class A-3 Distribution Amounts (exclusive of Group I Insured Payments) which are recovered from such Class A-3 Group I Certificateholders as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction and which have not theretofore been repaid to such Class A-3 Group I Certificateholders provided such Class A-3 Group I Certificateholders have complied with the provisions of Section 7.3(f); (iv) with respect to the Class A-4 Group I Certificates, any amounts included in previous distributions to Class A-4 Group I Certificateholders of Class A-4 Distribution Amounts (exclusive of Group I Insured Payments) which are recovered from such Class A-4 Group I Certificateholders as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction and which have not heretofore been repaid to such Class A-4 Group I Certificateholders provided such Class A-4 Group I Certificateholders have complied with the provisions of Section 7.3(f); (v) with respect to the Class A-5 Group I Certificates, any amounts included in previous distributions to Class A-5 Group I Certificateholders of Class A-5 Distribution Amounts (exclusive of Group I Insured Payments) which are recovered from such Class A-5 Group I Certificateholders as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction and which have not heretofore been repaid to such Class A-5 Group I Certificateholders provided 33 such Class A-5 Group I Certificateholders have complied with the provisions of Section 7.3(f); and (vi) with respect to the Class A-6 Group II Certificates, any amounts included in previous distributions to Class A-6 Group II Certificateholders of Class A-6 Distribution Amounts (exclusive of Group II Insured Payments and any Supplemental Interest Payment Amounts) which are recovered from such Class A-6 Group II Certificateholders as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction and which have not heretofore been repaid to such Class A-6 Group II Certificateholders provided such Class A-6 Group II Certificateholders have complied with the provisions of Section 7.3(f). "Premium Amount": The Group I Premium Amount or the Group II Premium Amount, as the case may be. "Prepayment": Any payment of principal of a Mortgage Loan by a Mortgagor which is received by the Master Servicer in advance of the scheduled due date for the payment of such principal. "Prepayment Interest Shortfalls": With respect to each Group, the sum of the difference (caused by any Prepayments during a calendar month), if any, for each Mortgage Loan in the related Group, between (i) the interest collected by the Master Servicer from the Mortgagor during a calendar month, and (ii) the full month's interest at the related Coupon Rate. "Preservation Expenses": Expenditures made by the Master Servicer in connection with a foreclosed Mortgage Loan prior to the liquidation thereof, including, without limitation, expenditures for real estate property taxes, hazard insurance premiums, property restoration or preservation. Preservation Expenses shall constitute "Servicing Advances" for all purposes of this Agreement. "Principal and Interest Account": The principal and interest account created by the Master Servicer pursuant to Section 10.8 hereof. "Principal Balance": As of any date of calculation and with respect to each Mortgage Loan, the Original Principal Balance thereof less any related Principal Remittance Amounts relating to such Mortgage Loan included in previous related Monthly Remittances and, if applicable, the related Monthly Remittance as of such date; provided that the Principal Balance for any Mortgage Loan which has become a Liquidated 34 Loan shall be zero following the date on which such Mortgage Loan becomes a Liquidated Loan, and at all times thereafter. "Principal Distribution Amount": The Class A-1 Principal Distribution Amount, the Class A-2 Principal Distribution Amount, the Class A-3 Principal Distribution Amount, the Class A-4 Principal Distribution Amount, the Class A-5 Principal Distribution Amount or the Class A-6 Principal Distribution Amount, as the case may be. "Principal Remittance Amounts": The Group I Principal Remittance Amount or the Group II Principal Remittance Amount, as the case may be. "Prohibited Transaction": Has the meaning as defined in Section 860F of the Code. "Property": The underlying real property, including the improvements thereon, securing a Mortgage Loan. "Prospectus": The Prospectus dated November 7, 1996 relating to Mortgage Loan Asset Backed Securities, issuable in Series. "Prospectus Supplement": The Prospectus Supplement dated May 22, 1997 relating to the Class A Certificates. "Qualified Liquidation": "Qualified Liquidation" shall have the meaning set forth from time to time in the definition thereof at Section 860F(a)(4) of the Code (or any successor statute thereto) and applicable to the Trust. "Qualified Mortgage": "Qualified mortgage" shall have the meaning set forth from time to time in the definition thereof at Section 860G(a)(3) of the Code (or any successor statute thereto) and applicable to the Trust. "Qualified Replacement Mortgage": A Mortgage Loan substituted for another by the Seller pursuant to Section 3.2, 3.3 or 3.4 hereof, which (i) has a fixed rate of interest if the Mortgage Loan being replaced is a Group I Mortgage Loan and has a variable rate of interest if the Mortgage Loan being replaced is a Group II Mortgage Loan, (ii) has a Coupon Rate at least equal to the Coupon Rate of the Mortgage Loan being replaced (which, in the case of a Group II Mortgage Loan, shall be deemed to mean the same index and a margin equal to or greater than the margin applicable to the Mortgage Loan being replaced), (iii) is of the same or better property type and the same or better occupancy status as the replaced Mortgage Loan, (iv) shall mature no later than the latest maturity date of any Mortgage Loan then held in the related Mortgage Loan Group (v) has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the Loan-to-Value 35 Ratio of the replaced Mortgage Loan at such time, (vi) shall be a First Mortgage Loan if the Mortgage Loan being replaced was a First Mortgage Loan, and shall have the same or higher lien priority if the Mortgage Loan being replaced was a junior Mortgage Loan, (vii) has a Principal Balance as of the related Replacement Cut-Off Date equal to or less than the Principal Balance of the replaced Mortgage Loan as of such Replacement Cut-Off Date, (viii) shall be of the same or higher credit quality classification (determined in accordance with the Seller's underwriting guidelines) as the Mortgage Loan which such Qualified Replacement Mortgage replaces, (ix) satisfies the criteria set forth from time to time in the definition of "qualified replacement mortgage" at Section 860G(a)(4) of the Code (or any successor statute thereto) and applicable to the Trust, and (x) complies as of the date of substitution with each representation and warranty set forth in Section 3.2(b) hereof, all as evidenced by any Officer's Certificate of the Seller delivered to the Trustee prior to any such substitution. In the event that one or more mortgage loans are proposed to be substituted for one or more Mortgage Loans, the Certificate Insurer may allow the foregoing tests to be met on a weighted average basis or other aggregate basis acceptable to the Certificate Insurer, as evidenced by a written approval delivered to the Trustee by the Certificate Insurer, except that the requirement of clause (ix) hereof must be satisfied as to each Qualified Replacement Mortgage. "Rating Agency": Any nationally recognized statistical credit rating agency, or its successor, that rates any Certificates at the request of the Seller at the time of the initial issuance of the Certificates. If such agency or a successor is no longer in existence, "Rating Agency" shall be such statistical credit rating agency, or other comparable Person, designated by the Seller, notice of which designation shall be given to the Trustee, the Certificate Insurer and the Master Servicer. References herein to the highest rating category of a rating agency shall mean AAA (with respect to long-term ratings) or A-1+ (with respect to short-term ratings), in the case of S&P, and Aaa (with respect to long-term ratings) or P-1 (with respect to short-term ratings), in the case of Moody's, and in the case of any other Rating Agency shall mean such equivalent ratings. "Record Date": With respect to the Class A-2, Class A-3, Class A-4 and Class A-5 Certificates and any Payment Date, the close of business on the first Business Day of the calendar month in which such Payment Date occurs. With respect to the Class A-1 and Class A-6 Certificates and any Payment Date, the close of business on the Business Day immediately preceding such Payment Date. "Reference Banks": Bankers Trust Company, Barclay's Bank PLC, The Bank of Tokyo and National Westminster Bank PLC; 36 provided that if any of the foregoing banks are not suitable to serve as a Reference Bank, then any leading banks selected by the Seller which are engaged in transactions in Eurodollar deposits in the international Eurocurrency market (i) with an established place of business in London, (ii) not controlling, under the control of or under common control with the Seller or any affiliate thereof, (iii) whose quotations appear on the Reuters Screen LIBO Page on the relevant Interest Determination Date and (iv) which have been designated as such by the Trustee. "Register": The register maintained by the Trustee in accordance with Section 5.4 hereof, in which the names of the Owners are set forth. "Registration Statement": The Seller's Registration Statement number 333-07837, filed on Form S-3. "Reimbursable Advances": As to any Mortgage Loan, all Delinquency Advances and Servicing Advances made by the Master Servicer with respect thereto, to the extent not previously paid to or withheld by the Master Servicer. "Reimbursement Amount": With respect to any Class of Class A Certificates and for any Payment Date, the sum of (x)(i) all related Insured Payments previously received by the Trustee not previously repaid to the Certificate Insurer pursuant to Section 7.3(b)(iii)(C), together with interest accrued on each such related Insured Payment not previously repaid calculated from the date the Trustee received the related Insured Payment at the Late Payment Rate and (y) any other amounts then due and owing to the Certificate Insurer relating to such Class A Certificates under the Insurance and Indemnity Agreement. "Released Mortgaged Property Proceeds": Proceeds received in connection with a taking of a Property by condemnation or the exercise of eminent domain or in connection with a release of part of the Property. "Relief Act Shortfalls": With respect to each Group, the aggregate difference (caused by application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended) between (i) the interest collected by the Master Servicer from the related Mortgagor during a calendar month and (ii) the full month's interest at the related Coupon Rate. "Remaining Group I Principal Distribution Amount": As of any Payment Date, the Group I Principal Distribution Amount less the Class A-5 Lockout Distribution Amount. "REMIC": A "real estate mortgage investment conduit" within the meaning of Section 860D of the Code. 37 "REMIC Provisions": 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 and rulings promulgated thereunder, as the foregoing may be in effect from time to time. "REMIC Trust": The segregated pool of assets consisting of the Trust Estate except for the Supplemental Interest Payment Account. "Remittance Date": Any date on which the Master Servicer is required to remit moneys on deposit in a Principal and Interest Account to the Trustee, which shall be the 13th day of each month, commencing in the month following the Startup Day or if such day is not a Business Day the following Business Day. "Remittance Period": The period (inclusive) beginning at the opening of business on the second day of the calendar month immediately preceding the calendar month in which a Remittance Date occurs and ending at the close of business on the first day of the calendar month in which such Remittance Date occurs. "REO Property": A Property acquired by the Master Servicer in the name of and on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan. "Replacement Cut-Off Date": With respect to any Qualified Replacement Mortgage, the second day of the calendar month in which such Qualified Replacement Mortgage is conveyed to the Trust. "Representation Letter": Letters to, or agreements with, the Depository to effectuate a book entry system with respect to the Class A Certificates registered in the Register under the nominee name of the Depository. "Representative": Prudential Securities Incorporated. "Reserve Interest Rate": With respect to any Interest Determination Date, the rate per annum that the Trustee determines to be either (i) the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates which three New York City banks selected by the Trustee are quoting on the relevant Interest Determination Date to the principal London offices of leading banks in the London interbank market or (ii) in the event that the Trustee can determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate 38 which three New York City banks selected by the Trustee are quoting on such Interest Determination Date to leading European banks. "Residual Certificate": Any Class RL Certificate or any Class RU Certificate. "Rolling Delinquency Percentage": For any Distribution Date, the average of the Delinquency Percentages for the Mortgage Loans as of the last day of each of the six (or 1, 2, 3, 4, and 5 in the case of the first five Payment Dates, as applicable) most recently ended Remittance Periods. "Rolling Loss Percentage": As of any Distribution Date commencing on the thirteenth Payment Date, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of Net Realized Losses incurred during the preceding twelve calendar months, and the denominator of which is the aggregate Pool Principal Balance as of the first day of the twelfth preceding calendar month. "S&P": Standard & Poor's, a division of The McGraw Hill Companies. "Sale Agreement": The Purchase and Sale Agreement dated as of May 1, 1997 between the Seller and the Transferor. "Second Mortgage Loan": A Mortgage Loan which constitutes a second priority mortgage lien with respect to the related Property, as identified in the Mortgage Loan Schedules. "Seller": Access Financial Lending Corp., a Delaware corporation. "Seller Optional Termination Date": The first Remittance Date on which the then-outstanding aggregate Principal Balances of the Mortgage Loans is ten percent or less of the Original Pool Principal Balance. "Senior Lien": With respect to any Second Mortgage Loan, the mortgage loan relating to the corresponding Property having a first priority lien. "Servicing Advance": As defined in Sections 10.9(b) and 10.13 hereof. "Servicing Standards": As defined in Section 10.2 hereof. "Startup Day": May 29, 1997. 39 "Step-Down Cumulative Loss Test": As such term is defined in the Insurance and Indemnity Agreement. "Step-Down Rolling Delinquency Test": As such term is defined in the Insurance and Indemnity Agreement. "Step-Down Rolling Loss Test": As such term is defined in the Insurance and Indemnity Agreement. "Step-Down Trigger": For any Payment Date after the 30th Payment Date, the Step-Down Trigger will have occurred if each of the Step-Down Cumulative Loss Test, the Step-Down Rolling Delinquency Test and the Step-Down Rolling Loss Test is met. In no event will the Step-Down Trigger be deemed to have occurred for the 30th Payment Date or any preceding Payment Date. "Step-Up Cumulative Loss Test": As such term is defined in the Insurance and Indemnity Agreement. "Step-Up Rolling Delinquency Test": As such term is defined in the Insurance and Indemnity Agreement. "Step-Up Rolling Loss Test": As such term is defined in the Insurance and Indemnity Agreement. "Step-Up Trigger": For any Payment Date, the Step- Up Trigger will have occurred if any one of the Step-Up Cumulative Loss Test, the Step-Up Rolling Delinquency Test or the Step-Up Rolling Loss Test is met. "Sub-Servicer": Any Person with whom the Master Servicer has entered into a Sub-Servicing Agreement and who satisfies the requirements set forth in Section 10.3 hereof in respect of the qualification of a Sub-Servicer. "Sub-Servicing Agreement": The written contract between the Master Servicer and any Sub-Servicer relating to servicing and/or administration of certain Mortgage Loans as permitted by Section 10.3 hereof. "Subordination Deficiency Amount": The Group I Subordination Deficiency Amount or the Group II Subordination Deficiency Amount, as the case may be. "Substitution Amount": As defined in Section 3.2(a) hereof. "Supplemental Certificates": The Class B-S Certificates. "Supplemental Interest Payment Account": The Supplemental Interest Payment Account established in 40 accordance with Section 7.9(a) hereof and maintained by the Trustee. "Supplemental Interest Payment Amount": As defined in Section 7.9(a) hereof. "Supplemental Interest Trust": The Access Financial Supplemental Interest Trust 1997-2 created pursuant to Section 7.9(a) hereof. "Tax Matters Person": The tax matters person, as defined in Section 1.860F-4(d) of the Treasury Regulations, appointed with respect to the Trust pursuant to Section 12.17 hereof. "Transferor": Access Financial Receivables Corp., a Delaware corporation. "Trigger Event": An Event of Default described in clauses (viii), (ix) or (x) of Section 11.1. "Trust": Access Financial Mortgage Loan Trust 1997-2, the trust created under Article II of this Agreement. "Trust Estate": Collectively, all money, instruments, and other property to the extent such money, instruments and other property, are subject hereto or intended to be held in trust for the benefit of the Owners, including all proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii) such amounts, including Eligible Investments, as from time to time may be held by the Trustee in any Account, and by the Master Servicer in the Principal and Interest Account or otherwise held by the Master Servicer in trust for the Owners (except as otherwise provided herein), (iii) any Property, the ownership of which has been effected in the name of the Trust as a result of foreclosure or acceptance by the Master Servicer of a deed in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) the rights, if any, of the Trust in any Insurance Policies relating to the Mortgage Loans, (v) Net Liquidation Proceeds (but only to the extent that such Net Liquidation Proceeds do not exceed the Principal Balance of the related Mortgage Loan plus accrued and unpaid interest on such Mortgage Loan) with respect to any Liquidated Loan, (vi) Released Mortgaged Property Proceeds and (vii) the Certificate Insurance Policy. "Trustee": The Chase Manhattan Bank, a New York banking corporation, located on the date of execution of this Agreement at 450 West 33rd Street, 15th Floor, New York, NY 10001, not in its individual capacity but solely as Trustee under this Agreement, and any successor hereunder. 41 "Trustee's Fee": The total of the Group I Trustee's Fee and the Group II Trustee's Fee. "Underwriters": Prudential Securities Incorporated and J.P. Morgan Securities Inc. "Underwriting Agreement": The Underwriting Agreement dated May 22, 1997 among the Seller and the Underwriters. "Unregistered Certificates": Certificates which are not registered as evidenced by inclusion in the Register. "Upper-Tier REMIC": The segregated pool of assets held by the Trust consisting of the Lower Tier Interests (except for the RL Lower-Tier Interest, as set forth in the chart in Section 2.8(c) hereof), the Distribution Accounts and the Certificate Insurance Policy. Section 1.2. Use of Words and Phrases. "Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this Agreement as a whole and not solely to the particular section of this Agreement in which any such word is used. The definitions set forth in Section 1.1 hereof include both the singular and the plural. Whenever used in this Agreement, any pronoun shall be deemed to include both singular and plural and to cover all genders. Section 1.3. Captions; Table of Contents. The captions or headings in this Agreement and the Table of Contents are for convenience only and in no way define, limit or describe the scope and intent of any provisions of this Agreement. Section 1.4. Opinions. Each opinion with respect to the validity, binding nature and enforceability of documents or Certificates may be qualified to the extent that the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law) and may state that no opinion is expressed on the availability of the remedy of specific enforcement, injunctive relief or any other equitable remedy. Any opinion required to be furnished by any Person hereunder must be delivered by counsel upon whose opinion the addressee of such opinion may reasonably rely, and such opinion may state that it is given in reasonable reliance upon an opinion of another, a copy of which must be attached, concerning the laws of a foreign jurisdiction. Opinions regarding REMIC matters must be furnished by special counsel to the Seller. 42 Section 1.5. Calculations. All calculations of accrued interest made pursuant to the Agreement shall be made assuming a 360-day year consisting of twelve 30-day months, except for interest on the Class A-1 Group I and Class A-6 Group II Certificates, which calculations shall be made based on the actual number of days over a 360-day year, or as otherwise specifically provided herein. ARTICLE II THE TRUST Section 2.1. Establishment of the Trust. The Seller does hereby create and establish, pursuant to the laws of the State of New York and this Agreement, the Trust, which, for convenience, shall be known as "Access Financial Mortgage Loan Trust 1997-2". The Trust shall be deemed to consist of two sub-trusts, one with respect to each Mortgage Loan Group. Section 2.2. Office. The office of the Trust shall be in care of the Trustee, 450 West 33rd Street, 15th Floor, New York, New York 10001, attn: Global Trust Services or at such other address as the Trustee may designate by notice to the Seller, the Master Servicer, the Transferor, the Certificate Insurer and the Owners. Section 2.3. Purpose and Powers. The purpose of the Trust is to engage in the following activities, and only such activities: (i) the purchase of the Mortgage Loans; (ii) the holding of the Mortgage Loans and the Trust Estate related thereto; (iii) the issuance of the Certificates; (iv) activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith, including the investment of moneys in accordance with this Agreement; and (v) such other activities as may be required in connection with conservation of the Trust Estate and distributions to the Owners; provided, however, that nothing contained herein shall be construed to permit the Trustee to take any action which would adversely affect the status of any interest held by the Trust which is intended to be treated as a REMIC. Section 2.4. Appointment of the Trustee; Declaration of Trust. The Seller hereby appoints the Trustee as trustee of the Trust effective as of the Startup Day, to have all the rights, powers and duties set forth herein. The Trustee hereby acknowledges and accepts such appointment, represents and warrants its eligibility as of the Startup Day to serve as Trustee pursuant to Section 9.8 hereof and declares that it will hold the Trust Estate in trust upon and subject to the conditions set forth herein for the benefit of the Owners. 43 Section 2.5. Expenses of the Trust. The Master Servicer shall retain its monthly aggregate Master Servicing Fees as provided in Section 10.15 herein; the Trustee's Fee shall be paid monthly as provided in Section 7.3(b)(i) hereof; and the premiums due to the Certificate Insurer shall be paid monthly as provided in Section 7.3(b)(iii)(C) hereof; all other expenses of the Trust including any fees and expenses incurred by the Trustee in connection with a termination of the Trust pursuant to Article VIII shall be submitted to the Seller for its approval, and, if so approved, shall be paid by the Seller. The reasonable fees and expenses of the Trustee's counsel in connection with the review and delivery of this Agreement and related documentation shall be due as of the Startup Day and shall be paid by the Seller. Section 2.6. Ownership of the Trust. On the Startup Day, the ownership interests in the Trust shall be transferred as set forth in Section 4.2 hereof, such transfer to be evidenced by issuance of the Certificates as described therein. Thereafter, transfer of any ownership interest shall be governed by Section 5.4 hereof. Section 2.7. Receipt of Trust Estate. The Seller hereby directs the Trustee to accept the property conveyed to it pursuant to Section 3.3 hereof in connection with the establishment of the Trust, and the Trustee hereby acknowledges receipt of such property. The Seller further directs the Trustee to issue the Certificates, to hold the Class A Certificates as transfer agent for the Depository as provided in Section 5.4, and to deliver the Class B Certificates and the Residual Certificates to the Seller. Section 2.8. Miscellaneous REMIC Provisions. (a) The Trust shall elect that the Upper-Tier REMIC and the Lower-Tier REMIC shall be treated as REMICs under Section 860D of the Code. Any inconsistencies or ambiguities in this Agreement or in the administration of the Trust shall be resolved in a manner that preserves the validity of such REMIC elections. (b) The Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II Certificates, the uncertificated right of the Supplemental Interest Account to receive the distributions described in Section 7.3(c) (the "Uncertificated Interest") are hereby designated as "regular interests" with respect to the Upper-Tier REMIC and the Class RU Certificates are hereby designated as the single class of "residual interest" with respect to the Upper-Tier REMIC. The Class LT-1, LT-2, LT-3, LT-4, LT-5, LT- 6, LT-7, LT-8 and LT-9 Certificates are hereby designated as "regular interests" with respect to the Lower-Tier REMIC and 44 the Class RL Certificates are hereby designated as the single class of "residual interest" with respect to the Lower-Tier REMIC. (c) The beneficial ownership interest of the Lower-Tier REMIC shall be evidenced by the interests (the "Lower-Tier Interests") having the characteristics and terms as follows: Original Final Class Companion Principal Interest Payment Designation Classes Balance Rate Date ----------- --------- --------- -------- ------- LT-1 A-1 $39,812,000 (1) March 18, 2012 LT-2 A-2 $21,165,000 (1) June 18, 2016 LT-3 A-3 $10,000,000 (1) October 18, 2023 LT-4 A-4 $8,175,000 (1) June 18, 2027 LT-5 A-5 $10,000,000 (1) June 18, 2027 LT-6 $2,000 (2) June 18, 2027 LT-7 A-6 $96,036,000 (3) May 18, 2027 LT-8 $2,000 (4) May 18, 2027 LT-9 $4,000 (5) June 18, 2027 RL (6) (6) June 18, 2027 (1) The Net Weighted Average Coupon Rate of the Group I Mortgage Loans, plus the Certificate Insurer Premium Rate. (2) The Weighted Average of the Class A-1, A-2, A-3, A-4 and A-5 Pass-Through Rates. (3) The Net Weighted Average Coupon Rate of the Group II Mortgage Loans, plus the Certificate Insurer Premium Rate. (4) The Class A-6 Pass-Through Rate. (5) The Net Weighted Average Coupon Rate of the Mortgage Loans, plus the Certificate Insurer Premium Rate. (6) The RL Certificate has no principal balance and does not bear interest. The Lower-Tier Interests LT-1, LT-2, LT-3, LT-4, LT-5, LT-6, LT-7, LT-8 and LT-9 shall be issued as non-certificated interests and recorded on the records of the Lower-Tier REMIC as being issued to and held by the Trustee on behalf of the Upper-Tier REMIC. On each Payment Date, the Lower Tier Distribution Amount shall be applied as principal and interest of particular Lower Tier Interests, other than the RL Certificate, in amounts corresponding to the aggregate respective amounts required to be applied as principal and interest of their related Companion Classes (as set forth above) and the Class B Certificates pursuant to the priorities set forth in section 7.3 hereof and with respect to the Lower Tier Interests LT-6, LT-8, and LT-9, (i) the Lower Tier Distribution Amount shall be applied as interest to LT-6, LT-8, and LT-9 in an amount corresponding to the interest accrued on the class principal balances of such classes at the interest rate for such class as stated above; provided, however, that amounts payable as interest in respect of 45 LT-9 shall be reduced (the "LT-9 Distribution Reduction Amount") when the Lower Tier Subordinated Amount is less than the Lower Tier Required Subordinated Amount by the lesser of (x) the amount of such difference and (y) the Maximum LT-9 Interest Deferral Amount. The LT-9 Distribution Reduction Amount will be applied to proportionately reduce the principal balances of LT-6 and LT-8; in the case of LT-6, in proportion to the amount on such Payment Date of any Group I Subordination Increase Amount, in the case of LT-8, in proportion to the amount on such Payment Date of any Group II Subordination Increase Amount; and (ii) the remainder of the Lower Tier Distribution Amount shall be applied as principal to LT-6, LT-8, and LT-9 in the following percentages: (a) 50.00% to LT-9; and (b) 50.00% to LT-6 and LT-8 in proportion to the Group I Principal Distribution Amount and the Group II Principal Distribution Amount, respectively, in each case as of such Payment Date provided that the Lower Tier Subordinated Amount is less than or equal to the Lower Tier Required Subordinated Amount. If not, 50.00% divided among LT-6, LT-8 and LT-9 such that the Lower Tier Subordinated Amount equals the Lower Tier Required Subordinated Amount. No distributions will be made on the Class RL Certificate, except that any distribution of the proceeds of the final remaining assets of the Lower Tier REMIC shall be distributed to the holder thereof upon presentation and surrender of the Class RL Certificate. (d) The Startup Day is hereby designated as the "startup day" of each REMIC within the meaning of Section 860G(a)(9) of the Code. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER, THE MASTER SERVICER AND THE TRANSFEROR; CONVEYANCE OF MORTGAGE LOANS Section 3.1. Representations and Warranties of the Seller, the Master Servicer and the Transferor. (a) The Seller hereby represents, warrants and covenants to the Master Servicer, the Transferor, the Trustee, the Certificate Insurer and to the Owners as of the Startup Day that: (i) The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is in good standing as a foreign 46 corporation in each jurisdiction in which the nature of its business, or the properties owned or leased by it make such qualification necessary. The Seller has all requisite corporate power and authority to own and operate its properties, to enable it to carry out its business as presently conducted in a material manner and as proposed to be conducted and to enter into and discharge its obligations under this Agreement and the other Operative Documents to which it is a party in a material manner. (ii) The execution and delivery of this Agreement and the other Operative Documents to which the Seller is a party, by the Seller, and its performance and compliance with the terms of this Agreement and of the other Operative Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Seller and will not violate the Seller's Certificate of Incorporation or Bylaws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Seller is a party or by which the Seller is bound, or violate any statute or any order, rule or regulation of any court, governmental agency or body or other tribunal having jurisdiction over the Seller or any of its properties. (iii) This Agreement and the other Operative Documents to which the Seller is a party, assuming due authorization, execution and delivery by the other parties hereto and thereto, each constitutes a valid, legal and binding obligation of the Seller, enforceable against it in accordance with the terms hereof and thereof, except as the enforcement hereof and thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law). (iv) The Seller is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Seller or its properties or might have consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which it is a party. (v) No litigation is pending or, to the best of the Seller's knowledge, threatened against the Seller which litigation might have consequences that would prohibit its entering into this Agreement or any other Operative Document to which it is a party or that would materially and adversely 47 affect the condition (financial or otherwise) or operations of the Seller or its properties or might have consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which it is a party. (vi) No certificate of an officer, statement furnished in writing or report delivered pursuant to the terms hereof by the Seller contains any untrue statement of a material fact or omits to state a material fact necessary to make the certificate, statement or report not misleading. (vii) The statements contained in the Registration Statement which describe the Seller or matters or activities for which the Seller is responsible in accordance with the Operative Documents or which are attributed to the Seller therein are true and correct in all material respects, and the Registration Statement does not contain any untrue statement of a material fact with respect to the Seller or omit to state a material fact required to be stated therein or necessary in order to prevent the statements contained therein with respect to the Seller from being misleading. To the best of the Seller's knowledge and belief, the Registration Statement does not contain any untrue statement of a material fact required to be stated therein or omit to state any material fact required to be stated therein or necessary to make the statements contained therein not misleading. (viii) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or "Blue Sky" statutes, as to which the Seller makes no such representation or warranty), that are necessary or advisable in connection with the purchase and sale of the Certificates and the execution and delivery by the Seller of the Operative Documents to which it is a party, have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other Operative Documents on the part of the Seller and the performance by the Seller of its obligations under this Agreement and such of the other Operative Documents to which it is a party. 48 (ix) The transactions contemplated by this Agreement are in the ordinary course of business of the Seller. (x) The Seller received fair consideration and reasonably equivalent value in exchange for the sale of the interests in the Mortgage Loans to the Transferor. (xi) The Seller did not sell any interest in any Mortgage Loan with any intent to hinder, delay or defraud any of its creditors. (xii) The Seller is solvent and the Seller will not be rendered insolvent as a result of the sale of the Mortgage Loans to the Transferor. (b) The Master Servicer hereby represents and warrants to the Seller, the Transferor, the Trustee, the Certificate Insurer, and to the Owners as of the Startup Day that: (i) The Master Servicer is a corporation duly organized, validly existing and in good standing under the laws of Delaware, and is, or a Sub-Servicer is, in compliance with the laws of each state in which any Property is located to the extent necessary to enable the Master Servicer to perform its obligations hereunder. The Master Servicer and each Sub-Servicer is in good standing as a foreign corporation in each jurisdiction in which the nature of its business, or the properties owned or leased by it make such qualification necessary to enable the Master Servicer to perform its obligations hereunder. The Master Servicer has all requisite corporate power and authority to own and operate its properties, to carry out its business as presently conducted and as proposed to be conducted and to enter into and discharge, either directly or through Sub-Servicers, its obligations under this Agreement. The Master Servicer and any Sub-Servicer (except LSI Financial Group) has equity of at least $15,000,000 as determined in accordance with generally accepted accounting principles. Each Sub-Servicer appointed by the Master Servicer will have all requisite corporate power and authority to own and operate its properties, to carry out its business as presently conducted and as proposed to be conducted. (ii) The execution and delivery of this Agreement by the Master Servicer and its performance and compliance with the terms of this Agreement and any Sub-Servicing Agreement have been duly authorized by all necessary corporate action on the part of the Master Servicer and will not violate the Master Servicer's Certificate of Incorporation or Bylaws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Master Servicer is a party or by which 49 the Master Servicer is bound or violate any statute or any order, rule or regulation of any court, governmental agency or body or other tribunal having jurisdiction over the Master Servicer or any of its properties. (iii) This Agreement and any Sub-Servicing Agreement, assuming due authorization, execution and delivery by the other parties hereto and thereto, each constitutes a valid, legal and binding obligation of the Master Servicer, enforceable against it in accordance with the terms hereof, except as the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (whether considered in a proceeding or action 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, regulation or demand of any federal, state, municipal or governmental agency, which might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Master Servicer or its properties or might have consequences that would materially and adversely affect its performance hereunder and under any Sub-Servicing Agreement. (v) No litigation is pending or, to the best of the Master Servicer's knowledge, threatened against the Master Servicer which litigation might have consequences that would prohibit its entering into this Agreement or any Sub-Servicing Agreement or that would materially and adversely affect the condition (financial or otherwise) or operations of the Master Servicer or its properties or might have consequences that would materially and adversely affect its performance hereunder. (vi) Each certificate of an officer, statement furnished in writing or report delivered pursuant to the terms hereof by the Master Servicer is true and correct in all material respects. (vii) The statements contained in the Prospectus Supplement which describe the Master Servicer under the caption "The Master Servicer" are true and correct in all material respects. (viii) The Master Servicing Fee is a "current (normal) servicing fee rate" as that term is used in Statement of Financial Accounting Standards No. 65 issued by the Financial Accounting Standards Board. Neither the Master Servicer nor any affiliate thereof will report on any financial statements any part of the Master Servicing Fee as an adjustment to the sales price of the Mortgage Loans. 50 (ix) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or "Blue Sky" statutes, as to which the Master Servicer makes no such representation or warranty), that are necessary or advisable in connection with the execution and delivery by, and the performance of the obligations of, the Master Servicer, either directly or through a Sub-Servicer, of this Agreement and each Sub-Servicing Agreement, have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and each Sub-Servicing Agreement on the part of the Master Servicer and the performance by the Master Servicer, either directly or through a Sub-Servicer, of its obligations under this Agreement and each Sub-Servicing Agreement. (x) The collection practices used by the Master Servicer with respect to the Mortgage Loans have been, in all material respects, legal, proper, prudent and customary in the non-conforming credit residential loan servicing business. (xi) The transactions contemplated by this Agreement are in the ordinary course of business of the Master Servicer. (c) The Transferor hereby represents and warrants to the Seller, the Master Servicer, the Trustee, the Certificate Insurer, and to the Owners as of the Startup Day that: (i) The Transferor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is in good standing as a foreign corporation in each jurisdiction in which the nature of its business, or the properties owned or leased by it make such qualification necessary. The Transferor has all requisite corporate power and authority to own and operate its properties, to enable it to carry out its business as presently conducted in a material manner and as proposed to be conducted and to enter into and discharge its obligations under this Agreement and the other Operative Documents to which it is a party in a material manner. 51 (ii) The execution and delivery of this Agreement and the other Operative Documents to which the Transferor is a party, by the Transferor, and its performance and compliance with the terms of this Agreement and of the other Operative Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Transferor and will not violate the Transferor's Certificate of Incorporation or Bylaws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which the Transferor is a party or by which the Transferor is bound, or violate any statute or any order, rule or regulation of any court, governmental agency or body or other tribunal having jurisdiction over the Transferor. (iii) This Agreement and the other Operative Documents to which the Transferor is a party, assuming due authorization, execution and delivery by the other parties hereto and thereto, each constitutes a valid, legal and binding obligation of the Transferor, enforceable against it in accordance with the terms hereof and thereof, except as the enforcement hereof and thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law). (iv) The Transferor is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which might have consequences that would materially and adversely affect its performance hereunder and under the other Operative Documents to which it is a party. (v) No litigation is pending or, to the best of the Transferor's knowledge, threatened against the Transferor which litigation might have consequences that would prohibit its entering into this Agreement or any other Operative Document to which it is a party or that would materially and adversely affect its performance hereunder and under the other Operative Documents to which it is a party. (vi) No certificate of an officer, statement furnished in writing or report delivered pursuant to the terms hereof by the Transferor contains any untrue statement of a material fact or omits to state a material fact necessary to make the certificate, statement or report not misleading. (vii) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, 52 state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or "Blue Sky" statutes, as to which the Transferor makes no such representation or warranty), that are necessary or advisable in connection with the purchase and sale of the Certificates and the execution and delivery by the Transferor of the Operative Documents to which it is a party, have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other Operative Documents on the part of the Transferor and the performance by the Transferor of its obligations under this Agreement and such of the other Operative Documents to which it is a party. (viii) The transactions contemplated by this Agreement are in the ordinary course of business of the Transferor. (ix) The Transferor received fair consideration and reasonably equivalent value in exchange for the sale of the interests in the Mortgage Loans to the Trust. (x) The Transferor did not sell any interest in any Mortgage Loan with any intent to hinder, delay or defraud any of its creditors. (xi) The Transferor is solvent and the Transferor will not be rendered insolvent as a result of the sale of the Mortgage Loans to the Trust. (d) The Transferor additionally covenants that it shall be operated in such a manner that it would not be substantively consolidated in the trust estate of any other Person in the event of a bankruptcy or insolvency of such Person and in such regard, the Transferor shall: (A) not become involved in the day-to-day management of any other Person; (B) not permit the Seller to become involved in the day-to-day management of the Transferor except to the extent provided in the Operative Documents; (C) not engage in transactions with any other Person other than those activities permitted by its certificate of incorporation and matters necessarily incident thereto; 53 (D) maintain separate corporate records and books of account and a separate business office from any other Person; (E) maintain its assets separately from the assets of any other Person (including through the maintenance of a separate bank account); (F) maintain separate financial statements, books and records from any other Person; (G) not guarantee any other Person's obligations or advance funds to any other Person for the payment of expenses or otherwise; (H) conduct all business correspondence of the Transferor and other communications in the Transferor's own name; (I) not act as an agent of any other Person in any capacity except pursuant to contractual documents indicating such capacity and only in respect of transactions permitted by its certificate of incorporation and matters necessarily incident thereto; (J) not fail to hold appropriate meetings of the Board of Directors at least annually and otherwise as necessary to authorize all corporate action; (K) not fail to hold meetings of the stockholders at least annually; (L) not form, or cause to be formed, any subsidiaries; (M) not act as an agent of the Seller nor permit the Seller to act as its agent except to the limited extent permitted under the Operative Documents; (N) maintain two independent directors at all times; (O) maintain a separate office from the Seller; and (P) not engage in intercorporate transactions except to the extent permitted by its certificate of incorporation and bylaws; (e) It is understood and agreed that the representations and warranties set forth in this Section 3.1 shall survive delivery of the Mortgage Loans to the Trustee. 54 Upon discovery by any of the Seller, the Master Servicer, the Transferor, the Certificate Insurer or the Trustee of a breach of any of the representations and warranties set forth in this Section 3.1(c) which materially and adversely affects the interests of the Owners or of the Certificate Insurer, the party discovering such breach shall give prompt written notice to the other parties and the Certificate Insurer; provided that, the Trustee shall have no duty or responsibility to inquire, investigate, determine or obtain actual knowledge of facts or events constituting a breach of any such representations or warranties. Within 30 days of its discovery or its receipt of notice of breach, the Master Servicer shall cure such breach in all material respects and, upon the Master Servicer's continued failure to cure such breach, may thereafter be removed pursuant to Section 11.1 hereof. Section 3.2. Covenants of the Seller to Take Certain Actions with Respect to the Mortgage Loans in Certain Situations. (a) Upon the actual knowledge of the Seller, the Master Servicer, the Transferor, the Certificate Insurer or the Trustee that the statements set forth in (ii), (x), (xiii), (xix), (xxxii), (xxxiii) or (xxxix) of subsection (b) below were untrue in any material respect as of the Startup Day or that any of the other statements set forth in subsection (b) below were untrue as of the Startup Day with the result that the interests of the Owners or the interests of the Certificate Insurer are materially and adversely affected, the party discovering such breach shall give prompt written notice to the other parties and the Certificate Insurer. Upon the earliest to occur of the Seller's discovery, its receipt of notice of breach from any one of the other parties or the Certificate Insurer or such time as a situation resulting from an existing statement which is untrue materially and adversely affects the interests of the Owners or of the Certificate Insurer as set forth above, the Seller hereby covenants and warrants that it shall promptly cure such breach in all material respects or it shall, subject to the further requirements of this paragraph, on the second Remittance Date next succeeding such discovery, receipt of notice or such time (i) substitute in lieu of each Mortgage Loan which has given rise to the requirement for action by the Seller a Qualified Replacement Mortgage and, if the outstanding principal amount of such Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than the Principal Balance of such Mortgage Loan as of such Replacement Cut-Off Date, deliver an amount equal to such difference together with accrued and unpaid interest on such amount calculated at the related Coupon Rate less the rate at which the Master Servicing Fee is calculated, if any, of the Mortgage Loan being replaced (such aggregate amount, the "Substitution Amount"), together with the aggregate amount of all unreimbursed Delinquency Advances and Servicing Advances theretofore made with respect to such Mortgage Loan to the Master Servicer for deposit in the Principal and Interest Account or (ii) purchase such Mortgage Loan from the Trust at a purchase price equal to the Loan Purchase Price thereof, which purchase price 55 shall be delivered to the Master Servicer for deposit in the Principal and Interest Account. In connection with any such proposed purchase or substitution, the Seller at its expense, shall cause to be delivered to the Trustee and to the Certificate Insurer an opinion of counsel experienced in federal income tax matters stating whether or not such a proposed purchase or substitution would constitute a Prohibited Transaction for the Trust or would jeopardize the status of either REMIC as a REMIC and the Seller shall only be required to take either such action to the extent such action would not constitute a Prohibited Transaction for the Trust or would not jeopardize the status of either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC. Notwithstanding the foregoing, the fact that a remedy would constitute a Prohibited Transaction with respect to a Mortgage Loan shall not reduce the obligation hereunder of the Seller to effect another remedy with respect to such Mortgage Loan. It is understood and agreed that the obligation of the Seller so to cure the defect, substitute or purchase any Mortgage Loan as to which such a statement set forth below is untrue in any material respect and has not been remedied, along with the indemnification remedy available under Section 12.21(b) shall constitute the sole remedies available to the Owners, the Trustee or the Certificate Insurer respecting any such statement. (b) (i) The information with respect to each Mortgage Loan set forth in the related Mortgage Loan Schedule is true and correct in all material respects as of the Cut-Off Date; (ii) Each Mortgage Loan File has been or will be delivered to the Trustee on the Startup Day; (iii) Each Mortgage Loan being transferred to the Trustee is a Qualified Mortgage and is a Mortgage; (iv) 88.90% of the Original Group I Pool Principal Balance and 90.89% of the Original Group II Pool Principal Balance have corresponding Properties that are improved by a one-to-four family residential dwelling and the remaining Mortgage Loans have corresponding Properties that are improved by modular housing, manufactured housing, PUD, SF row houses, townhouses or duplexes; (v) As of the Cut-Off Date, no Mortgage Loan in Group I had a Loan-to-Value Ratio in excess of 90.0% and the weighted average Loan-to-Value Ratio for Group I was approximately 74.25%, no Mortgage Loan in Group II had a Loan-to-Value Ratio in excess of 90% and the weighted average Loan-to-Value Ratio for Group II was approximately 77.66%; (vi) Each Mortgage Loan is being serviced by or on behalf of the Master Servicer; 56 (vii) The Note related to each Group I Mortgage Loan bears a fixed Coupon Rate of at least 7.50% per annum; the Note related to each Group II Mortgage Loan bears interest based on an index of six-month LIBOR, adjusts either every sixth month or every twenty-fourth month or every thirty-sixth month, has a margin of at least 3.63%, an adjustment cap of at least 1.00%, a lifetime cap of at least 11.88% and a Coupon Rate as of the Cut-Off Date of at least 6.99%; (viii) Notes representing not more than 48.89% of the Original Group I Pool Principal Balance of the Mortgage Loans provide for a "balloon" payment at the end of the 15th year, and notes representing not more than 0.43% of the Original Group II Pool Principal Balance of the Mortgage Loans provide for a "balloon" payment at the end of the 15th year (such Mortgage Loans having 30-year amortization schedules); (ix) As of the Cut-Off Date, each Mortgage is a valid and subsisting first or second lien (as identified in the Mortgage Loan Schedule) of record on the Property subject in the case of any Second Mortgage Loan only to a Senior Lien on such Property and subject in all cases to the exceptions to title set forth in the title insurance policy with respect to the related Mortgage Loan, which exceptions are generally acceptable to banking institutions in connection with their regular mortgage lending activities, and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage; (x) Immediately prior to the transfer and assignment contemplated by the Sale Agreement, the Seller held good and indefeasible title to, and was the sole owner of, each Mortgage Loan conveyed by the Seller subject to no liens, charges, mortgages, encumbrances or rights of others except as set forth in paragraph (ix) or other liens which will be released simultaneously with such transfer and assignment; and immediately upon the transfer and assignment contemplated the Trust will hold good and indefeasible title to, and be the sole owner of, each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or rights of others except as set forth in paragraph (ix) or other liens which will be released simultaneously with such transfer and assignment; (xi) As of the Cut-Off Date, no Mortgage Loan is more than 59 days delinquent, and Mortgage Loans (in the aggregate) representing no more than 2.25% of the Original Group I Pool Principal Balance of the Mortgage Loans are 30-59 days delinquent, and no more than 2.83% of the Original Group II Pool Principal Balance of the Mortgage Loans are 30-59 days delinquent; 57 (xii) As of the Startup Day, each Property is free of substantial damage and is in good repair; (xiii) As of the Startup Day, there is no valid and enforceable offset, defense or counterclaim to any Note or Mortgage, including the obligation of the related Mortgagor to pay the unpaid principal of or interest on such Note; (xiv) As of the Startup Day, there is no delinquent tax or assessment lien on any Property, nor is there any claim for work, labor or material affecting any Property which is or may be a lien prior to, or equal with, the lien of the related Mortgage except, in each case, those which are insured against by any title insurance policy referred to in paragraph (xvi) below; (xv) Each Mortgage Loan complies and at the time it was made complied in all material respects with all applicable state and federal laws and regulations, including, without limitation, the federal Truth-in-Lending Act, Real Estate Settlement Procedure Act and other consumer protection laws, usury, equal credit opportunity, disclosure and recording laws; (xvi) With respect to each Mortgage Loan, a lender's title insurance policy, issued in standard California Land Title Association form or American Land Title Association form in the state in which the related Property is situated, in an amount at least equal to the Original Principal Balance of such Mortgage Loan insuring the mortgagee's interest under the related Mortgage Loan as the holder of a valid first mortgage lien of record in the case of each First Mortgage Loan or second mortgage lien of record in the case of each Second Mortgage Loan on the real property described in the related Mortgage, as the case may be, subject only to exceptions of the character referred to in paragraph (ix) above, was effective on the date of the origination of such Mortgage Loan, and, as of the Startup Day, such policy will be valid and thereafter such policy shall continue in full force and effect. The assignment to the Trust of the benefits of the mortgage title insurance does not require the consent of or notification to the insurer. No claims have been made under such mortgage title insurance policies and no prior holder of the related mortgage has done, by act or omission, anything that would impair the coverage of such mortgage title insurance policy; (xvii) At the Startup Day, the improvements upon each Property are covered by a valid and existing hazard insurance policy (which may be a blanket policy of the type described in Section 10.11(c) hereof) with a generally acceptable carrier that provides for fire and extended coverage representing coverage not less than the least of (A) the outstanding 58 principal balance of the related Mortgage Loan (together, in the case of a Second Mortgage Loan, with the outstanding principal balance of the Senior Lien), (B) the minimum amount required to compensate for damage or loss on a replacement cost basis or (C) the full insurable value of the Property and in any event which is not less than the amount necessary to avoid the operation of any coinsurance provisions with respect to the Property in the event of any loss less than the amount of the insurance coverage and consistent with the amount that would have been required as of the date of origination by the related originator in its normal residential mortgage lending activities with respect to similar properties in the same locality. All hazard insurance policies are the valid and binding obligation of the insurer and contain a standard mortgagee clause naming the originator, its successors and assigns, as mortgagee. All premiums thereon have been paid. Such insurance policy requires prior notice to the insured of termination or cancellation, and no such notice has been received. The Mortgage obligates the Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost and expense, and upon the Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the Mortgagor's cost and expense and to seek reimbursement therefor from the Mortgagor; (xviii) If any Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, a flood insurance policy (which may be a blanket policy of the type described in Sections 10.11(b) and 10.11(c) hereof) in a form meeting the requirements of the current guidelines of the Federal Insurance Administration is in effect with respect to such Property with a generally acceptable carrier in an amount representing coverage not less than the least of (A) the outstanding principal balance of the related Mortgage Loan (together, in the case of a Second Mortgage Loan, with the outstanding principal balance of the Senior Lien), (B) the minimum amount required to compensate for damage or loss on a replacement cost basis or (C) the maximum amount of insurance that is available under the Flood Disaster Protection Act of 1973, as amended. All flood insurance policies are the valid and binding obligation of the insurer and contain a standard mortgagee clause naming the originator, its successors and assigns, as mortgagee. All premiums thereon have been paid. Such flood insurance policy requires prior notice to the insured of termination or cancellation, and no such notice has been received. The Mortgage obligates the Mortgagor thereunder to maintain all such flood insurance at the Mortgagor's cost and expense, and upon the Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain and maintain such flood insurance at the Mortgagor's cost and expense and to seek reimbursement therefor from the Mortgagor; 59 (xix) Each Mortgage and Note is the legal, valid and binding obligation of the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law), and all parties to each Mortgage Loan had full legal capacity to execute all documents relating to such Mortgage Loan and convey the estate therein purported to be conveyed; there is only one original Note with respect to each Mortgage Loan; (xx) The Seller has caused and will cause to be performed any and all acts required to be performed to preserve the rights and remedies of the Trust in any Insurance Policies applicable to any Mortgage Loans delivered by the Seller including, to the extent such Mortgage Loan is not covered by a blanket policy described in Section 10.11(c) hereof, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of co-insured, joint loss payee and mortgagee rights in favor of the Trustee; (xxi) Each original Mortgage was recorded or is in the process of being recorded, and all subsequent assignments of the original Mortgage have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof for the benefit of the Trustee (or, subject to Section 3.3 hereof, are in the process of being recorded); (xxii) The terms of each Note and each Mortgage have not been impaired, altered or modified in any respect, except by a written instrument which has been recorded, if necessary, to protect the interests of the Owners and which has been delivered to the Trustee. The substance of any such alteration or modification is reflected on the related Mortgage Loan Schedule; (xxiii) The proceeds of each Mortgage Loan have been fully disbursed, and there is no obligation on the part of the mortgagee to make future advances thereunder. Any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses incurred in making or closing or recording such Mortgage Loans were paid; (xxiv) Except for three Group II Mortgage Loans with an aggregate Principal Balance of approximately $392,500 as of the Cut-Off Date, no Mortgage Loan was originated under a buydown plan; 60 (xxv) No Mortgage Loan has a shared appreciation feature, or other contingent interest feature; (xxvi) Each Property is located in the state identified in the related Mortgage Loan Schedule and consists of one parcel of real property (or several parcels secured by a blanket mortgage) with a residential dwelling erected thereon; (xxvii) Each Mortgage contains a provision for the acceleration of the payment of the unpaid principal balance of the related Mortgage Loan in the event the related Property is sold without the prior consent of the mortgagee thereunder; (xxviii) Any advances made after the date of origination of a Mortgage Loan but prior to the Cut-Off Date have been consolidated with the outstanding principal amount secured by the related Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term reflected on the Mortgage Loan Schedule. The consolidated principal amount does not exceed the original principal amount of the related Mortgage Loan. No Note permits or obligates the Master Servicer to make future advances to the related Mortgagor at the option of the Mortgagor; (xxix) There is no proceeding pending or threatened for the total or partial condemnation of any Property, nor is such a proceeding currently occurring, and each Property is undamaged by waste, fire, earthquake or earth movement; (xxx) All of the improvements which were included for the purposes of determining the Appraised Value of any Property lie wholly within the boundaries and building restriction lines of such Property, and no improvements on adjoining properties encroach upon such Property, except in each case exceptions which are stated in the title insurance policy and affirmatively insured; (xxxi) With respect to each Mortgage constituting a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the Owners or the Trust to the trustee under the deed of trust, except in connection with a trustee's sale after default by the related Mortgagor; (xxxii) Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the realization against the related Property of the benefits of the security, including (A) in the case of a Mortgage designated as a deed of trust, by trustee's sale and (B) otherwise by judicial foreclosure. 61 There is no homestead or other exemption available that would materially interfere with the right to sell the related Property at a trustee's sale or the right to foreclose on the related Mortgage; (xxxiii) Except as provided by clause (xi) of this subsection 3.2(b), there is no default, breach, violation or event of acceleration existing under any Mortgage or the related Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration; and the Seller has not waived any default, breach, violation or event of acceleration; (xxxiv) No instrument of release or waiver has been executed in connection with any Mortgage Loan, and no Mortgagor has been released, in whole or in part; (xxxv) Each Mortgage Loan conforms, and all such Mortgage Loans in the aggregate conform, in all material respects to the description thereof set forth in the Registration Statement; (xxxvi) An appraisal was performed with respect to each Mortgage Loan; such appraisal was performed in material compliance with the appraisal description set forth in the Prospectus; (xxxvii) No more than 3.41% of the Original Pool Principal Balance of the Mortgage Loans in Group I is secured by condominiums, townhouses or rowhouses, and no more than 4.55% of the Original Pool Principal Balance of the Mortgage Loans in Group II is secured by condominiums, townhouses or rowhouses; (xxxviii) The credit underwriting guidelines applicable to each Mortgage Loan conform in all material respects to the description thereof set forth in the Prospectus and the Prospectus Supplement and each Mortgage Loan was underwritten in accordance therewith; (xxxix) As of the Startup Day, the Seller had no actual knowledge that there exists on any Property any hazardous substances, hazardous wastes or solid wastes, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act of 1976, or other federal, state or local environmental legislation; (xl) No more than ____% of the Original Pool Principal Balance of the Mortgage Loans in Group I is secured by Properties located within any single zip code area, and no more than ____% of the Original Pool Principal Balance of the 62 Mortgage Loans in Group II is secured by Properties located within any single zip code area; no more than 13.35% of the Original Pool Principal Balance of the Mortgage Loans in Group I is located within any single state, and no more than 18.11% of the Original Pool Principal Balance of the Mortgage Loans in Group II is located within any single state; (xli) At least 94.69% of the Original Group I Pool Principal Balance and at least 96.50% of the Original Group II Pool Principal Balance is secured by Properties that are owner occupied; (xlii) All taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid; (xliii) Except for payments in the nature of escrow payments, including, without limitation, taxes and insurance payments, the Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required by the Mortgage, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage proceeds, whichever is greater, to the day which precedes by one month the due date of the first installment of principal and interest; (xliv) No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities and the Mortgaged Property is lawfully occupied under applicable law; (xlv) The related Mortgage Note is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage; (xlvi) There is no obligation on the part of the Seller, the originator, the Master Servicer, the Transferor, the Trustee or any other Person to make payments in addition to those made by the Mortgagor; (xlvii) With respect to each Second Mortgage Loan, the related Senior Lien requires equal monthly payments, or if it bears an adjustable interest rate, the monthly payments for the related Senior Lien may be adjusted no more frequently than monthly; 63 (xlviii) With respect to each Second Mortgage Loan, either (i) no consent for the Mortgage Loan is required by the holder of the related Senior Lien or (ii) such consent has been obtained and is contained in the File; (xlix) With respect to any Senior Lien that provided for negative amortization or deferred interest, the balance of such Senior Lien used to calculate the Loan-to-Value Ratio for the Second Mortgage Loan is based on the maximum amount of negative amortization or deferred interest possible under such Senior Lien; (l) The maturity date of each Second Mortgage Loan is prior to the maturity date of the related Senior Lien if such Senior Lien provides for a balloon payment; (li) All parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Property is located, and (2)(A) organized under the laws of such state, or (B) qualified to do business in such state, or (C) federal savings and loans associations or national banks having principal offices in such state or (D) not doing business in such state so as to require qualification or licensing; (lii) All amounts received on and after the Cut-Off Date with respect to the Mortgage Loans to which the Master Servicer is not entitled have been deposited into the Principal and Interest Account and are, as of the Startup Day, in the Principal and Interest Account; (liii) The Mortgage Loans were not selected for inclusion in the Trust on any basis intended to adversely affect the Trust; (liv) With respect to each Property subject to a land trust (a "Land Trust Mortgage") (a) a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named as such in the land trust agreement and such trustee is named in the Land Trust Mortgage as Mortgagor; (b) all fees and expenses of the land trustee which have previously become due and owing have been paid and no fees or expenses are or will become payable by the Owners or the Trust to the land trustee under the land trust agreement; (c) the beneficiary is solely obligated to pay any fees and expenses of the land trustee and the priority of the lien of the Land Trust Mortgage is not and will not be primed by the land trustee; (d) the Mortgaged Property is occupied by the beneficiary under the land trust agreement and, if such land trust agreement terminates, the beneficiary 64 will become the owner of the Mortgaged Property; (e) the beneficiary is obligated to make payments under the Note and will have personal liability for deficiency judgments; (f) the Land Trust Mortgage and assignment of beneficial interest relating to such land trust held by the Trust was made in compliance with the related land trust agreement, was validly entered into by the related land trust trustee or beneficiary and, does not currently, and will not in the future, violate any provision of the related land trust agreement, nor any agreement between or amongst the beneficiaries of such land trust; (g) a UCC financing statement has been filed, continued, and will be continued, without intervening liens, as the first lien upon any assignment of beneficial interest in the Land Trust Mortgage; (h) the assignment of beneficial interest with respect to such Land Trust Mortgage held by the Trust was at the time of such assignment the only assignment of such beneficial interest in the Land Trust Mortgage, such assignment was accepted by, and noted in the records of the land trust trustee, subsequent assignment of the beneficial interest in whole or in part has not been made, and such subsequent assignment of the beneficial interest or any part thereof is not permitted pursuant to a written agreement between the respective beneficiary and the Mortgagee, until the expiration of the Note relating to the Land Trust Mortgage; (i) the Land Trust Mortgage is the first or second lien on the Property; no lien is in place against the beneficial interests, or any part thereof, of such Land Trust Mortgage or collateral assignment of beneficial interest, which liens are superior to the interest held by the Seller and the beneficial interest, or any part thereof, of any such Land Trust Mortgage or collateral assignment of beneficial interest has not been pledged as security for any other debt; and the beneficiary or land trust trustee is forbidden, pursuant to a written agreement between the beneficiary or the land trust trustee (as applicable) and the Mortgagee, from using the land trust property or beneficial interest, or any part of either, as security for any other debt until the expiration date of its respective Note; and (x) the terms and conditions of the land trust agreement do not prevent the free and absolute marketability of the Mortgaged Property. As of the Cut-Off Date, the aggregate Principal Balances of Land Trust Mortgage Loans with related Mortgaged Properties subject to land trusts does not exceed 2.50% of the Original Pool Principal Balance; (lv) With respect to each Property subject to a ground lease (a) the current ground lessor has been identified and all ground rents which previously became due and owing have been paid; (b) the ground lease term extends, or is automatically renewable, for at least five years beyond the maturity date of the related Mortgage Loan; (c) the ground lease has been duly executed and recorded; (d) the amount of the ground rent and any increases therein are clearly 65 identified in the lease and are for predetermined amounts at predetermined times; (e) the ground rent payment is included in the Mortgagor's monthly payment as an expense item; (f) the Trust has the right to cure defaults on the ground lease; and (g) the terms and conditions of the leasehold do not prevent the free and absolute marketability of the Property. As of the Cut-Off Date, the aggregate Principal Balance of Mortgage Loans with related Mortgaged Properties subject to ground leases does not exceed 5% of the Original Pool Principal Balance; (lvi) None of the Mortgage Loans are subject to a plan of bankruptcy or have borrowers that have sought protection or relief under any state or federal bankruptcy or insolvency law during the term of the related Mortgage. With respect to each Mortgage Loan which has been the subject of bankruptcy or insolvency proceedings, (a) as of the Cut-Off Date, the Mortgagor is not contractually delinquent more than 30 days with respect to any payment due under the related plan, (b) the current Loan-to-Value Ratio is less than or equal to 85% and (c) either (i) if the current Loan-to-Value Ratio is between 60% and 85%, as of the Cut-Off Date, the Mortgagor has made at least six consecutive payments under the related Plan or (ii) if the current Loan-to-Value Ratio is less than 60% as of the Cut-Off Date, the Mortgagor has made at least three consecutive payments under the related plan; and (lvii) To the best of the Seller's knowledge, there is no error, omission, misrepresentation, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including without limitation the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan. (c) In the event that any Qualified Replacement Mortgage is delivered by the Seller to the Trust pursuant to this Section 3.2, the Seller shall be obligated to take the actions described in subsection (a) above with respect to such Qualified Replacement Mortgage upon the discovery by any of the Owners, the Seller, the Master Servicer, the Transferor, the Certificate Insurer, any Sub-Servicer or the Trustee that the statements set forth in subsections (ii), (x), (xiii), (xix), (xxxii), (xxxiii) or (xxxix) of subsection (b) above are untrue in any material respect on the date such Qualified Replacement Mortgage is conveyed to the Trust or that any of the other statements set forth in subsection (b) hereof are untrue on the date such Qualified Replacement Mortgage is conveyed to the Trust such that the interests of the Owners or the Certificate Insurer in the related Qualified Replacement Mortgage are materially and adversely affected; provided, however, that for the purposes of this subsection (c) the 66 statements in subsection (b) hereof referring to items "as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to such items as of the date such Qualified Replacement Mortgage is conveyed to the Trust. (d) It is understood and agreed that the covenants set forth in this Section 3.2 shall survive delivery of the respective Mortgage Loans (including Qualified Replacement Mortgage Loans) to the Trustee. (e) The Seller hereby assigns to the Trustee on behalf of the Owners and the Certificate Insurer all of its rights to recovery for breaches of representations and warranties given by the originators of such Mortgage Loans that are similar in import to the following (but only to the extent such representations are given and to the extent such rights are assignable): no error omission, misrepresentation, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including without limitation the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan. Notwithstanding such assignment, none of the Owners, the Certificate Insurer or the Trustee may enforce any such remedy except to the extent that the Seller is unwilling to enforce the remedy. Section 3.3. Conveyance of the Mortgage Loans and Qualified Replacement Mortgages. (a) The Transferor hereby transfers, assigns, sets over and otherwise conveys without representation, warranty or recourse, to the Trust, all right, title and interest of the Transferor in and to each Mortgage Loan listed on the Mortgage Loan Schedule delivered by the Transferor on the Startup Day, and all its right, title and interest in and to (i) scheduled payments of interest due on each Mortgage Loan after the Cut-Off Date, (ii) scheduled payments of principal due, and unscheduled collections of principal received, on each Mortgage Loan on and after the Cut-Off Date, and (iii) its Insurance Policies; such transfer of the Mortgage Loans set forth on the Mortgage Loan Schedule to the Trust is absolute and is intended by the Owners and all parties hereto to be treated as a sale to the Trust. (b) In connection with the transfer and assignment of the Mortgage Loans by the Seller to the Transferor pursuant to the Purchase and Sale Agreement, and by the Transferor to the Trust pursuant to this Agreement, on the Startup Day, the Seller agrees to: (i) deliver, or cause to be delivered, without recourse to the Trustee on behalf of the Trust on the Startup Day with respect to each Mortgage Loan listed on the Mortgage Loan Schedule (A) the original Notes or, if any original Note has been lost or destroyed, certified copies thereof (together 67 with a lost note affidavit), endorsed without recourse by the originator (or most recent payee) thereof "Pay to the order of The Chase Manhattan Bank, as Trustee", (B) originals (subject to the provisions of paragraph (d) below relating to items in the process of being recorded) of all intervening assignments, showing a complete chain of assignment from origination to assignment to the Trustee, including warehousing assignments, with evidence of recording thereon, (C) originals of all assumption and modification agreements, if any, and (D) either: (1) the original Mortgage (subject to the provisions of paragraph (d) below relating to items in the process of being recorded), with evidence of recording thereon, or (2) a copy of the Mortgage certified by the public recording office in those instances where the original recorded Mortgage has been lost and (E) the original lender's title insurance policy issued on the date of origination of such Mortgage Loan, together with any endorsements thereto; provided, however, that, subject to Sections 3.3(d) and 3.4(b), the Seller shall not be required to prepare an assignment for any Mortgage as to which the original recording information is lacking; and provided, further, that pending the issuance of the final title policy, the Seller shall deliver the title commitment or title binder to insure same; and (ii) cause, within 10 Business Days following the Startup Day, assignments of the Mortgages from the related originator to The Chase Manhattan Bank to be submitted for recording in the appropriate jurisdictions to perfect the Trustee's lien thereunder as against creditors of or purchasers from the Seller, provided, however, that the Seller need not cause any assignment to be submitted with respect to which the Seller provides to the Trustee an opinion of counsel reasonably acceptable to the Certificate Insurer to the effect that such recordation is not necessary; the above-listed items constituting the "File" for the related Mortgage Loan; (c) Notwithstanding anything to the contrary contained in this Section 3.3, in those instances where the public recording office retains the original Mortgage, the assignment of a Mortgage or the intervening assignments of the Mortgage after it has been recorded, the Seller shall be deemed to have satisfied its obligations hereunder upon delivery to the Trustee of a copy of such Mortgage, such assignment or assignments of Mortgage certified by the public recording office to be a true copy of the recorded original thereof. (d) Not later than ten days following the end of the 10- Business Day period referred to in clause (b)(ii) above, the Seller shall deliver, or cause to be delivered, to the Trustee copies of all Mortgage assignments submitted for recording, together with a list of all Mortgages for which no Mortgage assignment has yet been submitted for recording, which list shall state the reason why such 68 Mortgage assignments have not been submitted for recording. With respect to any Mortgage assignment disclosed on such list as not yet submitted for recording for a reason other than a lack of original recording information, the Trustee shall make an immediate demand on the Seller to prepare, or cause to be prepared, such Mortgage assignments, and shall inform the Certificate Insurer of the Seller's failure to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in executing any documents submitted to the Trustee in connection with this provision. Thereafter, the Seller shall prepare, or cause to be prepared, a Mortgage assignment for any Mortgage for which original recording information is subsequently received by the Seller, and shall promptly deliver a copy of such Mortgage assignment to the Trustee. Neither the Master Servicer nor the Trustee shall be responsible for the costs of recording any Mortgage or any assignment of Mortgage pursuant to this Section 3.3. Copies of all Mortgage assignments received by the Trustee shall be kept in the related File. The Seller shall promptly deliver, or cause to be delivered, to the Trustee such original Mortgage or intervening mortgage assignment with evidence of recording indicated thereon upon receipt thereof from the public recording official. If the Seller within nine months from the Startup Day shall not have received such original Mortgage or intervening mortgage assignment from the public recording official, it shall obtain and deliver, or cause to be delivered, to the Trustee within ten months from the Startup Day, a copy of such original Mortgage or mortgage assignment certified by such public recording official to be a true and complete copy of such original Mortgage or mortgage assignment as recorded by such public recording office. (e) In the case of Mortgage Loans which have been prepaid in full on or after the Cut-Off Date and prior to the Startup Day, the Seller, in lieu of the foregoing, will deliver within 15 days after the Startup Day to the Trustee a certification of an Authorized Officer in the form set forth in Exhibit J. (f) The Seller (or an affiliate thereof) shall sell, transfer, assign, set over and otherwise convey without recourse, to the Trustee all its right, title and interest in and to any Qualified Replacement Mortgage delivered by it to the Trustee on behalf of the Trust pursuant to Section 3.2 or 3.4 hereof and all its right, title and interest to principal collected and interest accruing on such Qualified Replacement Mortgage on and after the applicable Replacement Cut-Off Date; provided, however, that the Seller (or such affiliate) shall reserve and retain all right, title and interest in and to payments of principal and interest due on such Qualified Replacement Mortgage prior to the applicable Replacement Cut-Off Date. 69 (g) As to each Mortgage Loan released from the Trust in connection with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will transfer, assign, set over and otherwise convey without representation, warranty or recourse, on the Seller's order, all of its right, title and interest in and to such released Mortgage Loan and all the Trust's right, title and interest in and to principal collected and interest accruing on such released Mortgage Loan on and after the applicable Replacement Cut-Off Date; provided, however, that the Trust shall reserve and retain all right, title and interest in and to payments of principal collected and interest accruing on such released Mortgage Loan prior to the applicable Replacement Cut-Off Date. (h) In connection with any transfer and assignment of a Qualified Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to deliver to the Trustee the items described in Section 3.3(b) on the date of such transfer and assignment or, if a later delivery time is permitted by Section 3.3(b), then no later than such later delivery time. (i) As to each Mortgage Loan released from the Trust in connection with the conveyance of a Qualified Replacement Mortgage the Trustee shall deliver on the date of conveyance of such Qualified Replacement Mortgage and on the order of the Seller (i) the original Note, or the certified copy, relating thereto, endorsed without recourse, to the Seller, and (ii) such other documents as constituted the File with respect thereto. (j) If a Mortgage assignment is lost during the process of recording, or is returned from the recorder's office unrecorded due to a defect therein, the Seller shall prepare or cause to be prepared a substitute assignment or cure such defect, as the case may be, and thereafter cause each such assignment to be duly recorded. (k) The Seller shall reflect on its records that the Mortgage Loans have been sold to Transferor and the Transferor shall reflect on its records that the Mortgage Loans have been sold to the Trust. Section 3.4. Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification by Trustee. (a) The Trustee agrees to execute and deliver on the Startup Day an acknowledgment of receipt of the items delivered by the Seller in the form attached as Exhibit K hereto (the "Initial Trustee Certification"), and declares that it will hold such documents and any amendments, replacement or supplements thereto, as well as any other assets included in the definition of Trust Estate and delivered to the Trustee, as Trustee in trust upon and subject to the conditions set forth herein for the benefit of the Owners. The Trustee agrees, for the benefit of the Owners, to review such items within 45 days after the Startup Day (or, with respect to any document delivered after the Startup Day, within 45 days of receipt 70 and with respect to any Qualified Replacement Mortgage, within 45 days after the assignment thereof) and to deliver to the Seller, the Master Servicer, any Sub-Servicer, the Transferor and the Certificate Insurer a Pool Certification in the form attached hereto as Exhibit L (the "Interim Trustee Certification"). Within 12 months from the Startup Day, the Trustee shall review the contents of the Files and deliver to the Seller, the Master Servicer, any Sub-Servicer, the Transferor and the Certificate Insurer a Pool Certification in the form attached hereto as Exhibit M (the "Final Trustee Certification"). The Trustee shall certify in the Initial Trustee Certification that it has examined each Note to confirm that except as otherwise described in such certification it is in possession of an executed original Note endorsed to the Trustee. The Trustee shall certify in the Interim and Final Trustee Certifications that except as described in such certification, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in such Certification as not covered by such Certification), (i) all documents required to be delivered to it pursuant to this Agreement are in its possession and have been executed, (ii) the original Note bearing an original endorsement to the Trustee from the original payee (or set of original endorsements evidencing a complete chain of title from the original payee to the Trustee) is in its possession; (iii) such documents have been reviewed by it and have not been mutilated, damaged, torn or otherwise physically altered and relate to such Mortgage Loan identified in the Mortgage Loan Schedule and (iv) based on its examination and only as to the foregoing documents, the information set forth on the Mortgage Loan Schedule as to loan number, name of mortgagor and address, date of origination, the original stated maturity date, the Original Principal Balance, the Coupon Rate, the scheduled monthly payment of principal and interest and the date in each month or which the related payments are due, accurately reflects the information set forth in the File. The Trustee shall be under no duty or obligation pursuant to this Section 3.4 to inspect, review or examine any such documents, instruments, certificates or other papers to determine that they are genuine, enforceable, or appropriate for the represented purpose or that they are other than what they purport to be on their face, nor shall the Trustee be under any duty to determine independently whether there are any intervening assignments or assumption or modification agreements with respect to any Mortgage Loan. In the Interim and Final Trustee Certifications, the Trustee based on its examination of the Files shall also either confirm, or list as an exception that: (i) each Note and Mortgage bears an original signature or signatures purporting to be that of the person or persons named as the maker and mortgagor/trustor; 71 (ii) the principal amount of the indebtedness secured by the Mortgage is identical to the original principal amount of the Note; (iii) the assignment of Mortgage is in the form "The Chase Manhattan Bank, as Trustee" and bears a signature that purports to be the signature of an authorized officer of the Person which the related File suggests was the immediately prior record holder of such Mortgage; (iv) if intervening assignments are included in the File, each such intervening assignment bears a signature that purports to be the signature of the mortgagee/beneficiary and/or the assignee; (v) the address of the real property set forth in the title insurance policy or preliminary title report or commitment to issue a title policy is identical to the real property address contained in the Mortgage and such policy or commitment is for an amount equal to the original principal amount of the Note; and (vi) it has received an original Mortgage with evidence of recordation and assignment, in each case, with evidence of recordation thereon or a copy thereof certified to be true and correct by the public recording office in possession of such Mortgage and assignment. Following the delivery of the Final Trustee Certification, the Trustee shall provide to the Seller, the Master Servicer, the Transferor and the Certificate Insurer no less frequently than monthly, updated certifications indicating the then current status of exceptions, until all such exceptions have been eliminated. (b) If the Trustee during such 45-day period in connection with the Interim Trustee Certification, or 12-month period in connection with the Final Trustee Certification finds any document constituting a part of a File which is not properly executed, has not been received, or is unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule or the Trustee is unable to make any of the other required certifications, or that any Mortgage Loan does not conform in a material respect to the description thereof as set forth in the Mortgage Loan Schedule, the Trustee shall promptly so notify the Seller, the Master Servicer, the Transferor and the Certificate Insurer. In performing any such review, the Trustee may conclusively rely on the Seller as to the purported genuineness of any such document and any signature thereon. It is understood that the scope of the Trustee's review of the items delivered by the Seller pursuant to Section 3.3(b)(i) is limited solely to such procedures as are necessary to enable the Trustee to complete Exhibits K, L and M hereto. The Seller agrees to use reasonable efforts to remedy a material defect in a document constituting part of a File of which 72 it is so notified by the Trustee. If, however, (i) in the case of a defect consisting of the failure of the Seller to deliver an original Mortgage and any intervening mortgage assignment evidencing a complete chain of title to the Trustee with evidence of recording thereon, on the first Remittance Date following the 12 month period from the Startup Day and (ii) in the case of all other defects within 60 days after the Trustee's notice to it respecting such defect the Seller has not remedied the defect and the defect materially and adversely affects the interest in the related Mortgage Loan of the Owners or of the Certificate Insurer, the Seller will on the next succeeding Remittance Date (i) substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage and, deliver the Substitution Amount applicable thereto to the Master Servicer for deposit in the Principal and Interest Account or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan Purchase Price thereof, which purchase price shall be delivered to the Master Servicer for deposit in the Principal and Interest Account. In connection with any such proposed purchase or substitution the Seller shall cause at the Seller's expense to be delivered to the Trustee and to the Certificate Insurer an opinion of counsel experienced in federal income tax matters stating whether or not such a proposed purchase or substitution would constitute a Prohibited Transaction for the Trust or would jeopardize the status of either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC, and the Seller shall only be required to take either such action to the extent such action would not constitute a Prohibited Transaction for either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC or would not jeopardize the status of either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC. Any required purchase or substitution, if delayed by the absence of such opinion shall nonetheless occur upon the earlier of (i) the occurrence of a default or imminent default with respect to the Mortgage Loan or (ii) the delivery of such opinion. Section 3.5. Cooperation Procedures. (a) The Seller shall, in connection with the delivery of each Qualified Replacement Mortgage to the Trustee, provide the Trustee with the information set forth in the related Mortgage Loan Schedule with respect to such Qualified Replacement Mortgage. (b) The Seller and the Trustee covenant to provide each other and the Certificate Insurer with all data and information required to be provided by them hereunder at the times required hereunder, and additionally covenant reasonably to cooperate with each other in providing any additional information required by any of them or the Certificate Insurer in connection with their respective duties hereunder. 73 ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES Section 4.1. Issuance of Certificates. On the Startup Day, upon the Trustee's receipt from the Seller of an executed Delivery Order in the form set forth as Exhibit H hereto, the Trustee shall execute, authenticate and deliver the Certificates on behalf of the Trust in accordance with the directions set forth in such Delivery Order. Section 4.2. Sale of Certificates. At 11 a.m. New York City time on the Startup Day, at the offices of Dewey Ballantine, 1301 Sixth Avenue, New York, New York, the Seller will sell and convey the Mortgage Loans and the money, instruments and other property related thereto to the Transferor, and the Transferor will sell and convey such property to the Trustee, and the Trustee will (i) hold the Class A Certificates as transfer agent for the Depository, with an aggregate Percentage Interest in each Class equal to 100%, registered in the name of Cede & Co. or in such other names as the Underwriters shall direct against payment of the purchase price thereof by wire transfer of immediately available funds to the Trustee for disbursement to the Seller and (ii) deliver to the Seller, the Class B Certificates and the Residual Certificates, with an aggregate Percentage Interest equal to 100%, registered as the Seller shall request. Upon receipt of the proceeds of the sale of the Certificates, the Seller shall (a) pay the initial premiums due to the Certificate Insurer and (b) pay other fees and expenses identified by the Seller. ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS Section 5.1. Terms. (a) The Certificates are pass-through securities having the rights described therein and herein. Distributions on the Certificates are payable solely from payments received on or with respect to the Mortgage Loans (other than the Master Servicing Fees), moneys in the Certificate Account, the Principal and Interest Account, the Supplemental Interest Payment Account, Insured Payments made by the Certificate Insurer, Delinquency Advances and Compensating Interest payments made by the Master Servicer or otherwise held by the Master Servicer in trust for the Owners, except as otherwise provided herein, and from earnings on moneys and the proceeds of property held as a part of the Trust Estate. Each Certificate entitles the Owner thereof to receive distributions in accordance with this Agreement and in a specified portion of the aggregate distribution due to the related Class of Certificates, pro rata in accordance with such Owner's Percentage Interest and in the case of the Class A-6 Certificates, certain amounts payable from the Supplemental Interest Payment Account. 74 (b) Each Owner is required, and hereby agrees, to return to the Trustee any Certificate with respect to which the Trustee has made the final distribution due thereon. Any such Certificate as to which the Trustee has made the final distribution thereon shall be deemed cancelled and shall no longer be Outstanding for any purpose of this Agreement, whether or not such Certificate is ever returned to the Trustee. Section 5.2. Forms. The Certificates of each Class shall be in substantially the forms set forth as the related Exhibits to this Agreement, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement or as may in the Seller's judgment be necessary, appropriate or convenient to comply, or facilitate compliance, with applicable laws, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any applicable securities laws or as may, consistently herewith, be determined necessary by the Authorized Officer of the Trustee executing such Certificates, as evidenced by his execution thereof. Section 5.3. Execution, Authentication and Delivery. Each Certificate shall be executed on behalf of the Trust, by the manual signature of one of the Trustee's Authorized Officers and shall be authenticated by the manual signature of one of the Trustee's Authorized Officers. Certificates bearing the manual signature of individuals who were at any time the proper officers of the Trustee shall bind the Trust, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the execution and delivery of such Certificates or did not hold such offices at the date of authentication of such Certificates. No Certificate shall be valid until executed and authenticated as set forth above. Certificates delivered on the Startup Day shall be dated the Startup Day; all Certificates delivered thereafter shall be dated the date of authentication. Section 5.4. Registration and Transfer of Certificates. (a) The Trustee shall cause to be kept a register (the "Register") in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates and the registration of transfer of Certificates. (b) Subject to the provisions of Section 5.8 hereof with respect to the Unregistered Certificates, upon surrender for registration of transfer of any Certificate at the office designated as the location of the Register, the Trustee shall execute and authenticate and deliver, in the name of the designated 75 transferee or transferees, one or more new Certificates of a like Class and in the aggregate principal or notional amount of the Certificate so surrendered. (c) At the option of any Owner, Certificates of any Class owned by such Owner may be exchanged for other Certificates authorized of like Class, tenor and a like aggregate original principal or notional amount and bearing numbers not contemporaneously outstanding, upon surrender of the Certificates to be exchanged at the office designated as the location of the Register. Whenever any Certificate is so surrendered for exchange, the Trustee shall execute and authenticate and deliver the Certificate or Certificates which the Owner making the exchange is entitled to receive. (d) All Certificates issued upon any registration of transfer or exchange of Certificates shall be valid evidence of the same ownership interests in the Trust and entitled to the same benefits under this Agreement as the Certificates surrendered upon such registration of transfer or exchange. (e) Every Certificate presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Owner thereof or his attorney duly authorized in writing. (f) No service charge shall be made to an Owner for any registration of transfer or exchange of Certificates, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Certificates; any other expenses in connection with such transfer or exchange shall be an expense of the Trust. (g) It is intended that the Class A Certificates be registered so as to participate in a global book-entry system with the Depository, as set forth herein. Each Class of Class A Certificates shall be initially issued in the form of a single fully registered Class A Certificate of the related Class with a denomination equal to the original principal balance of the related Class. Upon initial issuance, the ownership of such Class A Certificates shall be registered in the Register in the name of Cede & Co., or any successor thereto, as nominee for the Depository. The minimum denominations shall be $1,000 for any Class A Certificate, $100,000 for any Class B Certificate, and 10% Percentage Interest for any Residual Certificate. The Seller and the Trustee are hereby authorized to execute and deliver the Representation Letter with the Depository. 76 With respect to Class A Certificates registered in the Register in the name of Cede & Co., as nominee of the Depository, the Seller, the Master Servicer, the Transferor and the Trustee shall have no responsibility or obligation to the Depository's "Direct Participants" or "Indirect Participants" or beneficial owners for which the Depository holds Class A Certificates from time to time as a Depository. Without limiting the immediately preceding sentence, the Seller, the Master Servicer, the Transferor and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect Participant with respect to the ownership interest in the Class A Certificates, (ii) the delivery to any Direct or Indirect Participant or any other Person, other than a registered Owner of a Class A Certificate as shown in the Register, of any notice with respect to the Class A Certificates or (iii) the payment to, or withholding with respect to, any Direct or Indirect Participant or any other Person, other than a registered Owner of a Class A Certificate as shown in the Register, of any amount with respect to any distribution of principal or interest on the Class A Certificates. No Person other than a registered Owner of a Class A Certificate as shown in the Register shall receive a certificate evidencing such Class A Certificate. The Certificate Issuer shall have no responsibility for or obligation with respect to the accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect Participant with respect to the ownership interest in the Class A Certificates. Upon delivery by the Depository to the Trustee of written notice to the effect that the Depository has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions hereof with respect to the payment of interest by the mailing of checks or drafts to the registered Owners of Class A Certificates appearing as registered Owners in the registration books maintained by the Trustee at the close of business on a Record Date, the name "Cede & Co." in this Agreement shall refer to such new nominee of the Depository. (h) In the event that (i) the Depository or the Seller advises the Trustee in writing that the Depository is no longer willing or able to discharge properly its responsibilities as nominee and depository with respect to the Class A Certificates and the Seller is unable to locate a qualified successor, (ii) the Seller at its sole option elects to terminate the book-entry system through the Depository or (iii) after an Event of Default, Owners of Certificates evidencing at least 51% Percentage Interests of any Class affected thereby notify the Seller that the continuation of a book-entry system is not in the best interests of such Class of Owners, the Class A Certificates or any Class, as applicable, shall no longer be restricted to being registered in the Register in the name of Cede & Co. (or a successor nominee) as nominee of the Depository. At that time, the Class A Certificates shall be registered in the name of and deposited with a successor depository operating a global book-entry system, as may be acceptable to the 77 Seller, or such depository's agent or designee but, if the Seller does not select such alternative global book-entry system, then the Trustee shall notify the Owners of the Class A Certificates in writing of the termination of the book-entry system and the Class A Certificates may be registered in whatever name or names registered Owners of Class A Certificates transferring Class A Certificates shall designate, in accordance with the provisions hereof. (i) Notwithstanding any other provision of this Agreement to the contrary, so long as any Class A Certificate is registered in the name of Cede & Co., as nominee of the Depository, all distributions of principal or interest on such Class A Certificates and all notices with respect to such Class A Certificates shall be made and given, respectively, in the manner provided in the Representation Letter. Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (ii) in the case of any mutilated Certificate, such mutilated Certificate shall first be surrendered to the Trustee, and in the case of any destroyed, lost or stolen Certificate, there shall be first delivered to the Trustee such security or indemnity as may be reasonably required by it to hold the Trustee harmless, then, in the absence of notice to the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute and authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor and aggregate principal amount, bearing a number not contemporaneously outstanding. Upon the issuance of any new Certificate under this Section, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto; any other expense in connection with such issuance shall be an expense of the Owner. Every new Certificate issued pursuant to this Section in exchange for or in lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute evidence of a substitute interest in the Trust, and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Certificates of the same Class duly issued hereunder and such mutilated, destroyed, lost or stolen Certificate shall not be valid for any purpose. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates. 78 Section 5.6. Persons Deemed Owners. The Trustee and the Certificate Insurer and any of their respective agents may treat the Person in whose name any Certificate is registered as the Owner of such Certificate for the purpose of receiving distributions with respect to such Certificate and for all other purposes whatsoever, and neither the Trustee nor the Certificate Insurer nor any of their respective agents shall be affected by notice to the contrary. Section 5.7. Cancellation. All Certificates surrendered for registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. No Certificate shall be authenticated in lieu of or in exchange for any Certificate cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates may be held or destroyed by the Trustee in accordance with its standard policies. Section 5.8. Limitation on Transfer of Ownership Rights. (a) No sale or other transfer of any Unregistered Certificate (other than the initial sale of the Unregistered Certificates upon the issuance thereof) shall be made to any Person unless such Person delivers to the Trustee (i) a completed certificate in the form attached as Exhibit D hereto, (ii) if required by the terms of such certificate, an opinion to the effect that such sale or other transfer will not violate any applicable federal or state securities laws and (iii) an opinion that such transfer will not jeopardize the REMIC status of either REMIC or the deductibility of interest with respect to the Certificates; no sale or other transfer of any Unregistered Certificate shall be made to any Person until such Person delivers to the Trustee either (i) an opinion of counsel from the prospective transferee of such Certificate, acceptable to, and in form and substance satisfactory to the Seller, to the effect that such transferee is not a pension or benefit plan or individual retirement arrangement that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or to Section 4975 of the Code or an entity whose underlying assets are deemed to be assets of such a plan or arrangement by reason of such plan's or arrangement's investments in the entity, as determined under U.S. Department of Labor Regulations 29 C.F.R. ss. 2510.3-101 or otherwise, collectively, a "Plan" or (ii) the representation set forth in Paragraph D of Exhibit D hereto. (b) No sale or other transfer of record or beneficial ownership of a Residual Certificate (whether pursuant to a purchase, a transfer resulting from a default under a secured lending agreement or otherwise) shall be made to a Disqualified Organization. The transfer, sale or other disposition of a Residual Certificate (whether pursuant to a purchase, a transfer resulting from a default under a secured lending agreement or otherwise) to a Disqualified Organization shall be deemed to be of 79 no legal force or effect whatsoever and such transferee shall not be deemed to be an Owner for any purpose hereunder, including, but not limited to, the receipt of distributions on such Residual Certificate. Furthermore, in no event shall the Trustee accept surrender for transfer, registration of transfer, or register the transfer, of any Residual Certificate nor authenticate and make available any new Residual Certificate unless the Trustee has received an affidavit from the proposed transferee in the form attached hereto as Exhibit E. Each holder of a Residual Certificate by his acceptance thereof, shall be deemed for all purposes to have consented to the provisions of this Section 5.8(b). (c) Notwithstanding anything to the contrary herein, no sale or other transfer of record or beneficial ownership of a Class B Certificate or a Residual Certificate shall be made to any Person until such Person delivers to the Trustee either (i) an opinion of counsel from the prospective transferee of such Certificate, acceptable to, and in form and substance satisfactory to the Seller, to the effect that such transferee is not a Plan or (ii) the representation set forth in Paragraph D of Exhibit D hereto. Any such Certificateholder desiring to effect such transfer shall, and does hereby agree to, indemnify the Seller, the Master Servicer, the Transferor, the Certificate Insurer and the Trustee against any liability, cost or expense (including attorney's fees) that may result if the transfer is in violation of such statute. Section 5.9. Assignment of Rights. An Owner may pledge, encumber, hypothecate or assign all or any part of its right to receive distributions hereunder, but such pledge, encumbrance, hypothecation or assignment shall not constitute a transfer of an ownership interest sufficient to render the transferee an Owner of the Trust without compliance with the provisions of Section 5.4 and Section 5.8 hereof. ARTICLE VI COVENANTS Section 6.1. Distributions. On each Payment Date, the Trustee will distribute, from funds comprising the Trust Estate, to the Owners of record of the Certificates as of the related Record Date, such Owners' Percentage Interests in the amounts required to be distributed to the Owners of each Class of Certificates on such Payment Date. For so long as the Class A Certificates are in book-entry form with the Depository, the only "Owner" of the Class A Certificates will be the Depository. Section 6.2. Money for Distributions to be Held in Trust; Withholding. (a) All payments of amounts due and payable with respect to any Certificate that are to be made from amounts 80 withdrawn from the Certificate Account pursuant to Section 7.3 hereof shall be made by and on behalf of the Trustee. (b) The Trustee on behalf of the Trust shall comply with all requirements of the Code and applicable state and local law with respect to the withholding from any distributions made by it to any Owner of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. (c) Any money held by the Trustee in trust for the payment of any amount due with respect to any Class A Certificate, Class B Certificate or Residual Certificate and remaining unclaimed by the Owner of such certificate for three years after such amount has become due and payable shall be discharged from such trust and be paid to the Seller; and the Owner of such Class A Certificate, Class B Certificate or Residual Certificate shall thereafter, as an unsecured general creditor, look only to the Seller for payment thereof (but only to the extent of the amounts so paid to the Seller), and all liability of the Trustee with respect to such trust money shall thereupon cease; provided, however, that the Trustee, before being required to make any such payment, shall at the written request and expense of the Seller cause to be published once, in the eastern edition of The Wall Street Journal, notice that such money remains unclaimed and that, after a date specified therein, which shall be not fewer than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be paid to the Seller. The Trustee shall, at the direction of the Seller, also adopt and employ, at the expense of the Seller, any other reasonable means of notification of such payment (including, but not limited to, mailing notice of such payment to Owners whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Trustee at the last address of record for each such Owner). Section 6.3. Protection of Trust Estate. (a) The Trustee will hold the Trust Estate in trust for the benefit of the Owners and, upon request of the Certificate Insurer or the Seller and at the expense of the Seller, will from time to time execute and deliver all such supplements and amendments hereto pursuant to Section 12.14 hereof and all instruments of further assurance and other instruments, and will take such other action upon such reasonable request, to: (i) more effectively hold in trust all or any portion of the Trust Estate; (ii) perfect, publish notice of, or protect the validity of any grant made or to be made by this Agreement; (iii) enforce any of the Mortgage Loans; 81 (iv) preserve and defend title to the Trust Estate and the rights of the Trustee, and the ownership interests of the Owners represented thereby, in such Trust Estate against the claims of all Persons and parties; or (v) perfect a security interest in the Mortgage Loans, in the event that the conveyance by the Seller did not constitute a sale. (b) The Trustee shall have the power to enforce, and shall enforce the obligations of the other parties to this Agreement by action, suit or proceeding at law or equity, and shall also have the power to enjoin, by action or suit in equity, any acts or occurrences which may be unlawful or in violation of the rights of the Owners; provided, however, that nothing in this Section shall require any action by the Trustee unless the Trustee shall first (i) have been furnished indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such action and (ii) when required by this Agreement, have been requested to take such action by the Certificate Insurer, or, with the consent of the Certificate Insurer by a majority of the Percentage Interests represented by any Class of Class A Certificates, or, if there are no longer any Class A Certificates then Outstanding, by such percentage of the Percentage Interests represented by any Class of Class B Certificates then Outstanding. (c) The Trustee shall execute any instrument reasonably required pursuant to this Section so long as such instrument does not conflict with this Agreement or with the Trustee's fiduciary duties. Section 6.4. Performance of Obligations. The Trustee will not take any action that would release the Seller, the Master Servicer or the Transferor from any of their respective covenants or obligations under any instrument or document relating to the Trust Estate or the Certificates or which would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or document, except with the prior written consent of the Certificate Insurer, or as expressly provided in this Agreement or such other instrument or document. Section 6.5. Negative Covenants. The Trustee will not, to the extent within the control of the Trustee, take any of the following actions: (i) sell, transfer, exchange or otherwise dispose of any of the Trust Estate except as expressly permitted by this Agreement; (ii) claim any credit on or make any deduction from the distributions payable in respect of the Certificates (other 82 than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Owner by reason of the payment of any taxes levied or assessed upon any of the Trust Estate; (iii) incur, assume or guaranty on behalf of the Trust any indebtedness of any Person except pursuant to this Agreement; (iv) dissolve or liquidate in whole or in part the Trust Estate, except pursuant to Article VIII hereof; or (v) (A) impair the validity or effectiveness of this Agreement, or release any Person from any covenants or obligations with respect to the Trust or to the Certificates under this Agreement, except as may be expressly permitted hereby or (B) create or extend any lien, charge, adverse claim, security interest, mortgage or other encumbrance to or upon the Trust Estate or any part thereof or any interest therein or the proceeds thereof. Section 6.6. No Other Powers. The Trustee will not, to the extent within the control of the Trustee, permit the Trust to engage in any business activity or transaction other than those activities permitted by Section 2.3 hereof. Section 6.7. Limitation of Suits. No Owner shall have any right to institute any proceeding, judicial or otherwise, with respect to this Agreement or the Certificate Insurance Policy, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Owner has previously given written notice to the Seller, the Transferor, the Certificate Insurer and the Trustee of such Owner's intention to institute such proceeding; (2) the Owners of not less than 25% of the Percentage Interests represented by any Class of Class A Certificates, or, if there are no Class A Certificates then Outstanding, by such percentage of the Percentage Interests of any Class of Class B Certificates then Outstanding, shall have made written request to the Trustee to institute such proceeding in its own name as representative of the Owners; (3) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity has failed to institute such proceeding; and (4) no direction inconsistent with such written request has been given to the Trustee during such 30-day period by the Certificate Insurer or by the Owners of a majority of 83 the Percentage Interests represented by each Class of Class A Certificates or, if there are no Class A Certificates then Outstanding, by such percentage of the Percentage Interests represented by any Class of Class B Certificates then Outstanding; it being understood and intended that no one or more Owners shall have any right in any manner whatever by virtue of, or by availing themselves of, any provision of this Agreement to affect, disturb or prejudice the rights of any other Owner of the same Class or to obtain or to seek to obtain priority or preference over any other Owner of the same Class or to enforce any right under this Agreement, except in the manner herein provided and for the equal and ratable benefit of all the Owners of the same Class. In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Owners, each representing less than a majority of the applicable Class of Certificates, the Trustee shall act at the direction of the Certificate Insurer. Section 6.8. Unconditional Rights of Owners to Receive Distributions. Notwithstanding any other provision in this Agreement, the Owner of any Certificate shall have the right, which is absolute and unconditional, to receive distributions to the extent provided herein and therein with respect to such Certificate or to institute suit for the enforcement of any such distribution, and such right shall not be impaired without the consent of such Owner. Section 6.9. Rights and Remedies Cumulative. Except as otherwise provided herein, no right or remedy herein conferred upon or reserved to the Seller, the Master Servicer, the Transferor, the Trustee, to the Owners or to the Certificate Insurer is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Except as otherwise provided herein, the assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.10. Delay or Omission Not Waiver. No delay of the Seller, Master Servicer, the Transferor, the Trustee, or any Owner of any Certificate or the Certificate Insurer to exercise any right or remedy under this Agreement shall impair any such right or remedy or constitute a waiver of any such right or remedy. Every right and remedy given by this Article VI or by law to the Seller or to the Owners or the Certificate Insurer may be exercised from time to time, and as often as may be deemed expedient, by the Seller or by the Owners or the Certificate Insurer, as the case may be. 84 Section 6.11. Control by Owners. Either (x) the Certificate Insurer or (y) with the consent of the Certificate Insurer, the Owners of a majority of the Percentage Interests represented by each Class of Class A Certificates then Outstanding or, if there are no Class A Certificates then Outstanding, by such majority of the Percentage Interests represented by any Class of Class B Certificates then Outstanding, may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, provided that: (1) such direction shall not be in conflict with any rule of law or with this Agreement; (2) the Trustee shall have been provided with indemnity satisfactory to it; and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; provided, however, that the Trustee need not take any action which it determines might involve it in liability or may be unjustly prejudicial to the Owners not so directing. ARTICLE VII ACCOUNTS, FLOW OF FUNDS, DISTRIBUTIONS AND REPORTS Section 7.1. Collection of Money. Except as otherwise expressly provided herein, the Trustee may demand payment or delivery of all money and other property payable to or receivable by the Trustee pursuant to this Agreement, including (a) all payments due on the Mortgage Loans in accordance with the respective terms and conditions of such Mortgage Loans and required to be paid over to the Trustee by the Master Servicer, or by any Sub-Servicer and (b) Insured Payments in accordance with the terms of the Certificate Insurance Policy. The Trustee shall hold all such money and property received by it as part of the Trust Estate and shall apply it as provided in this Agreement. Section 7.2. Establishment of Accounts. The Trustee shall establish and maintain, at the corporate trust office of the Trustee, a Certificate Account, a Class A Group I Distribution Account, a Class A Group II Distribution Account and a Class B Distribution Account, each to be held by the Trustee as a segregated trust account so long as the Trustee qualifies as a Designated Depository Institution and if the Trustee does not so qualify, then by any Designated Depository Institution in the name of the Trust for the benefit of the Owners of the Certificates and the Certificate Insurer, as their interests may appear. 85 In administering the Accounts the Trustee may establish such sub-Accounts as the Trustee deems desirable. Section 7.3. Flow of Funds. (a) The Trustee shall deposit to the Certificate Account: (i) with respect to the Group I Mortgage Loans, without duplication, upon receipt, each Group I Monthly Remittance remitted by the Master Servicer or any Sub-Servicer, together with any amounts received by the Trustee in connection with the termination of the Trust insofar as such amounts relate to the Group I Mortgage Loans; and (ii) with respect to the Group II Mortgage Loans, without duplication, upon receipt, each Group II Monthly Remittance remitted by the Master Servicer or any Sub-Servicer, together with any amounts received by the Trustee in connection with the termination of the Trust, insofar as such amounts relate to the Group II Mortgage Loans. (b) On each Payment Date, the Trustee shall make the following allocations, disbursements and transfers from the Group I Available Funds and from the Group II Available Funds in the following order of priority, and each such allocation, transfer and disbursement shall be treated as having occurred only after all preceding allocations, transfers and disbursements have occurred: (i) first, the Trustee shall pay first, to itself the related Trustee's Fee then due; (ii) [Reserved]; (iii) second, the Trustee shall allocate the following amounts in the following order of priority: (A) from the Available Funds then on deposit in the Certificate Account with respect to each Group, the lesser of (x) the Available Funds with respect to such Group and (y) the Insured Distribution Amount with respect to such Group shall be allocated to the Class A Distribution Account with respect to such Group; (B) from the remaining Available Funds then on deposit in the Certificate Account with respect to each Group, the lesser of (x) such remaining Available Funds, and (y) the excess of (i) the Insured Distribution Amount with respect to the other Group over (ii) the amount then on 86 deposit in the Class A Distribution Account with respect to such Group (such excess, the "Insured Shortfall" with respect to such Group), shall be allocated to the Class A Distribution Accounts for the other Group; (C) (i) from the remaining Available Funds then on deposit in the Certificate Account with respect to each Group to the Certificate Insurer, the lesser of (x) such remaining Available Funds with respect to each Group and (y) the Premium Amount and any Reimbursement Amount then due to the Certificate Insurer; (ii) from the remaining Available Funds then on deposit in the Certificate Account with respect to each Group to the Certificate Insurer, the lesser of (x) such remaining Available Funds and (y) any amounts remaining due to the Certificate Insurer after application of (c)(i) above with respect to the other Group (such amount, a "Reimbursement Shortfall" with respect to a Group) shall be paid to the Certificate Insurer on behalf of the other Group; (iii) from the Available Funds then on deposit in the Certificate Account with respect to each Group, the lesser of (x) the Available Funds with respect to such Group and (y) the excess of (i) the Interest Distribution Amount with respect to such Group over (ii) the Insured Interest Distribution Amount with respect to such Group shall be allocated to the Class A Distribution Account with respect to such Group; (D) from the remaining Available Funds then on deposit in the Certificate Account with respect to such Group, the lesser of (x) such remaining Available Funds with respect to such Group and (y) the excess of (i) the Principal Distribution Amount applicable to such Group and Payment Date over (ii) all amounts then on deposit in the respective Class A Distribution Account that are allocable to principal, shall be allocated to such Class A Distribution Account; 87 (E) from the remaining Available Funds then on deposit in the Certificate Account with respect to each Group, the lesser of (x) such remaining Available Funds and (y) the Subordination Deficiency Amount applicable to the other Group on such Payment Date, shall be allocated to the respective Class A Distribution Account as a Subordination Increase Amount; (F) from the remaining Available Funds then on deposit in the Certificate Account with respect to each Group, the lesser of (x) such remaining Available Funds with respect to such Group and (y) the Class B Interest, shall be allocated to the Class B Distribution Account and applied as a distribution of interest on account of the Class B Certificates; (G) from the remaining Available Funds then on deposit in the Certificate Account with respect to such Group, the lesser of (x) such remaining Available Funds and (y) the Class B Principal Balance as of such Payment Date, assuming that the amount then on deposit in the Class B Distribution Account as a result of the application of clause (F) above has been applied as a distribution of principal on account of the Class B Principal Balance on such Payment Date, shall be allocated to the Class B Distribution Account and applied as a distribution of principal on the Class B Principal Balance; and (H) all amounts then remaining on deposit in the Certificate Account shall be distributed to the Owners of the Residual Certificates on such Payment Date. (c) On each Payment Date, the Trustee shall make the following disbursements from amounts deposited in the Distribution Accounts pursuant to Subsection (b) above, together with the amount of any Insured Payment with respect to a Group deposited to the respective Distribution Account: (i) the Trustee shall pay, pari passu from the amount then on deposit in the Class A Group I Distribution Account: 88 (A) to the Owners of the Class A-1 Group I Certificates, the Class A-1 Distribution Amount for such Payment Date; (B) to the Owners of the Class A-2 Group I Certificates, the Class A-2 Distribution Amount for such Payment Date; (C) to the Owners of the Class A-3 Group I Certificates, the Class A-3 Distribution Amount for such Payment Date; and (D) to the Owners of the Class A-4 Group I Certificates, the Class A-4 Distribution Amount for such Payment Date; and (E) to the Owners of the Class A-5 Group I Certificates, the Class A-5 Distribution Amount for such Payment Date; provided, however, that if, on any Payment Date, (x) the Certificate Insurer is then in default under the Certificate Insurance Policy and (y) a Group I Subordination Deficit exists, then any distribution of the Group I Principal Distribution Amount on such Payment Date shall be made pro rata to the Owners of each of the Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I Certificates and the Class A-5 Group I Certificates on such Payment Date; (ii) the Trustee shall pay from the amount then on deposit in the Class A Group II Distribution Account, to the Owners of the Class A-6 Group II Certificates, the Class A-6 Distribution Amount for such Payment Date; and (iii) the Trustee shall transfer from the amounts then on deposit in the Class B Distribution Account, to the Supplemental Interest Payment Account, the Class B Distribution Amount for such Payment Date; such transfer shall be deemed a distribution on the Class B Certificates. (d) Any amounts properly distributed to the Owners of the Class B Certificates or to the Owners of the Residual Certificates pursuant to the terms of this Agreement shall be distributed free of the subordination described herein, and any such amounts shall in no event be required to be returned to the Trustee or paid over to the Owners of the Class A Certificates. 89 (e) Whenever, during the administration of the Trust, there comes into the possession of the Trustee any money or property which this Agreement does not otherwise require to be distributed on account of the Class A Certificates or the Class B Certificates or to the Certificate Insurer, the Trustee shall distribute such money or other property to the Owners of the Class RU Certificates. (f) Each Owner of a Class A Certificate which pays any Preference Amounts theretofore received by such Owner on account of such Class A Certificate will be entitled to receive reimbursement for such amounts from the Certificate Insurer in accordance with the terms of the Certificate Insurance Policy, but only after (i) delivering a copy to the Trustee of a final, nonappealable order (a "Preference Order") of a court having competent jurisdiction under the United States Bankruptcy Code demanding payment of such amount to the bankruptcy court and (ii) irrevocably assigning such Owner's claim with respect to such Preference Order to the Certificate Insurer in such form as is required by the Certificate Insurer. In no event shall the Certificate Insurer pay more than one Insured Payment in respect of any Preference Amount. Section 7.4. Investment of Accounts. (a) All or a portion of any Account held by the Trustee shall be invested and reinvested by the Trustee in the name of the Trustee for the benefit of the Owners, as described in Section 7.4(c) hereof. No investment in any Account shall mature later than the Business Day immediately preceding the next Payment Date and shall be held until maturity. (b) Subject to Section 9.1 hereof, the Trustee shall not in any way be held liable by reason of any insufficiency in any Account held by the Trustee resulting from any loss on any Eligible Investment included therein (except to the extent that the bank serving as Trustee is the obligor thereon). (c) Until it is directed in writing by the Seller to invest in another Eligible Investment, the Trustee shall invest in Eligible Investments described in paragraph (h) of Section 7.5 hereof. (d) All income or other gain from investments in any Account held by the Trustee shall be deposited in such Account immediately on receipt, and any loss resulting from such investments shall be charged to such Account. Section 7.5. Eligible Investments. The following are Eligible Investments: (a) Direct general obligations of the United States or the obligations of any agency or instrumentality of the United States, the timely payment or the guarantee of which constitutes a full faith and credit obligation of the United States. 90 (b) FHLMC senior debt obligations, but excluding any such securities whose terms do not provide for payment of a fixed dollar amount upon maturity or call for redemption. (c) FNMA senior debt obligations, but excluding any such securities whose terms do not provide for payment of a fixed dollar amount upon maturity or call for redemption. (d) Federal funds, certificates of deposit, time and demand deposits, and bankers' acceptances (having original maturities of not more than 365 days) of any domestic bank (which may include the Trustee or its affiliate), the short-term debt obligations of which have been rated A-1 or better by S&P and P-1 by Moody's. (e) Deposits of any bank or savings and loan association which has combined capital, surplus and undivided profits of at least $50,000,000 which deposits are not in excess of the applicable limits insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, provided that the long-term deposits of such bank or savings and loan association are rated at least "BBB" by S&P and "Baa3" by Moody's. (f) Commercial paper (having original maturities of not more than 270 days) rated A-1 or better by S&P and P-1 by Moody's. (g) Investments in money market funds (including those of the Trustee or its affiliates (for which separate compensation may be received)) rated at least AAAm or AAAm-G by S&P and Aaa by Moody's. (h) Such other investments as have been approved in writing by S&P, Moody's and the Certificate Insurer; provided that no instrument described above is permitted to evidence either the right to receive (a) only interest with respect to obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument and the interest and principal payments with respect to such instrument provide a yield to maturity at par greater than 120% of the yield to maturity at par of the underlying obligations; and provided, further, that no instrument described above may be purchased at a price greater than par. Any Eligible Investment may be purchased by or through the Trustee or any of its affiliates. The Trustee or its affiliates may act as sponsor, manager, depository or advisor with regard to any Eligible Investment. Section 7.6. Reports by Trustee. (a) On each Payment Date the Trustee shall report in writing to each Owner and to the Seller, the Master Servicer, and the Transferor with a copy to the Certificate Insurer, S&P and Moody's: 91 (i) the amount of the distribution with respect to each Class of Certificates; (ii) the amount of such distributions allocable to principal, separately identifying the aggregate amount of any Prepayments or other unscheduled recoveries of principal included therein; (iii) the amount of such distributions allocable to interest; (iv) the amount of such distributions allocable to any Carry-Forward Amount; (v) the then-outstanding principal balance of each Class of Class A Certificates as of such Payment Date, together with the principal amount, by class, of each Class A Certificate (based on a Certificate in the original principal amount of $1,000) then Outstanding, in each case after giving effect to any payment of principal on such Payment Date; (vi) the then-outstanding principal balance of each class of Class B Certificates, together with the principal amount, by class, of each Class B Certificate (based on a Certificate in the original principal amount of $1,000) then Outstanding, in each case after giving effect to any payment of principal on such Payment Date; (vii) the total of any Substitution Amounts and any Loan Purchase Prices included in such distribution; (viii) the amount of any Supplemental Interest Payment Amount, Class B-S Certificate distribution and any Interest Advance on such Payment Date, together with the amount of any unreimbursed Interest Advance then owed to the Designated Residual Owner; (ix) the amount of the Master Servicing Fee paid with respect to each of the two Mortgage Loan Groups with respect to the related Remittance Period; (x) the amount of any Group I Insured Payment or any Group II Insured Payment made with respect to such Payment Date; and (xi) as of such Payment Date, the Group I Subordinated Amount and the Group II Subordinated Amount. In preparing the report under this Section 7.6, the Trustee shall rely solely upon the electronic report described in Section 10.8(d)(ii) hereof being received from the Master Servicer or any Sub-Servicer. The Trustee shall not be responsible for its 92 obligations under this Section 7.6 unless and until it receives such report from the Master Servicer. (b) On each Payment Date the Trustee will additionally inform the Seller, the Master Servicer, the Transferor, the Certificate Insurer, S&P and Moody's with respect to the following: (i) the Group I Available Funds and the Group II Available Funds for the related Payment Date; (ii) the Pool Principal Balance with respect to the two Mortgage Loan Groups as of the end of the related Remittance Period; (iii) the number and Principal Balances of all Mortgage Loans in the two Mortgage Loan Groups which were the subject of Prepayments during the related Remittance Period; (iv) the total amount of payments in respect of or allocable to interest on the Mortgage Loans in the two Mortgage Loan Groups received or deemed to have been received from the related Mortgagors by the Master Servicer or any Sub-Servicer during the related Remittance Period (including any net income from REO Properties received during the related Remittance Period); (v) the aggregate of all principal payments received or deemed to have been received from the related Mortgagors in the two Mortgage Loan Groups by the Master Servicer or any Sub-Servicer during the related Remittance Period; (vi) the aggregate of any Insurance Proceeds received or deemed to have been received by the Master Servicer or any Sub-Servicer during the related Remittance Period with respect to the two Mortgage Loan Groups; (vii) the aggregate of any Released Mortgaged Property Proceeds received or deemed to have been received by the Master Servicer or any Sub-Servicer during the related Remittance Period with respect to the two Mortgage Loan Groups; (viii) the aggregate of any Liquidation Proceeds, Liquidation Expenses and Net Liquidation Proceeds received or deemed to have been received by the Master Servicer or any Sub-Servicer, and Net Realized Losses incurred, during the related Remittance Period with respect to the two Mortgage Loan Groups, the Group I Cumulative Net Realized Losses, the Group II Cumulative Net Realized Losses, and the aggregate Cumulative Net Realized Losses since the Startup Day and during the prior 12-month period and the Pool Rolling Three Month Delinquency Rate; 93 (ix) the total amount of Compensating Interest payments paid or to be paid by the Master Servicer or any Sub-Servicer pursuant to Section 10.10 hereof with respect the two Mortgage Loan Groups; (x) the amount of Delinquency Advances made by the Master Servicer or any Sub-Servicer pursuant to Section 10.9 hereof with respect to such Payment Date with respect to the two Mortgage Loan Groups; (xi) the monthly Master Servicing Fee and any additional servicing fees paid to the Master Servicer or any Sub-Servicer pursuant to Section 10.15 hereof with respect to the two Mortgage Loan Groups; (xii) the amount of Delinquency Advances with respect to the two Mortgage Loan Groups reimbursable to the Master Servicer or any Sub-Servicer during such Remittance Period pursuant to Section 10.9 hereof and not previously reimbursed; (xiii) the amount of any Servicing Advance made by the Master Servicer or any Sub-Servicer pursuant to Sections 10.9 and 10.13 hereof with respect to the two Mortgage Loan Groups and not previously reimbursed; (xiv) the Class A-1 Distribution Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount, the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class A-6 Distribution Amount, and the Class B Distribution Amount, with the components thereof stated separately; (xv) the weighted average remaining term to maturity and Net Weighted Average Coupon Rate of the Mortgage Loans with respect to the two Mortgage Loan Groups as of the close of business on the last day of the related Remittance Period; (xvi) the Group I Subordinated Amount, Group I Subordination Deficiency Amount, Group I Specified Subordinated Amount, Group I Subordination Increase Amount, the Group II Subordinated Amount, Group II Subordination Deficiency Amount, Group II Specified Subordinated Amount and Group II Subordination Increase Amount; (xvii) the Group I Excess Subordinated Amount, Group I Subordination Reduction Amount, Group II Excess Subordinated Amount and Group II Subordination Reduction Amount, for the related Payment Date; (xviii) the number of Mortgage Loans in the two Mortgage Loan Groups at the beginning and end of the related Remittance Period; 94 (xix) the Group I Shortfall Amount and the Group II Shortfall Amount for the related Payment Date; (xx) such other information as the Certificate Insurer or the Seller may reasonably request and which is derived from information which is produced or available in the ordinary course of the Master Servicer's or any Sub-Servicer's business or which otherwise materially relates to the transactions contemplated hereby and is provided to the Trustee by the electronic report described in Section 10.8(d)(ii) hereof; and (xxi) the number and Principal Balance of any Mortgage Loans repurchased during the related Remittance Period pursuant to Section 10.13(f) and the number and cumulative Principal Balance of all Mortgage Loans so repurchased since the Cut-Off Date. (c) In addition, on each Payment Date the Trustee will disseminate to each Owner, the Seller, the Master Servicer and to the Transferor with a copy to the Certificate Insurer, S & P and Moody's, together with the information described in Subsection (a) preceding, the following information with respect to the two Mortgage Loan Groups as of the close of business on the last day of the related Remittance Period, which is required to be prepared by the Master Servicer or a Sub-Servicer and furnished to the Trustee pursuant to Section 10.8(d)(ii) hereof for such purpose on or prior to the related Remittance Date: (i) the total number of Mortgage Loans and the aggregate Principal Balances thereof, together with the number and aggregate principal balances of Mortgage Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days Delinquent; (ii) the number and aggregate principal balances of all Mortgage Loans in foreclosure proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (i)); (iii) the number and aggregate principal balances of all Mortgage Loans relating to Mortgagors in bankruptcy proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clauses (i) and (ii)); (iv) the number and aggregate principal balances of all Mortgage Loans relating to REO Properties (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clauses (i), (ii) and (iii)); 95 (v) the number and aggregate principal balances of all Mortgage Loans as to which foreclosure proceedings were commenced during the prior Remittance Period; (vi) a schedule regarding cumulative foreclosures since the Cut-Off Date; and (vii) the book value of any REO Property and any income received from REO Properties during the prior Remittance Period. The Seller, the Master Servicer, the Transferor and the Trustee on behalf of Certificateholders and the Trust (the "Trust Parties") hereby authorize the Certificate Insurer to include the information contained in reports provided to the Certificate Insurer hereunder (the "Information") on Bloomberg, an on-line computer based information network maintained by Bloomberg L.P. ("Bloomberg"), or in other electronic or print information services. The Trust Parties agree not to commence any actions or proceedings, or otherwise assert any claims, against the Certificate Insurer or its affiliates or any of the Certificate Insurer's or its affiliates' respective agents, representatives, directors, officers or employees (collectively, the "Certificate Insurer Parties"), arising out of, or related to or in connection with the dissemination and/or use of any Information by the Certificate Insurer, including, but not limited to, claims based on allegations of inaccurate, incomplete or erroneous transfer of information by the Certificate Insurer to Bloomberg or otherwise (other than in connection with the Certificate Insurer's gross negligence or willful misconduct). The Trust Parties waive their rights to assert any such claims against the Certificate Insurer Parties and fully and finally release the Certificate Insurer Parties from any and all such claims, demands, obligations, actions and liabilities (other than in connection with the Certificate Insurer's gross negligence or willful misconduct). The Certificate Insurer makes no representations or warranties, expressed or implied, of any kind whatsoever with respect to the accuracy, adequacy, timeliness, completeness, merchantability or fitness for any particular purpose of any Information in any form or manner. The Certificate Insurer reserves the right at any time to withdraw or suspend the dissemination of the Information by the Certificate Insurer. The authorizations, covenants and obligations of the Trust Parties under this section shall be irrevocable and shall survive the termination of this Agreement. Section 7.7. Drawings under the Certificate Insurance Policy and Reports by Trustee. (a) On each Determination Date the Trustee shall determine, no later than 12:00 noon on such Determination Date, whether a Group I Shortfall Amount or a Group II Shortfall Amount has theretofore occurred and will remain uncured on the following Payment Date, and whether a Group I Shortfall Amount or a Group II Shortfall Amount with respect to either the Group I Mortgage Loans, or the Group II Mortgage Loans 96 will occur on the following Payment Date. If the Trustee determines that a Group I Shortfall Amount or a Group II Shortfall Amount will, based on the amount then on deposit in the Certificate Account and amounts to be deposited in the Certificate Account prior to such Payment Date on account of the Trustee's advancing obligations as successor Master Servicer as set forth in Section 11(j) hereof, occur on the following Payment Date, the Trustee shall furnish the Certificate Insurer and the Seller with a completed Notice in the form set forth as Exhibit A to the Certificate Insurance Policy. The Notice shall specify the amount of the Insured Payment and shall constitute a claim for an Insured Payment pursuant to the Certificate Insurance Policy. (b) The Trustee shall report to the Seller, the Master Servicer, the Transferor and the Certificate Insurer with respect to the amounts then held in each Account held by the Trustee and the identity of the investments included therein, as the Seller, the Master Servicer, the Transferor or the Certificate Insurer may from time to time request. Without limiting the generality of the foregoing, the Trustee shall, at the request of the Seller, the Master Servicer, the Transferor or the Certificate Insurer transmit promptly to the Seller, the Master Servicer, the Transferor and the Certificate Insurer copies of all accountings of receipts in respect of the Mortgage Loans furnished to it by the Master Servicer or a Sub-Servicer. (c) Upon receipt of Insured Payments from the Certificate Insurer under the Certificate Insurance Policy, the Trustee shall deposit such Insured Payments in the Policy Payments Account. The Trustee shall withdraw Insured Payments from the Policy Payments Account in accordance with section 13.4(a). The Trustee shall distribute all Insured Payments received, or the proceeds thereof, in accordance with Section 7.3(b) and 7.3(c) to the Owners of the Class A Certificates of the related Class. (d) The Trustee shall (i) receive Insured Payments as attorney-in-fact of each Owner of the Class A Certificates of the related Class receiving any Insured Payment from the Certificate Insurer and (ii) disburse such Insured Payment to the Owners of the related Class A Certificates as set forth in Section 7.3(b) and 7.3(c). The Certificate Insurer shall be entitled to receive the related Reimbursement Amount pursuant to Section 7.5(b)(iii)(C) hereof with respect to each Insured Payment made by the Certificate Insurer. The Trustee hereby agrees on behalf of each Owner of Class A Certificates and the Trust for the benefit of the Certificate Insurer that it recognizes that to the extent the Certificate Insurer makes Insured Payments, either directly or indirectly (as by paying through the Trustee), to the Owners of such Class A Certificates, the Certificate Insurer will be entitled to receive the related Reimbursement Amount pursuant to Section 7.5(b)(iii)(C) hereof. 97 (e) Insured Payments disbursed by the Trustee from proceeds of the Certificate Insurance Policy shall not be considered payment by the Trust Fund nor shall such payments discharge the obligation of the Trust Fund with respect to the related Class A Certificates, and the Certificate Insurer shall become the owner of such unpaid amounts due from the Trust Fund in respect of the related Class A Certificates. The Trustee hereby agrees on behalf of each Holder of a related Class A Certificate for the benefit of the Certificate Insurer that it recognizes that to the extent the Certificate Insurer makes Insured Payments, either directly or indirectly (as by paying through the Trustee), to the Owners of any Class A Certificates, the Certificate Insurer will be subrogated to the rights of such Owners with respect to such Insured Payment, shall be deemed to the extent of payments so made to be a registered Owner of such Class A Certificates and shall receive all future distributions (subject to the priority set forth in 7.3(b)(iii)) until all such Insured Payments by the Certificate Insurer, together with interest thereon at the interest rate borne by the related Class A Certificates, have been fully reimbursed. To evidence such subrogation, the Trustee shall note the Certificate Insurer's rights as subrogee on the registration books maintained by the Trustee upon receipt from the Certificate Insurer of proof of payment of any Insured Payment. Section 7.8. Allocation of Realized Losses. If, on any Payment Date, following the making of all allocations, transfers and distributions (other than as provided in this Section) on such Payment Date (x) the sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance, the Class A-6 Principal Balance, and the Class B Principal Balance exceeds (y) the Pool Principal Balance as of the close of business on the last day of the related Remittance Period (any such excess, "Allocable Losses"), such Allocable Losses shall be applied as a reduction of the Class B Principal Balance until the Class B Principal Balance has been reduced to zero. Section 7.9. Supplemental Interest Payments. (a) The parties hereto do hereby create and establish a trust, the "Access Financial Supplemental Interest Trust 1997-2" (the "Supplemental Interest Trust"). The Supplemental Interest Trust shall hold a trust account, the "Supplemental Interest Payment Account", to be held by the Trustee in its name on behalf of the Supplemental Interest Trust. If, on any Determination Date, the Trustee determines that the amount to be available on the next Payment Date in the Supplemental Interest Payment Account (such amount, the "Supplemental Interest Payment Amount") is less than the excess of (i) the Class A-6 Full Interest Distribution Amount over (ii) the Class A-6 Interest Distribution Amount as of such Payment Date (the difference, if any, between the Supplemental Interest Payment 98 Amount and such excess, the "Class A-6 Formula Interest Shortfall"), the Trustee shall deliver a notice in the form of Exhibit O hereto to the Designated Residual Owner demanding that the Designated Residual Owner fund the Class A-6 Formula Interest Shortfall on the related Payment Date. The amount so funded by the Designated Residual Owner on any such Payment Date is the "Interest Advance" for such Payment Date. The Trustee shall deposit any Interest Advance received by it in the amount of the Class A-6 Formula Interest Shortfall into the Class A Group II Distribution Account. On each Payment Date the Trustee shall withdraw from the Supplemental Interest Payment Account and deposit in the Group II Distribution Account the Class A-6 Formula Interest Shortfall; provided that the amount to be withdrawn may not exceed the Supplemental Interest Payment Amount (such amount, the "Funded Amount"). (b) Any portion of the Supplemental Interest Payment Amount after application of clause (a) above (the "Remaining Amount") shall be applied in the following order of priority: (i) first, to the Designated Residual Owner, as reimbursement for unpaid Interest Advances, together with interest thereon (the "Interest Advance Reimbursement Amount"), with the earliest Interest Advances being deemed to be paid first; and (ii) second, to the Owners of the Class B-S Certificates, all remaining amounts then on deposit in the Supplemental Interest Payment Account, to such Owners pro rata in accordance with the Percentage Interests. ARTICLE VIII TERMINATION OF TRUST Section 8.1. Termination of Trust. The Trust created hereunder and all obligations created by this Agreement will terminate upon the earlier of (i) the payment to the Owners of all Certificates of all amounts held by the Trustee and required to be paid to such Owners pursuant to this Agreement upon the later to occur of (a) the final payment or other liquidation (or any advance made with respect thereto) of the last Mortgage Loan in the Trust Estate or (b) the disposition of all property acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified Liquidation of the Trust is effected as described below. To effect a termination of this Agreement pursuant to clause (b) above, the Owners of all Certificates then Outstanding shall (x) unanimously direct the Trustee on behalf of the Trust to adopt a plan of complete liquidation with respect to each REMIC, as contemplated by Section 860F(a)(4) of the Code and 99 (y) provide to the Trustee an opinion of counsel experienced in federal income tax matters to the effect that such liquidation constitutes a Qualified Liquidation and the Trustee either shall sell the Mortgage Loans and distribute the proceeds of the liquidation of the Trust Estate, or shall distribute equitably in kind all of the assets of the Trust Estate to the remaining Owners of the Certificates each in accordance with such plan, so that the liquidation or distribution of the Trust Estate, the distribution of any proceeds of the liquidation and the termination of this Agreement occur no later than the close of the 90th day after the date of adoption of the plan of liquidation and such liquidation qualifies as a Qualified Liquidation. In no event, however, will the Trust created by this Agreement continue beyond the expiration of twenty-one (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 United Kingdom, living on the date hereof. The Trustee shall give written notice of termination of the Agreement to the Certificate Insurer and each Owner in the manner set forth in Section 12.5 hereof. Section 8.2. Termination Upon Option of the Seller. (a) On any Remittance Date on or after the Remittance Date on which the then-outstanding aggregate Principal Balances of the Mortgage Loans is ten percent or less of the Original Pool Principal Balance, the Seller may determine to purchase and may cause the purchase from the Trust of all (but not fewer than all) Mortgage Loans and all property theretofore acquired in respect of any Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the Trust Estate at a price equal to 100% of the aggregate Principal Balances of the related Mortgage Loans as of the day of termination minus amounts remitted from the Principal and Interest Account to the Certificate Account representing collections of principal on the Mortgage Loans during the current Remittance Period, plus (i) one month's interest on such amount computed at the weighted average Coupon Rate for the related Mortgage Loan Group, (ii) the aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances, including amounts which would be Delinquency Advances which the Master Servicer has theretofore failed to remit, (iii) any amount owing to the Trustee, (iv) any Reimbursement Amount owing to the Certificate Insurer and the Trustee, (v) any Insured Payment due on the related Payment Date, (vi) the amount of any unpaid Interest Advances and (vii) the aggregate amount of any unpaid Supplemental Interest Payment Amounts. The Seller shall pay such termination price to the Trustee for deposit in the Certificate Account. In connection with such termination, the Master Servicer shall remit to the Trustee all amounts (net of investment earnings and providing for investment losses pursuant to Section 10.8(b) hereof, net of the Master Servicing Fee and net of amounts reimbursable for Delinquency Advances and Servicing Advances) then on deposit in the Principal and Interest Account for deposit to the Certificate 100 Account, which deposit shall be deemed to have occurred immediately preceding such purchase. (b) In connection with any such purchase, the Seller shall provide to the Trustee an opinion of counsel experienced in federal income tax matters to the effect that such purchase constitutes a Qualified Liquidation with respect to each REMIC. (c) Promptly following any such purchase, the Trustee will release the Files, with appropriate endorsements and transfer documents, to the Seller or otherwise upon its order. Section 8.3. Auction Sale. If the Seller fails, by the ninetieth day following the first Remittance Date on which such option may be exercised, to exercise its purchase option pursuant to Section 8.2 hereof, then upon receipt of written notice and direction from the Seller, the Trustee will notify the Representative (or, if the Representative is unable or unwilling, another investment banking or whole-loan trading firm selected by the Seller (the Representative or such other investment bank or trading firm, the "Advisor") who will solicit on behalf of the Trustee competitive bids for the purchase of the Mortgage Loans for fair market value. Such solicitation shall be conducted substantially in the manner described in Exhibit N hereto. In the event that satisfactory bids are received as described below, the proceeds of the sale of such assets shall be deposited into the Certificate Account. The Trustee will ask the Advisor to solicit, on behalf of the Trustee, good-faith bids from no fewer than two prospective purchasers that are considered at the time to be competitive participants in the home equity market. The Advisor will consult with any securities brokerage houses identified by the Seller as then making a market in the Class A Certificates to obtain a determination as to whether the fair market value of such assets has been offered. Any purchaser of such Mortgage Loans must agree to the continuation of the Master Servicer or any successor Master Servicer as servicer of the assets on terms substantially similar to those in this Agreement. If the highest good-faith bid received by the Advisor from a qualified bidder is, in the judgment of the Representative, not less than the fair market value of such Mortgage Loans and if such bid would equal the amount set forth in the following sentence, the Trustee, following consultation with and written direction from the Advisor and the Seller, will sell and assign such Mortgage Loans without representation, warranty or recourse to such highest bidder and will redeem the Class A Certificates. For the Trustee to consummate the sale, the bid must be at least equal to the termination price set forth in Section 8.2(a) hereof. In addition, the bid must be in an amount sufficient to pay the fees and expenses of the Trustee owing hereunder. If such conditions are not met, the Trustee will, following consultation with the 101 Advisor and the Seller, decline to consummate such sale. In addition, the Trustee will decline to consummate such sale unless it receives from the Advisor an opinion of counsel addressed to it and the Certificate Insurer that such sale will not give rise either to any "prohibited transaction" tax under section 860F(a)(1) of the Code or to any tax on contributions to the REMIC after the "startup day" under section 860G(d)(1) of the Code. In the event such sale is not consummated in accordance with the foregoing, the Trustee will not be under any obligation to solicit any further bids or otherwise to negotiate any further sale of the Mortgage Loans. In such event, however, if directed by the Seller, the Trustee may solicit bids from time to time in the future for the purchase of the Mortgage Loans upon the same terms described above. The Trustee may consult with the Advisor and the advice of the Advisor shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder. The Seller shall reimburse the Trustee for any fees incurred under this Section 8.3 if a sale is not consummated. Section 8.4. Disposition of Proceeds. The Trustee shall, upon receipt thereof, deposit the proceeds of any liquidation or termination of the Trust Estate pursuant to this Article VIII to the Certificate Account for application as provided in Section 7.3 hereof. ARTICLE IX THE TRUSTEE Section 9.1. Certain Duties and Responsibilities. (a) The Trustee (i) except during the continuance of an Event of Default, undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Trustee and (ii) in the absence of bad faith on its part, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished pursuant to and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. During the continuance of an Event of Default, the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances with respect to such person's property or affairs. 102 (b) Notwithstanding the retention of the Master Servicer pursuant hereto and subject to the provisions of Section 11.1 hereof, the Trustee is hereby empowered (but not obligated) to perform the duties of the Master Servicer hereunder following the failure of the Master Servicer to perform pursuant hereto. Specifically, and not in limitation of the foregoing, the Trustee shall have the power (but not the obligation): (i) to collect Mortgagor payments; (ii) to foreclose on defaulted Mortgage Loans; (iii) to enforce due-on-sale clauses and to enter into assumption and substitution agreements as permitted by Article X hereof; (iv) to deliver instruments of satisfaction pursuant to Article X hereof; (v) to enforce the Mortgage Loans; and (vi) to make Delinquency Advances and Servicing Advances and to pay Compensating Interest, in the manner required by this Agreement. (c) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this subsection shall not be construed to limit the effect of clause (a) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by an Authorized Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be 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 Seller or the Certificate Insurer or, with the Certificate Insurer's consent, of the Owners of a majority in Percentage Interest of the Certificates of the affected Class or Classes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement relating to such Certificates; (iv) The Trustee shall not be required to take notice or be deemed to have notice or knowledge of any 103 default by the Seller or by the Master Servicer unless the Trustee shall have received written notice thereof. In the absence of actual receipt of such notice, the Trustee may conclusively assume that there is no such default; and (v) Subject to the other provisions of this Agreement and without limiting the generality of this Section, the Trustee shall have no duty (A) to see to any recording, filing, or depositing of this Agreement, any Mortgage 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 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 property of the Trust, (D) to confirm or verify the contents of any reports or certificates of the Master Servicer or any Sub-Servicer delivered to the Trustee pursuant to this Agreement or any Sub-Servicing Agreement believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties. (d) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. (e) No provision of this Agreement shall require the Trustee 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 to perform, or be responsible for the manner of performance of, any of the obligations of the Master Servicer hereunder except during such time, if any, as the Trustee shall be the successor to, and be vested with the rights, duties and powers and privileges of, the Master Servicer in accordance with the terms of this Agreement. (f) The permissive right of the Trustee to take actions enumerated in this Agreement shall not be construed as a duty and the Trustee shall not be answerable for other than its own negligence or willful misconduct. 104 (g) The Trustee shall be under no obligation to institute any suit, or to take any remedial proceeding under this Agreement, or to take any steps in the execution of the trusts hereby created or in the enforcement of any rights and powers hereunder until it shall be indemnified to its reasonable satisfaction against any and all costs and expenses, outlays and counsel fees and other reasonable disbursements and against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct, in connection with any action so taken. Section 9.2. Removal of Trustee for Cause. (a) The Trustee may be removed pursuant to clause (b) hereof upon the occurrence of any of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) the Trustee shall fail to distribute to the Owners entitled thereto on any Payment Date amounts available for distribution in accordance with the terms hereof; or (2) the Trustee shall fail in the performance of, or breach, any covenant or agreement of the Trustee in this Agreement, or if any representation or warranty of the Trustee made in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall prove to be incorrect in any material respect as of the time when the same shall have been made, and such failure or breach shall continue or not be cured for a period of 30 days after there shall have been given, by registered or certified mail, to the Trustee by the Seller or the Certificate Insurer or by the Owners of at least 25% of the aggregate Percentage Interest represented by any Class of Class A Certificates, or, if there are no Class A Certificates then Outstanding, by such Percentage Interest represented by any Class of Class B Certificates, a written notice specifying such failure or breach and requiring it to be remedied (unless the Trustee is aware of such breach as evidenced by notice from the Trustee pursuant to Section 9.2(b) in which case the 30 day cure period shall begin at the time such notice was given); or (3) 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 Trustee, and such decree or order shall have 105 remained in force undischarged or unstayed for a period of 60 days; or (4) a conservator or receiver or liquidator or sequestrator or custodian of the property of the Trustee is appointed in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Trustee or relating to all or substantially all of its property; or (5) the Trustee shall become insolvent (however insolvency is evidenced), generally fail to pay its debts as they come due, file or consent to the filing of a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, voluntarily suspend payment of its obligations, or take corporate action for the purpose of any of the foregoing. (b) The Seller and the Trustee shall give notice to each other, to the Certificate Insurer, the Transferor and to each Owner if it becomes aware that an event described in Subsection (a) has occurred and is continuing. (c) If any event described in Subsection (a) occurs and is continuing, then and in every such case (x) the Seller or the Certificate Insurer or (y) with the consent of the Certificate Insurer, the Owners of a majority of the Percentage Interest represented by any Class of Class A Certificates, or, if there are no Class A Certificates then Outstanding, by such Percentage Interest represented by any Class of Class B Certificates then Outstanding, may, whether or not the Trustee resigns pursuant to Section 9.9 hereof, immediately, concurrently with the giving of notice to the Trustee, appoint a successor trustee pursuant to the terms of Section 9.9 hereof. Section 9.3. Certain Rights of the Trustee. Except as otherwise provided in Section 9.1 hereof: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Seller or the Owners of any Class of Certificates mentioned herein shall be sufficient if evidenced in writing; (c) whenever in the administration of this Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action 106 hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate; (d) the Trustee may consult with counsel, and the written advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reasonable reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement, unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document, but the Trustee in its discretion may make such further inquiry or investigation into such facts or matters as it may see fit; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized by the Authorized Officer of any Person or within its rights or powers under this Agreement other than as to validity and sufficiency of its authentication of the Certificates. Section 9.4. Not Responsible for Recitals or Issuance of Certificates. The recitals contained herein and in the Certificates, except any such recitals relating to the Trustee, shall be taken as the statements of the Seller and the Master Servicer and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Agreement, any offering materials relating to the Certificates, or of the Certificates other than as to the validity and sufficiency of its authentication of the Certificates. Section 9.5. May Hold Certificates. The Trustee or any other agent of the Trust, in its individual or any other capacity, 107 may become an Owner or pledgee of Certificates and may otherwise deal with the Trust with the same rights it would have if it were not Trustee or such other agent. Section 9.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other trust funds except to the extent required herein or required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Seller and except to the extent of income or other gain on investments which are deposits in or certificates of deposit of the Trustee in its commercial capacity and income or other gain actually received by the Trustee on Eligible Investments. Section 9.7. Compensation and Reimbursement. The Trustee shall receive compensation for fees and reimbursement for expenses pursuant to Section 2.5 hereof and Section 7.3(b)(i) hereof. The Trustee shall have no lien on the Trust Estate for the payment of such fees and expenses. Section 9.8. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation or association acceptable to the Certificate Insurer and organized and doing business under the laws of the United States of America or of any State authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $100,000,000, subject to supervision or examination by the United States of America, having a rating or ratings acceptable to the Seller and having a long-term deposit rating of at least BBB from S&P and Baa2 from Moody's (or such lower rating as may be acceptable to S&P, Moody's and the Certificate Insurer). If such Trustee 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 association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall, upon the request of the Seller or the Certificate Insurer resign immediately in the manner and with the effect hereinafter specified in this Article IX. Section 9.9. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor trustee pursuant to this Article IX shall become effective until the acceptance of appointment by the successor trustee under Section 9.10 hereof. (b) The Trustee, or any trustee or trustees hereafter appointed, may resign at any time by giving written notice of resignation to the Certificate Insurer, the Seller, the Master Servicer and to the Transferor and by mailing notice of resignation 108 by first-class mail, postage prepaid, to the Owners at their addresses appearing on the Register. Upon receiving notice of resignation, the Seller shall promptly appoint a successor trustee or trustees satisfying the eligibility requirements of Section 9.8 by written instrument, in duplicate, executed on behalf of the Trust by an Authorized Officer of the Seller, one copy of which instrument shall be delivered to the Trustee so resigning and one copy to the successor trustee or trustees. If no successor trustee shall have been appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Owner may, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribed, appoint a successor trustee. (c) If at any time the Trustee shall cease to be eligible under Section 9.8 hereof and shall fail to resign after written request therefor by the Seller or the Certificate Insurer, the Seller or the Certificate Insurer may remove the Trustee and the Seller, with the consent of the Certificate Insurer, or the Certificate Insurer may appoint a successor trustee by written instrument, in duplicate, executed on behalf of the Trust by an Authorized Officer of the Seller or the Certificate Insurer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee. (d) The Owners of a majority of the Percentage Interests represented by any Class of Class A Certificates with the consent of the Certificate Insurer, or, if there are no Class A Certificates then Outstanding, by such Percentage Interest represented by any Class of Class B Certificates then Outstanding, may at any time remove the Trustee and appoint a successor trustee by delivering to the Trustee to be removed, to the successor trustee so appointed, to the Seller and to the Certificate Insurer, copies of the record of the act taken by the Owners, as provided for in Section 12.3 hereof. (e) If the Trustee fails to perform its duties in accordance with the terms of this Agreement or becomes ineligible to serve as Trustee, the Seller or the Certificate Insurer may remove the Trustee and the Seller, with the consent of the Certificate Insurer, or the Certificate Insurer may appoint a successor trustee by written instrument, in triplicate, signed by the Seller or the Certificate Insurer duly authorized, one complete set to the Seller, one complete set to the Trustee so removed and one complete set to the successor trustee so appointed. (f) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Trustee for any cause, the Seller shall promptly appoint a 109 successor trustee satisfying the eligibility requirements of Section 9.8. (g) The Seller shall give notice of any removal of the Trustee by mailing notice of such event by first-class mail, postage prepaid, to the Owners as their names and addresses appear in the Register. Each notice shall include the name of the successor trustee and the address of its corporate trust office. Section 9.10. Acceptance of Appointment by Successor Trustee. Every successor trustee appointed hereunder shall execute, acknowledge and deliver to the Seller on behalf of the Trust and to its predecessor Trustee an instrument accepting such appointment hereunder and stating its eligibility to serve as Trustee hereunder, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of its predecessor hereunder; but, on request of the Seller or the successor trustee, such predecessor Trustee shall, upon payment of its charges then unpaid, execute and deliver an instrument transferring to such successor trustee all of the rights, powers and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver to such successor trustee all property and money held by such trustee so ceasing to act hereunder. Upon request of any such successor trustee, the Seller on behalf of the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts. The Seller shall reimburse the Trustee for any costs reasonably incurred hereunder resulting from the Trustee's removal under Section 9.09(d) hereof. Upon acceptance of appointment by a successor Trustee as provided in this Section, the Seller shall mail notice thereof by first-class mail, postage prepaid, to the Owners at their last addresses appearing in the Register. The Seller shall send a copy of such notice to the Rating Agencies. If the Seller fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Seller. No successor trustee shall accept its appointment unless at the time of such acceptance such successor shall be qualified and eligible under this Article IX. Section 9.11. Merger, Conversion, Consolidation or Succession to Business of the Trustee. Any corporation or association into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or association succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the 110 Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, however, that such corporation or association shall be otherwise qualified and eligible under this Article IX. In case any Certificates have been executed, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such Trustee may adopt such execution and deliver the Certificates so executed with the same effect as if such successor Trustee had itself executed such Certificates. Section 9.12. Reporting; Withholding. (a) The Trustee shall timely provide to the Owners the Internal Revenue Service's Form 1099 and any other statement required by applicable Treasury regulations as determined by the Seller, and shall withhold, as required by applicable law, federal, state or local taxes, if any, applicable to distributions to the Owners, including but not limited to backup withholding under Section 3406 of the Code and the withholding tax on distributions to foreign investors under Sections 1441 and 1442 of the Code. (b) The Trustee shall timely file all reports required to be filed by the Trust with any federal, state or local governmental authority having jurisdiction over the Trust, including other reports that must be filed with the Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the form required under Section 6050K of the Code, if applicable. Furthermore, the Trustee shall report to Owners, if required, with respect to the allocation of expenses pursuant to Section 212 of the Code in accordance with the specific instructions to the Trustee by the Seller with respect to such allocation of expenses. The Trustee shall collect any forms or reports from the Owners determined by the Seller to be required under applicable federal, state and local tax laws. (c) The Trustee shall provide to the Internal Revenue Service and to persons described in section 860(E)(e)(3) and (6) of the Code the information described in Treasury Regulation section 1.860D-1(b)(5)(ii), or any successor regulation thereto. Such information will be provided in the manner described in Treasury Regulation section 1.860E-2(a)(5), or any successor regulation thereto. Section 9.13. Liability of the Trustee. Except during the continuance of an Event of Default, the Trustee shall be liable in accordance herewith only to the extent of the obligations specifically imposed upon and undertaken by the Trustee herein. Neither the Trustee nor any of the directors, officers, employees or agents of the Trustee shall be under any liability on any Certificate or otherwise to any Account, the Seller, the Master Servicer, any Sub-Servicer, the Transferor or any Owner 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 111 Trustee or any such Person against any liability which would otherwise be imposed by reason of negligent action, negligent failure to act or bad faith in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. Subject to the foregoing sentence, the Trustee shall not be liable for losses on investments of amounts in any Account (except for any losses on obligations on which the bank serving as Trustee is the obligor). In addition, the Seller covenants and agrees to indemnify the Trustee, and when the Trustee is acting as Master Servicer, the Trustee in its capacity as Master Servicer, from, and hold it harmless against, any and all losses, liabilities, damages, claims or expenses (including reasonable and documented legal fees and expenses) other than those resulting from the negligence or bad faith of the Trustee. The Trustee and any director, officer, employee or agent of the Trustee may rely and shall be protected in acting or refraining from acting in good faith on any certificate, notice or other document of any kind prima facie properly executed and submitted by the Authorized Officer of any Person respecting any matters arising hereunder. Section 9.14. Appointment of Co-Trustee or Separate Trustee. Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Estate or any Property may at the time be located, the Master Servicer and the Trustee acting jointly and with the consent of the Certificate Insurer shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the Trust Estate or separate Trustee or separate Trustees of any part of the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Owners and the Certificate Insurer, such title to the Trust Estate, or any part thereof, and, subject to the other provisions of this Section 9.14, such powers, duties, obligations, rights and trusts as the Master Servicer and the Trustee may consider necessary or desirable. If the Master Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, or in the case any event indicated in Section 9.2 of this Agreement shall have occurred and be continuing, the Trustee alone (with the consent of the Certificate Insurer) shall have the power to make such appointment. No co-Trustee or separate Trustee hereunder shall be required to meet the terms of eligibility as a successor Trustee under Section 9.8 and no notice to Owners of the appointment of any co-Trustee or separate Trustee shall be required under Section 9.9. Every separate Trustee and co-Trustee shall, to the extent permitted, be appointed and act subject to the following provisions and conditions: (i) All rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon 112 and exercised or performed by the Trustee and such separate Trustee or co-Trustee jointly (it being understood that such separate Trustee or co-Trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Trustee hereunder or as successor to the Master Servicer hereunder), the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate Trustee or co-Trustee, but solely at the direction of the Trustee; (ii) No co-Trustee hereunder shall be held personally liable by reason of any act or omission of any other co- Trustee hereunder; and (iii) The Master Servicer and the Trustee acting jointly with the consent of the Certificate Insurer may at any time accept the resignation of or remove any separate Trustee or co-Trustee. Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate Trustees and co-Trustees, as effectively as if given to each of them. Every instrument appointing any separate Trustee or co-Trustee shall refer to this Agreement and the conditions of this Section 9.14. 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 thereof given to the Master Servicer. Any separate Trustee or co-Trustee may, at any time, constitute the Trustee, its agent or attorney-in-fact, with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate Trustee or co-Trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor Trustee. 113 ARTICLE X SERVICING AND ADMINISTRATION OF MORTGAGE LOANS Section 10.1. General Servicing Procedures. (a) Acting directly or through one or more Sub-Servicers as provided in Section 10.3, the Master Servicer shall service and administer the Mortgage Loans in accordance with this Agreement and shall have full power and authority, acting alone, to do or cause to be done any and all things in connection with such servicing and administration which it may deem necessary or desirable and consistent with the terms of this Agreement. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Master Servicer shall not have any duties, responsibilities, or fiduciary relationship with the parties hereto except those expressly set forth herein, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or shall otherwise exist against the Master Servicer. (b) The Master Servicer may, and is hereby authorized to, perform any of its servicing responsibilities with respect to all or certain of the Mortgage Loans through a Sub-Servicer as it may from time to time designate, but no such designation of a Sub-Servicer shall serve to release the Master Servicer from any of its obligations under this Agreement. Such Sub-Servicer shall have all the rights and powers of the Master Servicer with respect to such Mortgage Loans under this Agreement. (c) Without limiting the generality of the foregoing, but subject to the provisions of this Article X, the Master Servicer in its own name or in the name of a Sub-Servicer hereby is authorized and empowered, which authorization may further be evidenced, at the reasonable request of the Master Servicer, by a power of attorney executed and delivered by the Trustee, on behalf of itself, the Owners and the Trustee or any of them, (i) to execute and deliver any and all instruments of satisfaction or cancellation or of partial or full release or discharge and all other comparable instruments with respect to the Mortgage Loans and with respect to the Properties, (ii) to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of any Property in the name of the Trust, and (iii) to hold title in the name of the Trust to any Property upon such foreclosure or deed in lieu of foreclosure on behalf of the Trustee; provided, however, that to the extent any instrument described in clause (i) preceding would be delivered by the Master Servicer outside of its ordinary procedures for mortgage loans held for its own account the Master Servicer shall, prior to executing and delivering such instrument, obtain the prior written consent of the Certificate Insurer, and provided further, however, that Section 10.14(a) shall constitute a power of attorney from the Trustee to the Master Servicer to execute an instrument of 114 satisfaction (or assignment of mortgage without recourse) with respect to any Mortgage Loan paid in full (or with respect to which payment in full has been escrowed). Subject to Sections 10.13 and 10.14, the Trustee shall execute any powers of attorney and other documents as the Master Servicer or such Sub-Servicer shall reasonably request and that are provided to the Trustee to enable the Master Servicer and such Sub-Servicer to carry out their respective servicing and administrative duties hereunder. The costs to the Master Servicer of delivering any satisfactions described in clause (i) above shall be paid by the Master Servicer to the extent not recoverable from the related Mortgagor under applicable state law. (d) The Master Servicer, with the approval of the Seller, shall have the right to approve requests of Mortgagors for consent to (i) partial releases of Mortgages and (ii) alterations and removal, demolition or division of Properties subject to Mortgages. No such request shall be approved by the Master Servicer unless: (1) (x) the provisions of the related Note and Mortgage have been complied with; (y) the Loan-to-Value Ratio (which may, for this purpose, be determined at the time of any such action in a manner reasonably acceptable to the Certificate Insurer) after any release does not exceed the Loan-to-Value Ratio set forth for such Mortgage Loan in the Mortgage Loan Schedule; and (z) the lien priority, monthly payment, Coupon Rate or maturity date of the related Mortgage is not affected (except in accordance with Section 10.2) or (2) the Certificate Insurer shall have approved the granting of such request and shall not unreasonably withhold such approval. (e) The Master Servicer shall give prompt notice to the Seller, the Transferor, the Trustee and to the Certificate Insurer of any action, of which the Master Servicer has actual knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction over the Trust. (f) Servicing Advances incurred by the Master Servicer or any Sub-Servicer in connection with the servicing of the Mortgage Loans (including any penalties in connection with the payment of any taxes and assessments or other charges) on any Property shall be recoverable by the Master Servicer or such Sub-Servicer to the extent described in this Agreement. (g) Each of the Seller, the Master Servicer, any Sub-Servicer, the Transferor, the Trustee and the Certificate Insurer shall be entitled to rely, and shall be fully protected in relying, upon any promissory note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Mortgagor(s)), independent accountants 115 and other experts selected by the Seller, the Master Servicer, each Sub-Servicer, the Transferor, the Trustee or the Certificate Insurer. The Master Servicer shall be fully justified in failing or refusing to take any action under this Agreement for which failure or refusal it has sought and received instructions from the Owners and which failure or refusal has been consented to by the Certificate Insurer. The Master Servicer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Mortgage Loans in accordance with an express written request of the Owners to which the Certificate Insurer has consented, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Seller, the Master Servicer, the Transferor, the Trustee, the Certificate Insurer and all Owners. In the event of any conflicting instructions or requests, the instructions or requests delivered by the Certificate Insurer shall prevail, unless such instructions or requests violate the express terms of this Agreement or violate applicable law. (h) The Master Servicer shall have no liability to the Seller, the Transferor, the Trustee, the Certificate Insurer, the Owners or any other Person 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 the foregoing shall not apply to any breach of representations or warranties made by the Master Servicer herein, or to any specific liability imposed upon the Master Servicer pursuant to this Agreement or any liability that would otherwise be imposed upon the Master Servicer by reason of its willful misconduct, bad faith or negligence in the performance of its duties hereunder or by reason of its reckless disregard of its obligations or duties hereunder. Section 10.2. Collection of Certain Mortgage Loan Payments. The Master Servicer shall generally service the Mortgage Loans in a prudent manner consistent with the Master Servicer's Servicing and Collection Guide (the "Servicing Standards"), and agrees to make reasonable efforts to collect all payments called for under the terms and provisions of the Mortgage Loans, and shall, to the extent such procedures shall be consistent with this Agreement, follow collection procedures for all Mortgage Loans at least as rigorous as those the Master Servicer would take in servicing similar mortgage loans and in collecting payments thereunder for its own account. Consistent with the foregoing, the Master Servicer may (i) in its discretion waive or permit to be waived any late payment charge or assumption fee or any other fee or charge which the Master Servicer would be entitled to retain pursuant to Section 10.15 as servicing compensation, (ii) extend the due date for payments due on a Note for a period (with respect to each payment as to which the due date is extended) not greater than 125 days after the initially scheduled due date for such payment and (iii) amend any Note to extend the maturity thereof, provided that no maturity shall be extended beyond the maturity date of the Mortgage Loan with the latest maturity date and that no more than 3.0% of the Original Pool Principal Balance of the 116 Mortgage Loans shall have a maturity date which has been extended beyond the maturity date thereof at the Cut-off Date; provided further, with respect to clauses (i), (ii) and (iii), that such action does not violate applicable REMIC provisions. In the event the Master Servicer shall consent to the deferment of the due dates for payments due on a Note, the Master Servicer shall nonetheless make payment of any required Delinquency Advance with respect to the payments so extended to the same extent as if such installment were due, owing and Delinquent and had not been deferred, and shall be entitled to reimbursement therefor in accordance with Sections 10.8(d)(i)(D) and 10.9(a) hereof. The Master Servicer may not waive prepayment charges or penalty interest in connection with Prepayments. Any such amounts so received shall be paid over to the Seller as received. Section 10.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers. The Master Servicer may enter into Sub-Servicing Agreements for any servicing and administration of Mortgage Loans with any institution which is in compliance with the laws of each state necessary to enable it to perform its obligations under such Sub-Servicing Agreement and which (i) has been designated an approved seller-servicer by FHLMC or FNMA for first and second mortgage loans and (ii) (except for LSI Financial Group), has equity of at least $15,000,000, as determined in accordance with generally accepted accounting principles, and (iii) must have demonstrated proficiency in the servicing of mortgage loans having similar characteristics (including credit characteristics) to the Mortgage Loans. The Master Servicer shall give notice to the Seller, the Transferor, the Trustee, Moody's, S&P and the Certificate Insurer of the removal or appointment of any Sub-Servicer; no such removal or appointment shall be effective unless the Trustee shall have received the prior consent of Moody's, the Certificate Insurer and S&P. Any such Sub-Servicing Agreement shall be consistent with and not violate the provisions of this Agreement. For purposes of this Agreement, the Master Servicer shall be deemed to have received payments on or with respect to Mortgage Loans when any Sub-Servicer has received such payments. For purposes of this Agreement, the Master Servicer shall be deemed to have made a payment required to be made by it hereunder when any Sub-Servicer has made such payment in the manner required of the Master Servicer hereunder. For purposes of this Agreement, the Master Servicer shall be deemed to have delivered any document required to be delivered by it hereunder when any Sub-Servicer has delivered such document in the manner required of the Master Servicer hereunder. As of the Startup Day, the only Sub-Servicer is LSI Financial Group. Section 10.4. Successor Sub-Servicers. Each Sub- Servicing Agreement shall expressly provide that the Master Servicer or the Trustee shall be entitled to terminate any Sub-Servicing Agreement in accordance with the terms and conditions of such Sub-Servicing Agreement and to enter into a Sub-Servicing 117 Agreement with a successor Sub-Servicer which qualifies under Section 10.3. The Trustee shall have no duty or obligation hereunder to monitor or supervise the performance of any Sub-Servicer. Section 10.5. Liability of Master Servicer. The Master Servicer shall not be relieved of its obligations under this Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions of this Agreement relating to agreements or arrangements between the Master Servicer and a Sub-Servicer or otherwise, and the Master Servicer shall be obligated to the same extent and under the same terms and conditions as if it alone were servicing and administering the Mortgage Loans. The Master Servicer shall be entitled to enter into any agreement with a Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be deemed to limit or modify this Agreement. Section 10.6. No Contractual Relationship Between Sub-Servicer and Trustee or the Owners. Any Sub-Servicing Agreement and any other transactions or services relating to the Mortgage Loans involving a Sub-Servicer (other than the Sub-Servicing Agreement dated the date hereof among the Master Servicer, LSI Financial Group and the Trustee) shall be deemed to be between the Sub-Servicer, the Master Servicer and any other parties thereto alone and the Transferor, the Trustee and the Owners shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to any Sub-Servicer except as set forth in Sections 10.4 and 10.7, unless expressly made a party thereto. Section 10.7. Assumption or Termination of Sub-Servicing Agreement by Trustee. In connection with the assumption of the responsibilities, duties and liabilities and of the authority, power and rights of the Master Servicer hereunder by the Trustee pursuant to Section 11.1, it is understood and agreed that the Master Servicer's rights and obligations under any Sub-Servicing Agreement then in force between the Master Servicer and a Sub-Servicer may be assumed or terminated by the Trustee at its option, and the Master Servicer shall cause each Sub-Servicing Agreement to so provide. Each Sub-Servicing Agreement shall contain term provisions at least as restrictive as those contained herein with respect to the Master Servicer. The Master Servicer shall, upon request of the Trustee, but at the expense of the Master Servicer, deliver to the assuming party documents and records relating to each Sub-Servicing Agreement and an accounting of amounts collected and held by it and otherwise use its best reasonable efforts to effect the orderly and efficient transfer of the Sub-Servicing Agreements to the assuming party. 118 Section 10.8. Principal and Interest Account. (a) The Master Servicer shall establish and maintain at one or more Designated Depository Institutions the Principal and Interest Account as a segregated account. Subject to Subsections (c) and (d) below, the Master Servicer and any Sub-Servicer shall deposit all collections (other than amounts escrowed for taxes and insurance) related to the Mortgage Loans to the Principal and Interest Account on a daily basis (but no later than the first Business Day after receipt). On or before the Startup Day, the Master Servicer shall deposit to the Principal and Interest Account (i) all scheduled payments due and collected (other than amounts escrowed for taxes and insurance) on the Mortgage Loans after the Cut-Off Date and prior to the Startup Day and (ii) all unscheduled collections (other than amounts escrowed for taxes and insurance) on the Mortgage Loans received on or after the Cut-Off Date and prior to the Startup Day. (b) All funds in the Principal and Interest Account shall be invested in Eligible Investments maturing not later than the Business Day immediately preceding the related Remittance Date; provided, however, in the event that Trustee is acting as Successor Master Servicer, such amounts may be held uninvested. The Principal and Interest Account shall be held in trust in the name of the Trustee for the benefit of the Owners. Any investment earnings on funds held in the Principal and Interest Account shall be for the account of the Master Servicer and may only be withdrawn from the Principal and Interest Account by the Master Servicer immediately following the remittance of the Monthly Remittances by the Master Servicer. Any investment losses shall be paid by the Master Servicer to the Principal and Interest Account from the Master Servicer's own funds. Any references herein to amounts on deposit in the Principal and Interest Account shall refer to amounts net of such investment earnings and to additional amounts in respect of investment losses. The Trustee shall have no responsibility or liability for actions taken by the Master Servicer, including withdrawals, with respect to the Principal and Interest Accounts. (c) The Master Servicer shall deposit to the Principal and Interest Account all principal and interest payments from the related Mortgagors received by the Master Servicer (including any Prepayments), Net Proceeds, other recoveries or amounts related to the Mortgage Loans received by the Master Servicer, Compensating Interest, Delinquency Advances together with any amounts which are reimbursable to the Master Servicer from the Principal and Interest Account, the amount of any Loan Purchase Price received or paid by the Master Servicer, the amount of any Substitution Amount received by the Master Servicer, REO income pursuant to Section 10.13(c) hereof, and amounts required to be deposited therein pursuant to 119 Section 10.11 hereof in connection with blanket insurance policies and any proceeds received by the Master Servicer in connection with the termination of the Trust, but net of (i) the Master Servicing Fee with respect to each Mortgage Loan and other servicing compensation to the Master Servicer as permitted by Section 10.15 hereof, (ii) Net Proceeds to the extent such Net Proceeds exceed the sum of (I) the Principal Balance of the related Mortgage Loan, plus (II) accrued and unpaid interest on such Mortgage Loan at the Coupon Rate applicable to the related Remittance Period (net of the Master Servicing Fee) and (iii) prepayment charges and similar amounts to be paid over to the Seller pursuant to Section 10.2 hereof. Amounts described in clause (ii) of the preceding sentence shall be retained by the Master Servicer as additional servicing compensation or paid over to the related Mortgagor if required by law. (d) (i) The Master Servicer may make withdrawals from the Principal and Interest Account only for the following purposes: (A) to effect the timely remittance to the Trustee of the related Monthly Remittance due on each Remittance Date; (B) to withdraw investment earnings on amounts on deposit in the Principal and Interest Account; (C) to withdraw amounts that have been deposited to the Principal and Interest Account in error; (D) to reimburse itself for amounts which represent Reimbursable Advances made by the Master Servicer from its own funds and subsequently collected from the related Mortgagor; and (E) to clear and terminate the Principal and Interest Account in connection with the termination of the Trust. (ii) On the tenth day of each month (or the immediately following Business Day if the tenth day does not fall on a Business Day), the Master Servicer shall send to the Trustee a report, in such electronic form as may be agreed upon by the Master Servicer, the Seller, the Certificate Insurer and the Trustee, detailing the payments on the Mortgage Loans for each of the Mortgage Loan Groups during the prior Remittance Period. Such report shall be in the form and have the specifications as may be agreed to between the Master Servicer, the Seller, and the Trustee from time to time and, in any event, shall have such information as shall be necessary to enable the Trustee to perform its obligations hereunder. In addition, on or prior to each Remittance Date, the Master Servicer will furnish to the Seller, the Transferor, the Trustee and to the Certificate Insurer the following information 120 for the two Mortgage Loan Groups as of the close of business on the first business day of the current calendar month: (A) the total number of Mortgage Loans and the aggregate Principal Balances thereof, together with the number and aggregate principal balances of Mortgage Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days Delinquent; (B) the number and aggregate principal balances of all Mortgage Loans in foreclosure proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clause (A)); (C) the number and aggregate principal balances of all Mortgage Loans relating to Mortgagors in bankruptcy proceedings (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clauses (A) and (B)); (D) the number and aggregate principal balances of all Mortgage Loans relating to REO Properties (and whether any such Mortgage Loans are also included in any of the statistics described in the foregoing clauses (A), (B) and (C)); (E) the number and aggregate principal balances of all Mortgage Loans as to which foreclosure proceedings were commenced during the prior Remittance Period; (F) a schedule regarding cumulative foreclosures since the Cut-Off Date; (G) a schedule regarding the Group I Cumulative Net Realized Losses, the Group II Cumulative Net Realized Losses, and the Cumulative Net Realized Losses; (H) the book value of any REO Property and any income received from REO Properties during the prior Remittance Period; (I) such other information as the Trustee, the Seller, the Certificate Insurer or the Transferor may reasonably request and as is produced by the Master Servicer in the ordinary course of its business; and (J) the number and Principal Balance of any Mortgage Loans repurchased during the related Remittance Period pursuant to Section 10.13(f) and the number 121 and cumulative Principal Balance of all Mortgage Loans so repurchased since the Cut-Off Date. (iii) On each Remittance Date the Master Servicer shall remit the Group I Monthly Remittance and the Group II Monthly Remittance to the Trustee by wire transfer, or otherwise make funds available in immediately available funds. (e) In connection with any exercise by the Seller of its option and related termination under Article VIII hereof, upon written request of the Seller, the Master Servicer shall remit to the Trustee all amounts (net of investment earnings and providing for investment losses pursuant to Section 10.8(b), net of the Master Servicing Fee and net of amounts reimbursable for Delinquency Advances and Servicing Advances) then on deposit in the Principal and Interest Account for deposit to the Certificate Account, which deposit shall be deemed to have occurred immediately preceding such purchase. Section 10.9. Delinquency Advances and Servicing Advances. (a) If the amount on deposit in the Principal and Interest Account with respect to any Mortgage Loan Group as of any Remittance Date is less than the related Monthly Remittance for such Remittance Date, the Master Servicer shall deposit to the Principal and Interest Account with respect to such Mortgage Loan Group a sufficient amount of its own funds to make such amount equal to the related Monthly Remittance for such Remittance Date. Such amounts of the Master Servicer's own funds so deposited are "Delinquency Advances". Any Delinquency Advances funded by the Master Servicer from its own funds are reimbursable from subsequent collections on or with respect to the related Mortgage Loan, including Liquidation Proceeds, Insurance Proceeds, Released Mortgaged Property Proceeds, and payments from the related Mortgagor. Notwithstanding anything to the contrary contained in this Agreement, no Delinquency Advance or Servicing Advance shall be required to be made by the Master Servicer if such Delinquency Advance or Servicing Advance would, if made, constitute a Nonrecoverable Advance. The Master Servicer shall be permitted to fund its payment of Delinquency Advances on any Remittance Date from collections on any Mortgage Loan deposited to the Principal and Interest Account subsequent to the related Remittance Period, and shall deposit to the Certificate Account with respect to Delinquency Advances funded from amounts on deposit in the Principal and Interest Account (i) collections from the Mortgagor whose delinquency gave rise to the shortfall which resulted in such Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account of the related Mortgage Loan to the extent of the amount of aggregate Delinquency Advances related thereto. In any event, to the extent the Master Servicer uses such funds, the Master Servicer must reimburse the Principal and Interest Account by the next 122 Remittance Date to the extent necessary to provide for the related Monthly Remittance. (b) The Master Servicer will pay all reasonable and customary "out-of-pocket" costs and expenses (including reasonable legal fees) incurred in the performance of its servicing obligations including, but not limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of REO Property (including, without limitation, realtors' commissions) and (iv) advances made for taxes, insurance and other charges against the Property. Each such expenditure will constitute a "Servicing Advance". The Master Servicer may recover Servicing Advances from the Mortgagors to the extent permitted by the Mortgage Loans or, if not theretofore recovered from the Mortgagor on whose behalf such Servicing Advance was made, from Liquidation Proceeds, Insurance Proceeds and/or Released Mortgage Property Proceeds realized with respect to the related Mortgage Loan. In no case may the Master Servicer recover Servicing Advances from the principal and interest payments on any Mortgage Loan or from any amounts relating to any other Mortgage Loan. Section 10.10. Compensating Interest; Relief Act Shortfalls. A full month's interest at the related Coupon Rate less the Master Servicing Fee is due to the Trustee on the outstanding Principal Balance of each Mortgage Loan as of the beginning of each Remittance Period. If (x) a Prepayment of a Mortgage Loan occurs during any calendar month, any difference between the interest collected from the Mortgagor during such calendar month and the full month's interest at the related Coupon Rate less the Master Servicing Fee with respect to such Mortgage Loan ("Compensating Interest") that is due or (y) there is a Relief Act Shortfall for any Mortgage Loan for any Remittance Period, then, in each such case there shall be deposited prior to the Remittance Date by the Master Servicer to the Principal and Interest Account such amount, which and shall be included in the related Monthly Remittance to be made available to the Trustee on the next succeeding Remittance Date. The Master Servicer shall not be entitled to reimbursement for Compensating Interest or Relief Act Shortfall payments. Section 10.11. Maintenance of Insurance. (a) The Master Servicer shall cause to be maintained with respect to each Mortgage Loan a hazard insurance policy with a generally acceptable carrier licensed in the state in which the Property is located that provides for fire and extended coverage, and which provides for a recovery by the Trust of insurance proceeds relating to such Mortgage Loan in an amount not less than the least of (i) the outstanding principal balance of the Mortgage Loan (together in the case of a Second Mortgage Loan, with the outstanding principal balance of the Senior Lien), (ii) the minimum amount required to compensate for loss or damage on a replacement cost basis and (iii) the full insurable value of the premises and which otherwise 123 conforms to the description thereof set forth in clause (xvii) of Section 3.2(b). The Master Servicer shall indemnify the Trust out of the Master Servicer's own funds for any loss to the Trust resulting from the Master Servicer's failure to maintain the insurance required by this paragraph. (b) If the Mortgage Loan at the time of origination relates to a Property in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, the Master Servicer will cause to be maintained with respect thereto a flood insurance policy in a form meeting the requirements of the current guidelines of the Federal Insurance Administration with a generally acceptable carrier, and which provides for a recovery by the Master Servicer on behalf of the Trust of insurance proceeds relating to such Mortgage Loan of not less than the least of (i) the outstanding principal balance of the Mortgage Loan, (ii) the minimum amount required to compensate for damage or loss on a replacement cost basis and (iii) the maximum amount of insurance that is available under the Flood Disaster Protection Act of 1973, as amended and which otherwise conforms to the description thereof set forth in clause (xviii) of Section 3.2(b). The Master Servicer shall indemnify the Trust and the Certificate Insurer out of the Master Servicer's own funds for any loss to the Trust and the Certificate Insurer resulting from the Master Servicer's failure to maintain the insurance required by this Section. (c) In the event that the Master Servicer shall obtain and maintain a blanket policy with an insurer acceptable to the Certificate Insurer insuring against fire and hazards of extended coverage on all of the Mortgage Loans, then, to the extent such policy names the Master Servicer as loss payee and provides coverage in an amount equal to the aggregate unpaid principal balance on the Mortgage Loans with co-insurance, and otherwise complies with the requirements of this Section 10.11, the Master Servicer shall be deemed conclusively to have satisfied its obligations with respect to fire and hazard insurance coverage under this Section 10.11, it being understood and agreed that such blanket policy may contain a deductible clause, in which case the Master Servicer shall, in the event that there shall not have been maintained on the related Property a policy complying with subsection (a) of this Section 10.11, and there shall have been a loss which would have been covered by such policy, deposit in the Principal and Interest Account from the Master Servicer's own funds the difference, if any, between the amount that would have been payable under a policy complying with subsection (a) of this Section 10.11 and the amount paid under such blanket policy. Upon the request of the Trustee, the Master Servicer shall cause to be delivered to the Trustee, a certified true copy of such policy. (d) The Seller shall indemnify the Master Servicer for any loss to the Master Servicer if any Mortgage Loan does not, at the time the Master Servicer assumed the servicing of such Mortgage 124 Loan, have in place the insurance described in Sections 3.2(b)(xvi) and (xvii) hereof and described herein and, if applicable, Section 3.2(b)(xviii) hereof. Without limiting the obligations of the Seller pursuant to Section 3.2, the Master Servicer shall only be required to maintain insurance on any Property if such insurance was in place at the time the Master Servicer assumed the servicing of the related Mortgage Loan. Section 10.12. Due-on-Sale Clauses; Assumption and Substitution Agreements. (a) When a Property has been or is about to be conveyed by the Mortgagor, the Master Servicer shall, to the extent it has knowledge of such conveyance or prospective conveyance, exercise its rights to accelerate the maturity of the related Mortgage Loan under any "due on sale" clause contained in the related Mortgage or Note; provided, however, that the Master Servicer shall not exercise any such right if the "due on sale" clause, in the reasonable belief of the Master Servicer, is not enforceable under applicable law; and provided, further, that the Master Servicer may refrain from exercising any such right if the Certificate Insurer gives its prior consent to such non-enforcement. (b) The Mortgage Loan, if assumed, shall conform in all respects to the requirements, representations and warranties of this Agreement. The Master Servicer shall notify the Trustee in writing that any applicable assumption or substitution agreement has been completed and shall forward to the Trustee the original recorded copy of such assumption or substitution agreement, which copy shall be added by the Trustee in writing to the related File and which shall, for all purposes, be considered a part of such File to the same extent as all other documents and instruments constituting a part thereof. The Master Servicer shall be responsible for recording any such assumption or substitution agreements. In connection with any such assumption or substitution agreement, the required monthly payment on the related Mortgage Loan shall not be changed but shall remain as in effect immediately prior to the assumption or substitution, the stated maturity or outstanding principal amount of such Mortgage Loan shall not be changed, the Coupon Rate shall not be changed nor shall any required monthly payments of principal or interest be deferred or forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for consenting to any such conveyance or entering into an assumption or substitution agreement shall be retained by or paid to the Master Servicer as additional servicing compensation. (c) Notwithstanding the foregoing clauses (a) and (b) or any other provision of this Agreement, the Master Servicer shall not be deemed to be in default, breach or any other violation of its obligations hereunder by reason of any assumption of a Mortgage Loan by operation of law or any assumption which the Master Servicer may be restricted by law from preventing, for any reason whatsoever. 125 Section 10.13. Realization Upon Defaulted Mortgage Loans. (a) The Master Servicer shall foreclose upon or otherwise comparably effect the ownership in the name of the Trust of Properties relating to defaulted Mortgage Loans as to which no satisfactory arrangements can be made for collection of Delinquent payments and which the Master Servicer has not purchased pursuant to Section 10.13(f), unless the Master Servicer reasonably believes that Net Liquidation Proceeds with respect to such Mortgage Loan would not be increased as a result of such foreclosure or other action, in which case such Mortgage Loan will be charged-off and will become a Liquidated Loan. The Master Servicer shall have no obligation to purchase any Property at any foreclosure sale. The Master Servicer will give notice of any such charge-off to the Certificate Insurer by delivery of a Liquidation Report in the form attached as Exhibit G hereto. In connection with such foreclosure or other conversion, the Master Servicer shall exercise foreclosure procedures with the same degree of care and skill in their exercise or use, as it would exercise or use under the circumstances in the conduct of its own affairs. Any amounts, including Liquidation Expenses, advanced by the Master Servicer in connection with such foreclosure or other action shall constitute "Servicing Advances" within the meaning of Section 10.9(b) hereof. (b) The Master Servicer shall sell any REO Property within 23 months of its acquisition by the Trust, unless the Master Servicer obtains for the Trustee an opinion of counsel experienced in federal income tax matters, addressed to the Trustee, the Certificate Insurer and the Master Servicer, to the effect that the holding by the Trust of such REO Property for a greater specified period will not result in the imposition of taxes on "Prohibited Transactions" of the Trust as defined in Section 860F of the Code or cause the REMICs to fail to qualify under the REMIC Provisions at any time that any Certificates are outstanding. (c) Notwithstanding the generality of the foregoing provisions, the Master Servicer shall manage, conserve, protect and operate each REO Property for the Owners solely for the purpose of its prompt disposition and sale in a manner which does not cause such REO Property to fail to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code or result in the receipt by the Trust of any "income from non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell such REO Property, the Master Servicer shall either itself or through an agent selected by the Master Servicer protect and conserve such REO Property in the same manner and to such extent as is customary in the locality where such REO Property is located and may, incident to its conservation and protection of the interests of the Owners and the Certificate Insurer, rent the same, or any part thereof, as the Master Servicer deems to be in the best interest of the Owners and the Certificate Insurer for the period prior to the sale of 126 such REO Property. The net income from the sale of an REO Property shall be deposited in the Principal and Interest Account. (d) If the Master Servicer has reason to believe that a Property which the Master Servicer is contemplating acquiring in foreclosure or by deed in lieu of foreclosure contains environmental or hazardous waste risks known to the Master Servicer, the Master Servicer shall notify the Seller, the Transferor, the Trustee and the Certificate Insurer prior to acquiring the Property. The Master Servicer shall not institute foreclosure actions with respect to such a property if it reasonably believes that such action would not be consistent with the Servicing Standards, and the Master Servicer is not permitted to take any action with respect to such a Property without the prior written approval of the Seller, the Transferor, the Trustee, and the Certificate Insurer, and in no event shall the Master Servicer be required to manage, operate or take any other action with respect thereto which the Master Servicer in good faith believes will result in "clean-up" or other liability under applicable law, unless the Master Servicer receives an indemnity acceptable to it in its sole discretion. (e) The Master Servicer shall determine, with respect to each defaulted Mortgage Loan, when it has recovered, whether through trustee's sale, foreclosure sale or otherwise, all amounts, if any, it expects to recover from or on account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall become a "Liquidated Loan". The Master Servicer shall deliver to the Seller, the Transferor, the Trustee and the Certificate Insurer on each Remittance Date a Liquidation Report in the form annexed as Exhibit G hereto with respect to each Mortgage Loan as to which the Master Servicer made a determination that such Mortgage Loan has become a Liquidated Loan during the related Remittance Period. (f) The Master Servicer has the right and the option, but not the obligation, to purchase for its own account any Mortgage Loan which becomes Delinquent, in whole or in part, as to four consecutive monthly installments or any Mortgage Loan as to which enforcement proceedings have been brought by the Master Servicer pursuant to this Section 10.13 or which is in default or as to which a default is imminent. Any such Mortgage Loan so purchased shall be purchased on a Remittance Date at a purchase price equal to the Loan Purchase Price thereof, which purchase price shall be deposited in the Principal and Interest Account. (g) The Master Servicer shall consult with the Seller with respect to its obligations under this Section 10.13. Section 10.14. Trustee to Cooperate; Release of Files. (a) Upon the payment in full of any Mortgage Loan (including the repurchase of any Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure or otherwise), or the receipt by the Master Servicer of a notification that payment in full will be 127 escrowed in a manner customary for such purposes, the Master Servicer shall deliver to the Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master Servicer's Trust Receipt, the Trustee shall promptly release the related File, in trust to (i) the Master Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of the Trustee, in each case pending its release by the Master Servicer, such escrow agent or such employee, agent or attorney of the Trustee, as the case may be. Upon any such payment in full, or the receipt of such notification that such funds have been placed in escrow, the Master Servicer is authorized to give, as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which secured the Note, an instrument of satisfaction (or assignment of Mortgage without recourse) regarding the Property relating to such Mortgage, which instrument of satisfaction or assignment, as the case may be, shall be delivered to the Person or Persons entitled thereto against receipt therefor of payment in full, it being understood and agreed that no expense incurred in connection with such instrument of satisfaction or assignment, as the case may be, shall be chargeable to the Principal and Interest Account. In lieu of executing any such satisfaction or assignment, as the case may be, the Master Servicer may prepare and submit to the Trustee, a satisfaction (or assignment without recourse, if requested by the Person or Persons entitled thereto) in form for execution by the Trustee with all requisite information completed by the Master Servicer; in such event, the Trustee shall execute and acknowledge such satisfaction or assignment, as the case may be, and deliver the same with the related File, as aforesaid. (b) From time to time and as appropriate in the servicing of any Mortgage Loan, including, without limitation, foreclosure or other comparable conversion of a Mortgage Loan or collection under any applicable Insurance Policy, the Trustee shall (except in the case of the payment or liquidation pursuant to which the related File is released to an escrow agent or an employee, agent or attorney of the Trustee), promptly upon request of the Master Servicer and delivery to the Trustee of a Master Servicer's Trust Receipt, release the related File to the Master Servicer and shall execute such documents as shall be reasonably necessary to the prosecution of any such proceedings, including, without limitation, an assignment without recourse of the related Mortgage to the Master Servicer. The Trustee shall complete in the name of the Trustee any endorsement in blank on any Note prior to releasing such Note to the Master Servicer. Such receipt shall obligate the Master Servicer to return the File to the Trustee when the need therefor by the Master Servicer no longer exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt of the liquidation information, in physical or electronic form, the Master Servicer's Trust Receipt shall be released by the Trustee to the Master Servicer. Notwithstanding the foregoing, at no time shall the Trustee release to the Master Servicer pursuant to this Section 128 10.14 a quantity of Files in excess of 10% of the number of Mortgage Loans within the Pool, excluding Files relating to Mortgage Loans which have been paid in full or have become Liquidated Loans (unless otherwise approved by the Certificate Insurer). (c) In all cases where the Master Servicer needs the Trustee to sign any document or to release a File within a particular period of time, the Master Servicer shall notify an Authorized Officer of the Trustee by telephone or telecopy of such need and the Trustee shall thereupon use its best efforts to comply with the Master Servicer's needs, but in any event will comply within two Business Days of such request. Section 10.15. Master Servicing Compensation. As compensation for its activities hereunder, the Master Servicer shall be entitled to retain the amount of the Master Servicing Fee with respect to each Mortgage Loan. Additional servicing compensation in the form of release and satisfaction fees (to the extent allowed by law), bad check charges, assumption fees, late payment charges, and any other servicing-related fees, Net Proceeds not required to be deposited in the Principal and Interest Account pursuant to Section 10.8(c)(ii) and similar items may, to the extent collected from Mortgagors, be retained by the Master Servicer. Section 10.16. Annual Statement as to Compliance. The Master Servicer, at its own expense, will deliver to the Seller, the Transferor, the Trustee, the Certificate Insurer, Moody's and S&P annually, commencing in 1998, an Officer's Certificate stating, as to each signer thereof, that (i) a review of the activities of the Master Servicer during such preceding fiscal year and of performance under this Agreement has been made under such officer's supervision, and (ii) to the best of such officer's knowledge, based on such review, the Master Servicer has fulfilled all its obligations under this Agreement for such year, or, if there has been a default in the fulfillment of one or more such obligations, specifying each such default known to such officer and the nature and status thereof including the steps being taken by the Master Servicer to remedy such default. Any Sub-Servicer which is not a Master Servicer Affiliate also shall deliver an annual statement as to compliance in the form described above or the Master Servicer shall cover their performance in their statement. These statements shall be available to Owners upon written request. Section 10.17. Annual Independent Certified Public Accountants' Reports. Annually, commencing in 1998, the Master Servicer, at its own expense, shall cause to be delivered to the Seller, the Transferor, the Trustee, the Certificate Insurer, Moody's and S&P a letter or letters of a firm of independent, nationally recognized certified public accountants reasonably acceptable to the Certificate Insurer stating that such firm has, with respect to the Master Servicer's overall servicing operations (i) performed applicable tests in accordance with the compliance 129 testing procedures as set forth in Appendix 3 of the "Audit Guide for Audits of HUD Approved Non-Supervised Mortgages" or (ii) examined such operations in accordance with the requirements of the Uniform Single Attestation Program for Mortgage Bankers, and stating such firm's conclusions relating thereto. These reports will be made available to Owners upon written request. Section 10.18. Access to Certain Documentation and Information Regarding the Mortgage Loans; Confidentiality. The Master Servicer shall provide to the Seller, the Transferor, the Trustee, the Certificate Insurer, and the supervisory agents and examiners (as required in the latter case by applicable state and federal regulations) of each of the foregoing access to the documentation regarding the Mortgage Loans, such access being afforded without charge but only upon reasonable request and during normal business hours at the offices of the Master Servicer designated by it. Upon any change in the format of the computer tape maintained by the Master Servicer in respect of the Mortgage Loans, the Master Servicer shall deliver a copy of such computer tape to the Trustee and the Seller and in addition shall provide a copy of such computer tape to the Trustee and the Seller at such other times as the Trustee and the Seller may request. The Master Servicer, the Trustee, and the Certificate Insurer shall keep confidential (including from affiliates thereof) information concerning the Mortgage Loans and the underwriting criteria for the Mortgage Loans, except as required by law. Each of the Seller, the Transferor, the Trustee and the Certificate Insurer acknowledges the proprietary nature of the software, software procedures, software development tools, know-how, methodologies, processes and technologies of the Master Servicer and any Sub-Servicer and agrees (i) that it shall use the same means as it uses to protect its own confidential information, but in no event less than reasonable means, to avoid disclosure by it or its agents or employees to any third party of any confidential or proprietary information of the Master Servicer or any Sub-Servicer, and (ii) that all such software, software procedures, software development tools, know-how, methodologies, process and technologies that are based upon trade secrets or proprietary information of the Master Servicer or any Sub-Servicer shall be and remain the property of the Master Servicer or any Sub-Servicer and that each of the Seller, the Transferor, the Trustee and the Certificate Insurer will have no interest therein or claim thereto. Each Sub-Servicer shall be a third-party beneficiary of this paragraph. Section 10.19. Assignment of Agreement. The Master Servicer may not assign its obligations under this Agreement, in whole or in part, unless it shall have first obtained (i) the written consent of the Seller, the Trustee and Certificate Insurer 130 and (ii) the Trustee and Certificate Insurer shall have received a confirmation letter from each Rating Agency confirming the rating of the Class A Certificates as AAA or its equivalent; provided, however, that any assignee must meet the eligibility requirements set forth in Section 11.1(g) hereof for a successor servicer. Section 10.20. Inspections by Certificate Insurer and Account Parties; Errors and Omissions Insurance. (a) At any reasonable time and from time to time upon reasonable notice, the Seller, the Transferor, the Certificate Insurer, the Trustee, or any agents or representatives thereof may inspect the Master Servicer's servicing operations and discuss the servicing operations of the Master Servicer. The out-of-pocket costs and expenses incurred by the Master Servicer or its agents or representatives in connection with any such examinations or discussions shall be paid by the requesting party prior to the occurrence and continuance of an Event of Default, and by the Master Servicer after the occurrence and during the continuance of an Event of Default. (b) The Master Servicer agrees to maintain or cause a Sub-Servicer to maintain errors and omissions coverage and a fidelity bond, each at least to the extent required by Section 305 of Part I of FNMA Guide or any successor provision thereof or such other insurance arrangements reasonably satisfactory to the Certificate Insurer. Section 10.21. Financial Statements. The Master Servicer understands that, in connection with the transfer of the Certificates, Owners may request that the Master Servicer make available upon written request to prospective Owners any publicly available annual audited financial statements of the Master Servicer for one or more of the most recently completed four fiscal years for which such statements are available, which request shall not be unreasonably denied. Such financial statements shall also be supplied to the Certificate Insurer. The Master Servicer also agrees to make available on a reasonable basis to the Seller, the Transferor, the Trustee, the Certificate Insurer, any Owner or any prospective Owner a knowledgeable financial or accounting officer for the purpose of answering reasonable questions respecting recent developments affecting the Master Servicer or the financial statements of the Master Servicer and to permit the Seller, the Transferor, the Trustee, the Certificate Insurer, any Owner or any prospective Owner to inspect the Master Servicer's servicing facilities during normal business hours for the purpose of satisfying the Seller, the Transferor, the Trustee, the Certificate Insurer, any Owner or such prospective Owner that the Master Servicer has the ability to service the Mortgage Loans in accordance with this Agreement. Each requesting party shall use the same means as it uses to protect its own confidential information, but in no event less 131 than reasonable means, to avoid disclosure by it or its agents or employees to any third party of any confidential or proprietary information of the Master Servicer. Section 10.22. REMIC. The Master Servicer covenants and agrees for the benefit of the Owners (i) to take no action which would result in the termination of REMIC status for either REMIC, (ii) not to engage in any "prohibited transaction", as such term is defined in Section 860F(a)(2) of the Code and (iii) not to engage in any other action which may result in the imposition of any other taxes under the Code. Section 10.23. The Designated Depository Institution. The Master Servicer shall give the Seller, the Transferor, the Trustee and the Certificate Insurer (a) at least thirty days' prior written notice of any anticipated change of the Designated Depository Institution at which the Principal and Interest Account is maintained and (b) written notice of any change in the ratings of such Designated Depository Institution of which the Master Servicer is aware, within two Business Days after discovery. Section 10.24. Appointment of Custodian. If the Master Servicer determines that the Trustee is unable to deliver Files to the Master Servicer as required pursuant to Section 10.14 hereof, the Master Servicer shall so notify the Seller, the Transferor, the Trustee, the Certificate Insurer, S&P and Moody's, and make request that a custodian acceptable to the Seller, the Master Servicer, the Transferor and the Certificate Insurer be appointed to retain custody of the Files on behalf of the Trustee. The Seller, the Transferor and the Trustee agree to co-operate reasonably with the Master Servicer in connection with the appointment of such custodian. The Trustee shall pay from the Trustee's Fee all reasonable fees and expenses of such custodian, in an amount not to exceed 1 basis point of the Pool Principal Balance. ARTICLE XI EVENTS OF DEFAULT; REMOVAL OF MASTER SERVICER; MERGER Section 11.1. Removal of Master Servicer; Resignation of Master Servicer. (a) The Certificate Insurer (or, with the consent of the Certificate Insurer, the Seller or the Owners of Class A Certificates evidencing at least a majority in Percentage Interest of all Class A Certificates) may remove the Master Servicer upon the occurrence of any of the following events (each, an "Event of Default"): (i) The Master Servicer shall (I) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or similar entity with respect to itself or its property, (II) admit in writing its inability to pay its debts generally as they become due, (III) make a general assignment 132 for the benefit of creditors, (IV) be adjudicated a bankrupt or insolvent, (V) commence a voluntary case under the federal bankruptcy laws of the United States of America or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding or (VI) cause corporate action to be taken by it for the purpose of effecting any of the foregoing; or (ii) If without the application, approval or consent of the Master Servicer, a proceeding shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect of the Master Servicer an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, conservator, liquidator or custodian or similar entity with respect to the Master Servicer or of all or any substantial part of its assets, or other like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being contested by the Master Servicer in good faith, the same shall (A) result in the entry of an order for relief or any such adjudication or appointment or (B) continue undismissed or pending and unstayed for any period of sixty (60) consecutive days; or (iii) The Master Servicer shall fail to perform any one or more of its obligations hereunder (other than its obligations referenced in clauses (vi) and (vii) below) and shall continue in default thereof for a period of thirty (30) days after the earlier to occur of (x) the date on which an Authorized Officer of the Master Servicer knows or reasonably should know of such failure or (y) receipt by the Master Servicer of a written notice from the Trustee, any Owner, the Seller, the Transferor or the Certificate Insurer of said failure; or (iv) The Master Servicer shall fail to cure any breach of any of its representations and warranties set forth in Section 3.1(c) which materially and adversely affects the interests of the Owners or Certificate Insurer for a period of thirty (30) days after the earlier of (x) the date on which an Authorized Officer of the Master Servicer knows or reasonably should know of such breach or (y) receipt by the Master Servicer of a written notice from the Trustee, any Owner, the Seller, the Transferor or the Certificate Insurer of such breach; or (v) If the Certificate Insurer pays out any money under the Certificate Insurance Policy, or if the Certificate 133 Insurer otherwise funds any shortfall with its own money, because the amounts available to the Trustee (other than from the Certificate Insurer) are insufficient to make required distributions on the Class A Certificates; or (vi) The failure by the Master Servicer to make any required Servicing Advance for a period of 30 days following the earlier of (x) the date on which an Authorized Officer of the Master Servicer knows or reasonably should know of such failure or (y) receipt by the Master Servicer of a written notice from the Trustee, any Owner, the Seller, the Transferor or the Certificate Insurer of such failure; or (vii) The failure by the Master Servicer to make any required Delinquency Advance, to pay any Compensating Interest or to pay over any Monthly Remittance or other amounts required to be remitted by the Master Servicer pursuant to this Agreement; or (viii) If on any Payment Date the Pool Rolling Three Month Delinquency Rate (including all foreclosures and REO Properties) exceeds 4.75% during the period May 1, 1997 through April 30, 1998, 5.50% during the period May 1, 1998 through April 30, 1999, 6.25% during the period May 1, 1999 through April 30, 2000, 7.25% during the period May 1, 2000 through April 30, 2001, 8.25% during the period May 1, 2001 through April 30, 2002 or 10.00% after May 1, 2002; or (ix) If on any Payment Date occurring in May of any year, commencing in May 1998, the aggregate Pool Cumulative Net Realized Losses over the prior twelve month period exceed 0.75% of the average Pool Principal Balance as of the close of business on the last day of each of the twelve preceding Remittance Periods; or (x) If on any Payment Date the aggregate Pool Cumulative Net Realized Losses for all prior Remittance Periods since the Startup Day exceed 3.25% of the Original Pool Principal Balance; provided, however, that (x) prior to any removal of the Master Servicer pursuant to clauses (ii) through (iv) and (vi) of this Section 11.1(a), any applicable grace period granted by any such clause shall have expired prior to the time such occurrence shall have been remedied and (y) in the event of the refusal or inability of the Master Servicer to comply with its obligations described in clause (vii) above, such removal shall be effective (without the requirement of any action on the part of the Seller, the Transferor, the Certificate Insurer or of the Trustee) at 4 p.m. New York City time on the second Business Day following the day on which the Trustee notifies an Authorized Officer of the Master Servicer that a required amount described in clause (vii) above has not been received by the Trustee, unless the required amount 134 described in clause (vii) above is paid by the Master Servicer prior to such time or the Certificate Insurer grants an extension of time for such payment. Upon the Trustee's obtaining actual knowledge that a required amount described in clause (vii) above has not been made by the Master Servicer, the Trustee shall so notify an Authorized Officer of the Master Servicer, and the Certificate Insurer, as soon as is reasonably practical. (b) Upon the occurrence of an Event of Default as described in clauses (viii), (ix) or (x) of Section 11.1(a), the Certificate Insurer may remove the Master Servicer; provided, however, that if such occurrence of an Event of Default is the result of circumstances beyond the Master Servicer's control, the Master Servicer shall not be removed, and provided further, that in the event of any disagreement between the Seller and the Certificate Insurer, the decision of the Certificate Insurer shall control. (c) The Master Servicer shall not resign from the obligations and duties hereby imposed on it, except upon determination that its 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, the other activities of the Master Servicer so causing such a conflict being of a type and nature carried on by the Master Servicer at the date of this Agreement. Any such determination permitting the resignation of the Master Servicer shall be evidenced by an opinion of counsel to such effect which shall be delivered to the Seller, the Transferor, the Trustee and the Certificate Insurer. (d) No removal or resignation of the Master Servicer shall become effective until the Trustee or a successor Master Servicer acceptable to the Certificate Insurer shall have assumed the Master Servicer's responsibilities and obligations in accordance with this Section. (e) Upon removal or resignation of the Master Servicer, the Master Servicer also shall promptly deliver or cause to be delivered to a successor Master Servicer or the Trustee all the books and records (including, without limitation, records kept in electronic form) that the Master Servicer has maintained for the Mortgage Loans, including all tax bills, assessment notices, insurance premium notices and all other documents as well as all original documents then in the Master Servicer's possession. (f) Any collections received by the Master Servicer after removal or resignation shall be endorsed by it to the Trustee and remitted directly and immediately to the Trustee or the successor Master Servicer. (g) Upon removal or resignation of the Master Servicer, the Trustee (x) may solicit bids for a successor Master Servicer as described below, and (y) pending the appointment of a successor 135 Master Servicer as a result of soliciting such bids, shall serve as Master Servicer; provided, however, that the Trustee shall not be liable for any acts, omissions or obligations of the Master Servicer prior to such succession or for any breach by the Master Servicer of any of its representations and warranties contained in this Agreement or in any related document or agreement. The Trustee shall, if it is unable to obtain a qualifying bid and is prevented by law from acting as Master Servicer, appoint, or petition a court of competent jurisdiction to appoint, any housing and home finance institution, bank or mortgage servicing institution which (i) has been designated as an approved seller-servicer by FNMA or FHLMC for first and second mortgage loans, (ii) has equity of not less than $15,000,000, as determined in accordance with generally accepted accounting principles, and (iii) must have demonstrated proficiency in the servicing of mortgage loans having similar characteristics (including credit characteristics) to the Mortgage Loans, (iv) and must be acceptable to the Certificate Insurer as the successor to the Master Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Master Servicer hereunder. The compensation of any successor Master Servicer (including, without limitation, the Trustee) so appointed shall be the aggregate Master Servicing Fees, together with the other servicing compensation in the form of assumption fees, late payment charges or otherwise as provided in Sections 10.8 and 10.15. (h) In the event the Trustee solicits bids as provided above, the Trustee shall solicit, by public announcement, bids from housing and home finance institutions, banks and mortgage servicing institutions meeting the qualifications set forth above. Such public announcement shall specify that the successor Master Servicer shall be entitled to the full amount of the aggregate Master Servicing Fees as servicing compensation (including the servicing compensation received in the form of assumption fees, late payment charges or otherwise) as provided in Sections 10.8 and 10.15. Within thirty days after any such public announcement, the Trustee shall, with the consent of the Certificate Insurer, negotiate and effect the sale, transfer and assignment of the servicing rights and responsibilities hereunder to the qualified party submitting the highest satisfactory bid. The Trustee shall deduct from any sum received by the Trustee from the successor to the Master Servicer in respect of such sale, transfer and assignment all costs and expenses of any public announcement and of any sale, transfer and assignment of the servicing rights and responsibilities hereunder. After such deductions, the remainder of such sum shall be paid by the Trustee to the Master Servicer at the time of such sale, transfer and assignment to the successor Master Servicer. (i) The Trustee and such successor Master Servicer shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. The Master Servicer 136 agrees to cooperate with the Trustee and any successor Master Servicer in effecting the termination of the Master Servicer's servicing responsibilities and rights hereunder and shall promptly provide the Trustee or such successor Master Servicer, as applicable, all documents and records reasonably requested by it to enable it to assume the Master Servicer's functions hereunder and shall promptly also transfer to the Trustee or such successor Master Servicer, as applicable, all amounts which then have been or should have been deposited in the Principal and Interest Account by the Master Servicer or which are thereafter received with respect to the Mortgage Loans. Neither the Trustee nor any other successor Master Servicer shall be held liable by reason of any failure to make, or any delay in making, any distribution hereunder or any portion thereof caused by (i) the failure of the Master Servicer to deliver, or any delay in delivering, cash, documents or records to it, or (ii) restrictions imposed by any regulatory authority having jurisdiction over the Master Servicer. (j) The Trustee or any other successor Master Servicer, upon assuming the duties of Master Servicer hereunder, shall immediately make all Delinquency Advances and pay all Compensating Interest which the Master Servicer has theretofore failed to remit with respect to the Mortgage Loans; provided, however, that if the Trustee is acting as successor Master Servicer or another successor Master Servicer has become the Master Servicer, the Trustee or such other successor Master Servicer, as the case may be, shall only be required to make Delinquency Advances (including the Delinquency Advances described in this clause (j)) if, in the Trustee's or such other successor Master Servicer's, as the case may be, reasonable good faith judgment, such Delinquency Advances will ultimately be recoverable from the related Mortgage Loans. The Trustee, while acting as Master Servicer hereunder, shall only be obligated to make payments with respect to Compensating Interest to the extent of its Master Servicing Fee. (k) The Master Servicer that is being removed or is resigning shall give notice to the Mortgagors and to the Rating Agencies of the transfer of the servicing to the successor Master Servicer. (l) Any successor Master Servicer shall assume all rights and obligations of the predecessor Master Servicer under this Agreement, except those arising before succession (other than the obligation to make Delinquency Advances) and under Section 3.1(b) (insofar as such provisions relate to the predecessor Master Servicer). (m) If the Master Servicer is removed pursuant to Section 11.1(a) or the first paragraph of Section 11.1(b) hereof the Master Servicer shall remain entitled to reimbursement for Reimbursable Advances to the extent that the related amounts are thereafter recovered with respect to the related Mortgage Loans. 137 Section 11.2. Trigger Events; Removal of Master Servicer. (a) Upon determination by the Certificate Insurer that a Trigger Event has occurred, the Certificate Insurer shall give notice of such Trigger Event to the Master Servicer, the Seller, the Trustee and to Moody's and S&P. (b) At any time after such determination and while a Trigger Event is continuing, the Certificate Insurer may direct the Trustee to remove the Master Servicer if the Certificate Insurer makes a determination that the manner of master servicing was a factor contributing to the end of the delinquencies or losses incurred in the Trust Fund. (c) Upon receipt of directions to remove the Master Servicer pursuant to the preceding clause (b), the Trustee shall notify the Master Servicer that it has been terminated and the Master Servicer shall be terminated in the same manner as specified in Section 11.1. (d) After notice of occurrence of a Trigger Event has been given and while a Trigger Event is continuing, until and unless the Master Servicer has been removed as provided in clause (b), the Master Servicer covenants and agrees to act as the Master Servicer for a term from the occurrence of the Trigger Event to the end of the calendar quarter in which such Trigger Event occurs, which term may at the Certificate Insurer's discretion be extended by notice to the Trustee for successive terms of three (3) calendar months each, until the termination of the Trust Fund. The Master Servicer will, upon the receipt of each such notice of extension (a "Master Servicer Extension Notice") become bound for the duration of the term covered by such Master Servicer Extension Notice to continue as Master Servicer subject to and in accordance with this Agreement. If, as of the fifteenth (15th) day prior to the last day of any term as the Master Servicer, the Trustee shall not have received any Master Servicer Extension Notice from the Certificate Insurer, the Trustee shall, within five (5) days thereafter, give written notice of such nonreceipt to the Certificate Insurer and the Master Servicer. If any such term expires without a Master Servicer Extension Notice then the Trustee shall act as Master Servicer as provided in Section 11.1. (e) No provision of this Section 11.2 shall have the effect of limiting the rights of the Company, the Trustee, the Certificateholders or the Certificate Insurer under Section 11.1. Section 11.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer. Subject to the immediately succeeding sentence, any corporation into which the Master Servicer may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Master Servicer shall be 138 a party, or any corporation succeeding to all or substantially all of the business of the Master Servicer, shall be the successor of 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 provided (x) that such corporation meets the qualifications set forth in Section 11.1(g) and (y) that any successor Master Servicer must meet the qualifications set forth in Section 11.1(g). Any Affiliate into which the Master Servicer may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation of the Master Servicer and an Affiliate, or any Affiliate succeeding to all or substantially all of the business of the Master Servicer, shall be the successor of 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. ARTICLE XII MISCELLANEOUS Section 12.1. Compliance Certificates and Opinions. Upon any application or request by the Seller, the Transferor or the Owners to the Trustee to take any action under any provision of this Agreement, the Seller, the Transferor or the Owners, as the case may be, shall furnish to the Trustee a certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with, except that in the case of any such application or request as to which the furnishing of any documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate need be furnished. Except as otherwise specifically provided herein, each certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; and (c) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 12.2. Form of Documents Delivered to the Trustee. In any case where several matters are required to be 139 certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate of an Authorized Officer of the Trustee may be based, insofar as it relates to legal matters, upon an opinion of counsel, unless such Authorized Officer knows, or in the exercise of reasonable care should know, that the opinion is erroneous. Any such certificate of an Authorized Officer of the Trustee or any opinion of counsel may be based, insofar as it relates to factual matters upon a certificate or opinion of, or representations by, one or more Authorized Officers of the Seller, the Master Servicer or of the Transferor, stating that the information with respect to such factual matters is in the possession of the Seller, the Master Servicer or the Transferor, unless such Authorized Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any opinion of counsel may also be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Authorized Officer of the Trustee, stating that the information with respect to such matters is in the possession of the Trustee, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any opinion of counsel may be based on the written opinion of other counsel, in which event such opinion of counsel shall be accompanied by a copy of such other counsel's opinion and shall include a statement to the effect that such counsel believes that such counsel and the Trustee may reasonably rely upon the opinion of such other counsel. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 12.3. Acts of Owners. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by the Owners may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Owners 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, where it is hereby expressly required, delivered to and with the consent of the Seller, the Transferor and the Certificate Insurer. Such instrument or instruments (and the action embodied therein and 140 evidenced thereby) are herein sometimes referred to as the "act" of the Owners signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee and the Trust, if made in the manner provided in this Section. (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 of 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. (c) The ownership of Certificates shall be proved by the Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Owner of any Certificate shall bind the Owner 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 Trust in reliance thereon, whether or not notation of such action is made upon such Certificates. Section 12.4. Notices, etc. to Trustee. Any request, demand, authorization, direction, notice, consent, waiver or act of the Owners or other documents provided or permitted by this Agreement to be made upon, given or furnished to, or filed with the Trustee by any Owner or by the Seller shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its corporate trust office as set forth in Section 12.19 hereof. Section 12.5. Notices and Reports to Owners; Waiver of Notices. Where this Agreement provides for notice to Owners of any event or the mailing of any report to Owners, such notice or report shall be sufficiently given (unless otherwise herein expressly provided) if mailed, first-class postage prepaid, to each Owner affected by such event or to whom such report is required to be mailed, at the address of such Owner as it appears on the Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice or the mailing of such report. In any case where a notice or report to Owners is mailed in the manner provided above, neither the failure to mail such notice or report nor any defect in any notice or report so mailed to any particular Owner shall affect the sufficiency of such notice or report with respect to other Owners, and any notice or 141 report which is mailed in the manner herein provided shall be conclusively presumed to have been duly given or provided. Where this Agreement provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Owners shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Owners when such notice is required to be given pursuant to any provision of this Agreement, then any manner of giving such notice as the Seller shall direct to the Trustee shall be deemed to be a sufficient giving of such notice. Where this Agreement provides for notice to any rating agency that rated any Certificates, failure to give such notice shall not affect any other rights or obligations created hereunder. Section 12.6. Rules by Trustee and Seller. The Trustee may make reasonable rules for any meeting of Owners. The Seller may make reasonable rules and set reasonable requirements for its functions. Section 12.7. Successors and Assigns. All covenants and agreements in this Agreement by any party hereto shall bind its successors and assigns, whether so expressed or not. Section 12.8. Severability. In case any provision in this Agreement or in the Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 12.9. Benefits of Agreement. Nothing in this Agreement or in the Certificates, expressed or implied, shall give to any Person, other than the Owners, the Certificate Insurer and the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.10. Legal Holidays. In any case where the date of any Remittance Date, any Payment Date, any other date on which any distribution to any Owner is proposed to be paid, or any date on which a notice is required to be sent to any Person pursuant to the terms of this Agreement shall not be a Business Day, then (notwithstanding any other provision of the Certificates or this Agreement) payment or mailing need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made or mailed on the nominal date of 142 any such Remittance Date, such Payment Date, or such other date for the payment of any distribution to any Owner or the mailing of such notice, as the case may be, and no interest shall accrue for the period from and after any such nominal date, provided such payment is made in full on such next succeeding Business Day. Section 12.11. Governing Law. This Agreement and each Certificate shall be construed in accordance with and governed by the laws of the State of New York applicable to agreements made and to be performed therein. Section 12.12. Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Section 12.13. Usury. The amount of interest payable or paid on any Certificate under the terms of this Agreement shall be limited to an amount which shall not exceed the maximum nonusurious rate of interest allowed by the applicable laws of the State of New York or any applicable law of the United States permitting a higher maximum nonusurious rate that preempts such applicable New York laws, which could lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In the event any payment of interest on any Certificate exceeds the Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed to have been paid to the Owner of such Certificate as a result of an error and the Owner receiving such excess payment shall promptly, upon discovery of such error or upon notice thereof from the Trustee on behalf of the Trust, refund the amount of such excess or, at the option of such Owner, apply the excess to the payment of principal of such Certificate, if any, remaining unpaid. In addition, all sums paid or agreed to be paid to the Trustee for the benefit of Owners of Certificates for the use, forbearance or detention of money shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such Certificates. Section 12.14. Amendment. The Seller, the Master Servicer, the Transferor and the Trustee, may at any time and from time to time, with the prior written consent of the Certificate Insurer but without the consent of the Owners, amend this Agreement, and the Trustee shall consent to such amendment, for the purpose of (i) curing any ambiguity, or correcting or supplementing any provision hereof which may be inconsistent with any other provision hereof, or to add provisions hereto which are not inconsistent with the provisions hereof, (ii) upon receipt of an opinion of counsel experienced in federal income tax matters to the effect that no entity-level tax will be imposed on the Trust or upon the transferor of a Residual Certificate as a result of the ownership of any Residual Certificate by a Disqualified Organization, removing the restriction on transfer set forth in Section 5.8(b) hereof or (iii) complying with the requirements of the Code and the regulations proposed or promulgated thereunder; 143 provided, however, that any such action shall not, as evidenced by an opinion of counsel delivered to the Trustee, materially and adversely affect the interests of any Owner or materially and adversely affect (without its written consent) the rights and interests of the Certificate Insurer. This Agreement may also be amended by the Seller, the Master Servicer, the Transferor and the Trustee at any time and from time to time, with the prior written approval of the Certificate Insurer and of not less than 66 2/3% of the Percentage Interest represented by each affected Class of Certificates then Outstanding, for the purpose of adding any provisions or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Owners hereunder; provided, however, that no such amendment shall (a) change in any manner the amount of, or change the timing of, payments which are required to be distributed to any Owner without the consent of the Owner of such Certificate or (b) reduce the aforesaid percentages of Percentage Interests which are required to consent to any such amendments, without the consent of the Owners of all Certificates of the Class or Classes affected then Outstanding. The Trustee shall be entitled to receive upon request, and shall be fully protected in relying in good faith upon, an opinion of counsel reasonably acceptable to the Trustee stating that the execution of such amendment is authorized or permitted by this Agreement. Promptly after the execution of any such amendment, the Trustee shall furnish written notification of the substance of such amendment to each Owner and to the Rating Agencies. The Certificate Insurer and the Owners, if they so request, shall be provided with copies of any amendments to this Agreement, together with copies of any opinions or other documents or instruments executed in connection therewith. The Trustee shall not be required to enter into any amendment which affects its rights or obligations hereunder. The definitions of "Group I Specified Subordinated Amount" and "Group II Specified Subordinated Amount" may be amended by the Seller, the Master Servicer, the Transferor and the Trustee, with the consent of the Certificate Insurer, in any respect without the consent of, or notice to, the Owners of any Certificates; provided, (x) that the Certificate Insurer is not then in default, (y) that the effect of such change would not be to alter materially (in the judgment of the Seller) the weighted average life of the related Class A Certificates and (z) the then-current ratings on the related Class A Certificates are not thereby reduced. 144 Section 12.15. REMIC Status; Taxes. (a) The Tax Matters Person shall prepare and file or cause to be filed with the Internal Revenue Service Federal tax or information returns with respect to each REMIC and the Certificates containing such information and at the times and in such manner as may be required by the Code or applicable Treasury regulations, and shall furnish to Owners such statements or information at the times and in such manner as may be required thereby. For this purpose, the Tax Matters Person may, but need not, rely on any proposed regulations of the United States Department of the Treasury. The Tax Matters Person shall indicate the election to treat each REMIC as a REMIC (which election shall apply to the taxable period ending December 31, 1996 and each calendar year thereafter) in such manner as the Code or applicable Treasury regulations may prescribe. The Trustee, as Tax Matters Person appointed pursuant to Section 12.17 hereof shall sign all tax information returns filed pursuant to this Section 12.16. The Tax Matters Person shall provide information necessary for the computation of tax imposed on the transfer of a Residual Certificate to a Disqualified Organization, or an agent of a Disqualified Organization, or a pass-through entity in which a Disqualified Organization is the record holder of an interest. The Trustee shall not be required to file a separate tax return for the Supplemental Interest Trust. (b) The Tax Matters Person shall timely file all reports required to be filed by the Trust with any federal, state or local governmental authority having jurisdiction over the Trust, including other reports that must be filed with the Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the form required under Section 6050K of the Code, if applicable to REMICs. Furthermore, the Tax Matters Person shall report to Owners, if required, with respect to the allocation of expenses pursuant to Section 212 of the Code in accordance with the specific instructions to the Tax Matters Person by the Seller with respect to such allocation of expenses. The Tax Matters Person shall collect any forms or reports from the Owners determined by the Seller to be required under applicable federal, state and local tax laws. (c) The Tax Matters Person shall provide to the Internal Revenue Service and to persons described in Section 860E(e)(3) and (6) of the Code the information described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor regulation thereto. Such information will be provided in the manner described in Treasury Regulation Section 1.860E-2(a)(5), or any successor regulation thereto. (d) The Seller covenants and agrees to within ten Business Days after the Startup Day provide to the Trustee any information necessary to enable the Trustee to meet its obligations under subsections (b) and (c) above. 145 (e) The Trustee, the Seller and the Master Servicer each covenants and agrees for the benefit of the Owners (i) to take no action which would result in the termination of "REMIC" status for either REMIC, (ii) not to engage in any "prohibited transaction", as such term is defined in Section 860F(a)(2) of the Code and (iii) not to engage in any other action which may result in the imposition on the Trust of any other taxes under the Code, including, without limitation, for purposes of this paragraph any alteration, modification, amendment, extension, waiver or forbearance with respect to any Mortgage Loan. (f) The Trust shall, for federal income tax purposes, maintain books on a calendar year basis and report income on an accrual basis. (g) No Eligible Investment shall be sold prior to its stated maturity (unless sold pursuant to a plan of liquidation in accordance with Article VIII hereof). (h) Neither the Seller nor the Trustee shall enter into any arrangement by which the Trustee will receive a fee or other compensation for services rendered pursuant to this Agreement, which fee or other compensation is paid from the Trust Estate, other than as expressly contemplated by this Agreement. (i) Notwithstanding the foregoing clauses (g) and (h), the Trustee, the Seller may engage in any of the transactions prohibited by such clauses, provided that the Trustee shall have received an opinion of counsel experienced in federal income tax matters to the effect that such transaction does not result in a tax imposed on the Trust or cause a termination of REMIC status for either REMIC; provided, however, that such transaction is otherwise permitted under this Agreement. Section 12.16. Additional Limitation on Action and Imposition of Tax. (a) Any provision of this Agreement to the contrary notwithstanding, the Trustee shall not, without having obtained an opinion of counsel experienced in federal income tax matters to the effect that such transaction does not result in a tax imposed on the Trust or cause a termination of REMIC status for either REMIC, (i) sell any assets in the Trust Estate, (ii) accept any contribution of assets after the Startup Day or (iii) agree to any modification of this Agreement. (b) In the event that any tax is imposed on "prohibited transactions" as defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure property" as defined in Section 860G(c) of the Code, on any contribution to either REMIC after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax is imposed, such tax shall be paid by (i) the Trustee, if such tax arises out of or results from the Trustee's negligence or willful misconduct, (ii) the Master Servicer, if such tax arises out of or results from a breach by the Master Servicer of any of 146 its obligations under this Agreement, or otherwise (iii) the Owners of the Residual Certificates in proportion to their Percentage Interests. To the extent such tax is chargeable against the Owners of the Residual Certificates, notwithstanding anything to the contrary contained herein, the Trustee is hereby authorized to retain from amounts otherwise distributable to the Owners of the Residual Certificates on any Payment Date sufficient funds for the payment of such tax. Section 12.17. Appointment of Tax Matters Person. A Tax Matters Person will be appointed by the Owners of the Residual Certificates for all purposes of the Code and such Tax Matters Person will perform, or cause to be performed, such duties and take, or cause to be taken, such actions, as are required to be performed or taken by the Tax Matters Person under the Code. The Trustee hereby agrees to act as the Tax Matters Person (and the Trustee is hereby appointed by the Owners of the Residual Certificates as the Tax Matters Person) for each REMIC held by the Trust. Section 12.18. Reports to the Securities and Exchange Commission. The Trustee shall, on behalf of the Trust, cause to filed with the Securities and Exchange Commission any periodic reports required to be filed under the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission thereunder. Upon the request of the Trustee, each of the Master Servicer and the Seller shall cooperate with the Trustee in the preparation of any such report and shall provide to the Trustee in a timely manner all such information as the Trustee may reasonably request in connection with the performance of its duties and obligations under this Section. Section 12.19. Notices. All notices hereunder shall be given as follows, until any superseding instructions are given to all other Persons listed below: The Seller: Access Financial Lending Corp. and Master 400 Highway 169 South Servicer Suite 400 St. Louis Park, Minnesota 55426-1106 Attention: General Counsel Tel: (612) 542-6500 Fax: (612) 542-6510 The Transferor: Access Financial Receivables Corp. 400 Highway 169 South Suite 410 St. Louis Park, Minnesota 55426-1106 Attention: General Counsel The Trustee: The Chase Manhattan Bank 450 West 33rd Street, 15th Floor 147 New York, NY 10001 Attention: Global Trust Services Access Financial Mortgage Loan Trust 1997-2 Tel: (212) 946-3200 Fax: (212) 946-8191 The Certificate Insurer: Financial Security Assurance, Inc. 350 Park Avenue New York, NY 10022 Attention: Senior Vice President- Surveillance Tel: (212) 826-0100 Fax: (212) 888-5278 or such other address or telecopy number as may hereafter be furnished to the Trustee and the Master Servicer in writing by the Certificate Insurer. In each case in which a notice or other communication to the Certificate Insurer refers to an Event of Default or a claim under the Certificate Insurance Policy or with respect to which failure on the part of the Certificate Insurer to respond shall be deemed to constitute consent or acceptance, then a copy of such notice or other communication should also be sent to the attention of the General Counsel and the Head-Financial Guaranty Group and shall be marked to indicate "URGENT MATERIAL ENCLOSED." Moody's: Moody's Investors Service 99 Church Street New York, New York 10007 Attention: The Home Equity Monitoring Department S & P: Standard & Poor's 26 Broadway 15th Floor New York, New York 10004 Attention: Residential Mortgage Surveillance Dept. 148 Underwriters: c/o Prudential Securities Incorporated One New York Plaza, 15th Floor New York, New York 10292-2015 Tel: (212) 778-1000 Fax: (212) 778-7401 Section 12.20. Grant of Security Interest. It is the express intent of the parties hereto that the conveyance of the Mortgage Loans and all other assets constituting the Trust Estate by the Transferor to the Trust be, and be construed as, a sale of the Mortgage Loans and such other assets constituting the Trust Estate by the Transferor and not a pledge by the Seller to secure a debt or other obligation of the Transferor. However, in the event that, notwithstanding the aforementioned intent of the parties, the Mortgage Loans and other assets constituting the Trust Estate are held to be property of the Seller, then (a) it is the express intent of the parties that such conveyance be deemed as a pledge of the Mortgage Loans and all other assets constituting the Trust Estate to the Trust to secure a debt or other obligation of the Seller and this Agreement shall be deemed to be a security agreement within the meaning of the Uniform Commercial Code and the conveyance provided for in Section 3.3 hereof shall be deemed a grant by the Transferor to the Trust of a security interest in all of the Transferor's right, title and interest in and to the Mortgage Loans and all other assets constituting the Trust Estate. Accordingly, the Transferor hereby grants to the Trustee a security interest in the Mortgage Loans and all other assets constituting the Trust Estate for the purpose of securing to the Trust the performance by the Transferor of the obligations under this Agreement. Notwithstanding the foregoing, the parties hereto intend the conveyance pursuant to Section 3.3 to be a true, absolute and unconditional sale of the Mortgage Loans and all other assets constituting the Trust Estate by the Transferor to the Trust, the Transferor shall take such actions, and the Trustee shall take such actions as directed by the Transferor, as may be necessary to ensure that if this Agreement were deemed to create a security interest, such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such for the term of this Agreement. Without limiting the generality of the foregoing, the Seller shall file, or shall cause to be filed, all filings necessary to maintain the effectiveness of any original filings necessary under the Uniform Commercial Code to perfect the Trustee's security interest in or lien on the Mortgage Loans for the benefit of the Owners, including, without limitation, (x) continuation statements and (y) such other statements as may be occasioned by (i) any change of name of the Transferor or Trustee, (ii) any change of location of the place of business or the chief executive office of the Transferor or (iii) any transfer of any interest of the Transferor in any Mortgage Loan; provided, however, that with respect to 149 clauses (i) through (iii) above, the Transferor shall notify the Trustee of any changes related thereto. Section 12.21. Indemnification. (a) The Master Servicer agrees to indemnify and hold the Trustee, the Transferor, the Certificate Insurer, each Certificateholder harmless against any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments, and any other reasonable costs, fees and expenses that were caused by (i) the failure of the Master Servicer to perform its duties and service the Mortgage Loans in compliance with the terms of this Agreement and the Servicing Standards and (ii) a breach of any of the Master Servicer's representations, covenants and warranties contained in this Agreement. This indemnity shall survive the termination of this Agreement and the payment of the Mortgage Loans, provided, that the Master Servicer shall have no liability to indemnify any such indemnified party under this Agreement to the extent that any such losses, penalties, fines, forfeitures, costs, fees, judgments, liabilities, damages, claims or expenses were caused by the negligence, willful misconduct or bad faith of such indemnified party. If the Master Servicer shall have made any indemnity payment pursuant to this Section 12.21(a) and the recipient thereafter collects from another Person any amount relating to the matters covered by the foregoing indemnity, the recipient shall promptly repay such amount to the Master Servicer. Promptly after receipt by any of the above-mentioned indemnified parties of notice of any claim or commencement of any action discussed above, such indemnified party shall, if a claim in respect thereof is to be made against the Master Servicer, promptly notify the Master Servicer in writing of the claim or the commencement of that action; provided, however, that the failure to notify the Master Servicer shall not relieve it from any liability which it may have under this Section 12.21(a) except to the extent it has been materially prejudiced by such failure; and provided, further, that the failure to notify the Master Servicer shall not relieve it from any liability which it may have to the above-mentioned indemnified parties otherwise than under this Section 12.21(a). (b) The Seller agrees to indemnify and hold the Master Servicer, the Transferor, the Certificate Insurer, the Trustee, each Certificateholder harmless against any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments and other reasonable costs, fees and expenses that were caused by (i) the failure of the Seller to perform its duties in accordance with the terms of this Agreement or (ii) a breach of any of the Seller's representations, covenants, and warranties contained in this Agreement. This indemnity shall survive the termination of this Agreement, the payment of the Mortgage Loans and the removal or resignation of the Trustee; provided, that the 150 Seller shall have no liability to indemnify any such indemnified party under this Agreement to the extent that any such losses, penalties, fines, forfeitures, costs, fees and judgments, liabilities, damages, claims or expenses were caused by the negligence, willful misconduct or bad faith of such indemnified party. If the Seller shall have made any indemnity payment pursuant to this Section 12.21 and the recipient thereafter collects from another Person any amount relating to the matters covered by the foregoing indemnity, the recipient shall promptly repay such amount to the Seller. Promptly after receipt by any of the above-mentioned indemnified parties of notice of any claim or commencement of any action discussed above, such indemnified party shall, if a claim in respect thereof is to be made against the Seller, promptly notify the Seller in writing of the claim or the commencement of that action; provided, however, that the failure to notify the Seller shall not relieve it from any liability which it may have under this Section 12.21(b) except to the extent it has been materially prejudiced by such failure; and provided, further, that the failure to notify the Seller shall not relieve it from any liability which it may have to the above-mentioned indemnified parties otherwise than under this Section 12.21(b). (c) The Seller hereby covenants and agrees to indemnify, exonerate and hold the Master Servicer, the Transferor, the Trustee, the Trust Estate, the Owners, the Certificate Insurer, their respective directors, officers, agents and employees (collectively, the "Indemnified Persons") harmless from and against any and all damages, losses, liabilities, obligations, penalties, fines, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses (including, without limitation, reasonable attorneys' and experts' fees and disbursements as they become due and without waiting for the ultimate outcome of the matter) of any kind or of any nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against any Indemnified Person arising from or out of any Hazardous Substances (as defined below) on, in, under or affecting all or any portion of any of the Properties. The matters covered by the foregoing indemnity shall include, without limitation, all of the following: (i) the costs of removal of any and all Hazardous Substances from all or any portion of the Properties or any adjacent property, (ii) the costs required to take necessary precautions to protect against the release of Hazardous Substances on, in, under or affecting any of the Properties into the air, ground, water, other public domain or any adjacent property to the extent required by applicable Environmental Laws or any governmental authority, including, without limitation, the costs and expenses of environmental testing and assessments, and (iii) the costs incurred to comply, in connection with all or any portion of the Properties, with all applicable Environmental Laws, including without limitation fines, 151 penalties, and administrative and overhead costs charged by any governmental entity. The obligations of the Seller under this Section to compensate the Indemnified Persons and to reimburse them for expenses (including, without limitation, litigation expenses), disbursements and advances shall survive the termination of this Agreement and the resignation or removal of the Trustee, and continue thereafter for so long as any liability or expenses indemnified against may be imposed under applicable Environmental Law (as defined below) against any Indemnified Person. (d) In no event shall any Person be indemnified for any losses, expenses, damages, claims or liabilities incurred by such Person by reason of such Person's (or such Person's agents) willful malfeasance, bad faith or negligence. "Hazardous Substance" shall include, without limitation: (i) those substances included within the definitions of one or more of the terms "hazardous substances," "hazardous materials" and "toxic substances" in CERCLA, RCRA, and the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.ss. 1801 et seq., and in the regulations promulgated pursuant to said laws under applicable law; (ii) those substances listed in the United States Department of Transportation Table (49 CFR 172 1 01 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto); (iii) such other substances, materials and wastes as are or become regulated under applicable local, state or Federal laws or regulations, or which are classified as hazardous or toxic under Federal, state, or local laws or regulations; and (iv) any material, waste or substance which is (a) petroleum; (b) friable asbestos; (c) polychlorinated biphenyls; (d) designated as a "Hazardous Substance" pursuant to Section 311 of the Clean Water Act, as amended, 13 U.S.C. ss.ss. 1321 et seq. (33 U.S.C. ss.ss. 1321) or designated as "toxic pollutants" subject to Chapter 26 of the Clean Water Act pursuant to Section 307 of the Clean Water Act (33 U.S.C. ss.ss. 1317); (e) flammable explosive; or (f) radioactive materials. "Environmental Law" shall mean any Federal, state or local statute, law, regulation, order, consent decree, judgment, permit, license, code, covenant, deed restriction, common law, ordain or other requirement relating to public health, safety or the environment, including, without limitation, those relating to releases, discharges or emissions to air, water, land or ground water, to the withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or management of hazardous or solid waste, or Hazardous Substances or crude oil, or any fraction thereof, or to exposure to toxic hazardous materials, to the handling, transportation, discharge or release of gaseous or liquid Hazardous Substances and any regulation, order, notice or demand issued pursuant to such law, statute or ordinance, in each case applicable 152 to the property of Borrower or the operation, construction or modification of any thereof, including without limitation the following: CERCLA, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Sold Waste Amendments of 1984, the Hazardous Materials Transportation Act, as amended, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966, as amended, the Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of 1977, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the National Environmental Policy Act of 1975 and the Oil Pollution Act of 1990 and any similar or implementing state law, and any state statute and any further amendments to these laws, providing for financial responsibility for cleanup or other actions with respect to the release or threatened release of Hazardous Substances or crude oil, or any fraction thereof and all rules, regulations, guidance documents and publication promulgated thereunder. ARTICLE XIII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER Section 13.1. Rights of the Certificate Insurer to Exercise Rights of the Owners of the Class A Certificates. By accepting its Certificate, each Owner of a Class A Certificate agrees that unless a Certificate Insurer Default exists, the Certificate Insurer shall be deemed to be the Class A Certificateholders for all purposes (other than with respect to payment on the Class A Certificates) and will be entitled to exercise all rights of the Class A Certificateholders under this Agreement. In addition, each Owner of a Class A Certificate agrees that, unless a Certificate Insurer Default exists, the rights specifically set forth above may be exercised by the Owners of Class A Certificates only with the prior written consent of the Certificate Insurer. Section 13.2. Trustee to Act Solely with Consent of the Certificate Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not: (i) agree to any amendment to this Agreement; or (ii) undertake any litigation pursuant to or in connection with this Agreement; or (iii) terminate or assume any Sub-Servicing Agreement pursuant to this Agreement; 153 without the prior written consent of the Certificate Insurer which consent shall not be unreasonably withheld; provided, however, if a Certificate Insurer Default occurs hereunder, the Trustee shall act hereunder without Certificate Insurer consent. Section 13.3. Trust Fund and Accounts Held for Benefit of the Certificate Insurer. The Trustee shall hold the Trust Estate and the Mortgage Files for the benefit of the Owners and the Certificate Insurer and all references in this Agreement and in the Certificates to the benefit of Owners of the Certificates shall be deemed to include the Certificate Insurer. The Trustee shall cooperate in all reasonable respects with any reasonable request by the Certificate Insurer for action to preserve or enforce the Certificate Insurer's rights or interests under this Agreement and the Certificates. The Master Servicer hereby acknowledges and agrees that it shall service and administer the Mortgage Loans and any REO Properties, and shall maintain the Principal and Interest Account, for the benefit of the Owners and for the benefit of the Certificate Insurer, and all references in this Agreement to the benefit of or actions on behalf of the Owners shall be deemed to include the Certificate Insurer. Section 13.4. Claims Upon the Policy; Policy Payments Account. (a) The Trustee shall establish a separate special purpose trust account for the benefit of Owners of the Class A Certificates and the Certificate Insurer referred to herein as the "Policy Payments Account" over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall deposit any amount paid under the Certificate Insurance Policy in the Policy Payments Account and distribute such amount only for purposes of payment to Owners of Class A Certificates of the Insured Payments for which a claim was made and such amount may not be applied to satisfy any costs, expenses or liabilities of the Master Servicer, the Trustee or the Trust. Amounts paid under the Certificate Insurance Policy shall be transferred to the related Class A Distribution Account in accordance with the next succeeding paragraph and disbursed by the Trustee to Owners of Class A Certificates in accordance with Section 7.3. It shall not be necessary for such payments to be made by checks or wire transfers separate from the checks or wire transfers used to pay the Insured Payments with other funds available to make such payment. However, the amount of any payment of principal of or interest on the Class A Certificates to be paid from funds transferred from the Policy Payments Account shall be noted as provided in paragraph (b) below in the Register and in the statement to be furnished to Owners of the Certificates pursuant to Section 7.6. Funds held in the Policy Payments Account shall not be invested by the Trustee. On any Payment Date with respect to which a claim has been made under the Certificate Insurance Policy, the amount of any funds received by the Trustee as a result of any claim under the 154 Certificate Insurance Policy, to the extent required to pay the related Insured Distribution Amount on such Payment Date shall be withdrawn from the Policy Payments Account and deposited in the related Distribution Account and applied by the Trustee, together with the other funds to be withdrawn from the related Distribution Account pursuant to this Agreement, directly to the payment in full of the related Insured Distribution Amount due on the related Class A Certificates. Funds received by the Trustee as a result of any claim under the Certificate Insurance Policy shall be deposited by the Trustee in the Policy Payments Account and used solely for payment to the Owners of the Class A Certificates and may not be applied to satisfy any costs, expenses or liabilities of the Master Servicer, the Trustee or the Trust Fund. Any funds remaining in the Policy Payments Account on the first Business Day following a Payment Date shall be remitted to the Certificate Insurer, pursuant to the instructions of the Certificate Insurer, by the end of such Business Day. (b) The Trustee shall keep a complete and accurate record of the amount of interest and principal paid in respect of any Class A Certificate from moneys received under the Certificate Insurance Policy. The Certificate Insurer shall have the right to inspect such records at reasonable times during normal business hours upon one Business Day's prior notice to the Trustee. (c) The Trustee shall promptly notify the Certificate Insurer and Fiscal Agent of any proceeding or the institution of any action, of which a Responsible Officer of the Trustee has actual knowledge, seeking the avoidance as a preferential transfer under applicable bankruptcy, insolvency, receivership or similar law (a "Preference Claim") of any distribution made with respect to the Class A Certificates. Each Owner of a Class A Certificate, by its purchase of Class A Certificates, the Master Servicer and the Trustee hereby agree that, the Certificate Insurer (so long as no Certificate Insurer Default exists) may at any time during the continuation of any proceeding relating to a Preference Claim direct all matters relating to such Preference Claim, including, without limitation, (i) the direction of any appeal of any order relating to such Preference Claim and (ii) the posting of any surety, supersedeas or performance bond pending any such appeal. In addition and without limitation of the foregoing, the Certificate Insurer shall be subrogated to the rights of the Master Servicer, the Trustee and each Owner of a Class A Certificate in the conduct of any such Preference Claim, including, without limitation, all rights of any party to an adversary proceeding action with respect to any court order issued in connection with any such Preference Claim. Section 13.5. Effects of Payments by the Certificate Insurer. To the extent that the Certificate Insurer makes Insured Payments it will be entitled to receive the related Reimbursement Amounts, pursuant to Section 7.3(b)(iii)(C) hereof. 155 The Trustee and the Master Servicer shall cooperate in all respects with any reasonable request by the Certificate Insurer for action to preserve or enforce the Certificate Insurer's rights or interests under this Agreement without limiting the rights or affecting the interests of the Owners as otherwise set forth herein. Section 13.6. Notices to the Certificate Insurer. All notices, statements, reports, certificates or opinions required by this Agreement to be sent to any other party hereto or to any of the Owners shall also be sent to the Certificate Insurer. Section 13.7. Third-Party Beneficiary. Subject to the provisions below, the Certificate Insurer is a third party beneficiary of each provision of this Agreement that creates a right of or benefit to the Certificate Insurer. Any right conferred to the Certificate Insurer shall not arise until the issuance by the Certificate Insurer of the Certificate Insurance Policy and shall be suspended during any Certificate Insurer Default described in clause (a) of the definition thereof (except that subrogation rights which have previously arisen shall not be so suspended). During the period of any such suspension, such rights shall vest in the Owners of the Class A Certificates, and may be exercised by the Owners of a majority in Percentage Interest of each Class of Class A Certificates then Outstanding or, if there are no Class A Certificates then Outstanding, by such Percentage Interest represented by the Class B Certificates then Outstanding. [Except for these words (and the accompanying punctuation) the rest of this page has been intentionally left blank.] 156 IN WITNESS WHEREOF, the Seller, the Master Servicer, the Transferor and the Trustee have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, all as of the day and year first above written. ACCESS FINANCIAL LENDING CORP., as Seller By:______________________________________ Name: Dan J. Cheever Title: Chief Executive Officer and Chief Financial Officer ACCESS FINANCIAL LENDING CORP., as Master Servicer By:______________________________________ Name: Dan J. Cheever Title: Chief Executive Officer and Chief Financial Officer ACCESS FINANCIAL RECEIVABLES CORP., as Transferor By:______________________________________ Name: Dan J. Cheever Title: Chief Financial Officer THE CHASE MANHATTAN BANK, as Trustee By:______________________________________ Name: John Mynttinen Title: Second Vice President [Pooling and Servicing Agreement] STATE OF MINNESOTA ) : ss.: COUNTY OF HENNEPIN ) On the 29th day of May, 1997, before me personally came Dan J. Cheever, to me known, who, being by me duly sworn did depose and say that his office is located at 400 Highway 169 South, Suite 400, St. Louis Park, Minnesota 55426-0365, that he is the Chief Executive Officer and Chief Financial Officer of Access Financial Lending Corp., a Delaware corporation, which is described in and which executed the above instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. ______________________________________ Notary Public [Pooling and Servicing Agreement] STATE OF MINNESOTA ) : ss.: COUNTY OF HENNEPIN ) On the 29th day of May, 1997, before me personally came Dan J. Cheever, to me known, who, being by me duly sworn did depose and say that his office is located at 400 Highway 169 South, Suite 410, St. Louis Park, Minnesota 55426-0365, that he is the Chief Financial Officer of Access Financial Receivables Corp., a Delaware corporation, which is described in and which executed the above instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. ______________________________________ Notary Public [Pooling and Servicing Agreement] STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On the 29th day of May, 1997, before me personally came John Mynttinen, to me known, who, being by me duly sworn did depose and say that his office is located at 450 West 33rd Street, 15th Floor, New York, NY 10001; that he is a Second Vice President of The Chase Manhattan Bank, the New York banking corporation described in and that executed the above instrument as Trustee; and that he signed his name thereto by order of the Board of Directors of said New York banking corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. ______________________________________ Notary Public [Pooling and Servicing Agreement] EX-10 5 EXHIBIT 10.1 INDEMNIFICATION AGREEMENT - -------------------------------------------------------------------------------- INDEMNIFICATION AGREEMENT among FINANCIAL SECURITY ASSURANCE INC., ACCESS FINANCIAL LENDING CORP., ACCESS FINANCIAL RECEIVABLES CORP., PRUDENTIAL SECURITIES INCORPORATED and J.P. MORGAN SECURITIES, INC. Dated as of May 22, 1997 $185,188,000 Access Financial Mortgage Loan Trust 1997-2, Mortgage Loan Pass-Through Certificates, Series 1997-2 - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page ---- SECTION 1. Definitions..................................................... 1 SECTION 2. Representations, Warranties and Agreements of Financial Security................................ 3 SECTION 3. Representations, Warranties and Agreements of the Underwriter................................... 6 SECTION 4. Indemnification................................................. 7 SECTION 5. Indemnification Procedures...................................... 8 SECTION 6. Contribution.................................................... 9 SECTION 7. Miscellaneous................................................... 10 EXHIBIT A Opinion of General Counsel INDEMNIFICATION AGREEMENT INDEMNIFICATION AGREEMENT dated as of May 22, 1997, among FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), ACCESS FINANCIAL RECEIVABLES CORP. (the "Transferor"), ACCESS FINANCIAL LENDING CORP. (the "Company"), PRUDENTIAL SECURITIES INCORPORATED ("Prudential") and J.P. MORGAN SECURITIES, INC. ("J.P. Morgan") (each of Prudential and J.P. Morgan, an "Underwriter"): Section 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings provided below: "Agreement" means this Indemnification Agreement, as amended from time to time. "Company Party" means any of the Company, its parent and subsidiaries and any shareholder, director, officer, employee, agent or "controlling person" (as such term is used in the Securities Act) of any of the foregoing. "Federal Securities Laws" means the Securities Act, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding Company Act of 1935, each as amended from time to time, and the rules regulations in effect from time to time under such Acts. "Financial Security Agreements" means this Agreement and the Insurance Agreement. "Financial Security Information" has the meaning provided in Section 2(g) hereof. "Financial Security Party" means any of Financial Security, its parent, subsidiaries and affiliates, and any shareholder, director, officer, employee, agent or "controlling person" (as such term is used in the Securities Act) of any of the foregoing. "Indemnified Party" means any party entitled to any indemnification pursuant to Section 4 hereof. "Indemnifying Party" means any party required to provide indemnification pursuant to Section 4 hereof. -2- "Insurance Agreement" means the Insurance and Indemnity Agreement, dated as of May 1, 1997, among Financial Security, the Transferor and the Company. "Losses" means (a) any actual out-of-pocket damages incurred by the party entitled to indemnification or contribution hereunder, (b) any actual out-of-pocket costs or expenses incurred by such party, including reasonable fees or expenses of its counsel and other expenses incurred in connection with investigating or defending any claim, action or other proceeding which entitle such party to be indemnified hereunder (subject to the limitations set forth in Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds provided by any other Person other than an affiliate of such party (provided that the foregoing shall not create or imply any obligation to pursue recourse against any such other Person), plus (c) interest on the amount paid by the party entitled to indemnification or contribution from the date of such payment to the date of payment by the party who is obligated to indemnify or contribute hereunder at the statutory rate applicable to judgments for breach of contract. "Offering Circular" means the Prospectus Supplement relating to the Securities dated May 22, 1997. "Offering Document" means the Offering Circular and any other material or documents delivered by an Underwriter to any Person in connection with the offer or sale of the Securities. "Person" means any individual, partnership, joint venture, corporation, trust, unincorporated organization or other organization or entity (whether governmental or private). "Policy" means the financial guaranty insurance policy delivered by Financial Security with respect to the Securities. "Securities" means the Class A Group I Certificates and Class A-6 Group II Certificates issued pursuant to the Pooling and Servicing Agreement, dated as of May 1, 1997, among the Company, the Transferor and Chase Manhattan Bank, as trustee. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Transferor Party" means any of the Transferor, its parent and subsidiaries and any shareholder, director, officer, employee, agent or "controlling person" (as such term is used in the Securities Act) of any of the foregoing. -3- "Underwriter Information" has the meaning provided in Section 3(c) hereof. "Underwriter Party" means either Underwriter, or, with respect to either Underwriter, the parent, subsidiaries and affiliates thereof and any shareholder, director, officer, employee, agent or "controlling person" (as such item is used in the Securities Act) of any of the foregoing. "Underwriting Agreement" means the Underwriting Agreement between the Company and the Underwriters in respect of the Securities. Section 2. Representations, Warranties and Agreements of Financial Security. Financial Security represents, warrants and agrees to and with the other parties hereto as follows: (a) Organization, Etc. Financial Security is a stock insurance company duly organized, validly existing and authorized to transact financial guaranty insurance business under the laws of the State of New York. (b) Authorization, Etc. The Policy and the Financial Security Agreements have been duly authorized, executed and delivered by Financial Security. (c) Validity, Etc. The Policy and the Financial Security Agreements constitute valid and binding obligations of Financial Security, enforceable against Financial Security in accordance with their terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity and subject, in the case of this Agreement, to principles of public policy limiting the right to enforce the indemnification provisions contained herein. (d) Exemption From Registration. The Policy is exempt from registration under the Securities Act. (e) No Conflicts. Neither the execution or delivery by Financial Security of the Policy or the Financial Security Agreements, nor the performance by Financial Security of its obligations thereunder, will conflict with any provision of the certificate of incorporation or the bylaws of Financial Security nor result in a breach of, or constitute a default under, any material agreement or other instrument to which Financial Security is a party or by which any of its property is bound nor violate any judgment, order or decree applicable to Financial Security of any governmental or regulatory body, administrative agency, court or arbitrator having jurisdiction over Financial Security (except -4- that, in the published opinion of the Securities and Exchange Commission, the indemnification provisions of this Agreement, insofar as they relate to indemnification for liabilities arising under the Securities Act, are against public policy as expressed in the Securities Act and are therefore unenforceable). (f) Financial Information. The consolidated balance sheets of Financial Security as of December 31, 1995 and December 31, 1996 and the related consolidated statements of income, changes in shareholder's equity and cash flows for the fiscal years then ended and the interim consolidated balance sheet of Financial Security as of March 31, 1997, and the related statements of income, changes in shareholder's equity and cash flows for the interim period then ended, furnished by Financial Security to the Underwriters, fairly present in all material respects the financial condition of Financial Security as of such dates and for such periods in accordance with generally accepted accounting principles consistently applied (subject as to interim statements to normal year-end adjustments), and since the date of the most current interim consolidated balance sheet referred to above there has been no change in the financial condition of Financial Security which would materially and adversely affect its ability to perform its obligations under the Policy. (g) Financial Security Information. The information in the Offering Circular set forth under the caption "The Certificate Insurance Policy and the Certificate Insurer--Certificate Insurer" (as revised from time to time in accordance with the provisions hereof, the "Financial Security Information") is limited and does not purport to provide the scope of disclosure required to be included in a prospectus with respect to a registrant in connection with the offer and sale of securities of such registrant registered under the Securities Act. Within such limited scope of disclosure, however, as of the date of the Offering Circular and as of the date hereof, the Financial Security Information does not contain any untrue statement of a material fact, or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. (h) Additional Information. Financial Security will furnish to the Underwriters or the Company, upon request of an Underwriter or the Company, as the case may be, copies of Financial Security's most recent financial statements (annual or interim, as the case may be) which fairly present in all material respects the financial condition of Financial Security as of the dates and for the periods indicated, in accordance with generally accepted accounting principles consistently applied except as noted therein (subject, as to interim statements, to normal year-end adjustments); provided, however, that, if an Underwriter or the Company shall require a manually signed report or consent of Financial Security's auditors in connection with such financial statements, such report or -5- consent shall be at the expense of the relevant Underwriter or the Company, as the case may be. In addition, if the delivery of an Offering Circular relating to the Securities is required at any time prior to the expiration of nine months after the time of issue of the Offering Circular in connection with the offering or sale of the Securities, the Company or an Underwriter will notify Financial Security of such requirement to deliver an Offering Circular and Financial Security will promptly provide the Underwriters and the Company with any revisions to the Financial Security Information that are in the judgment of Financial Security necessary to prepare an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission. (i) Opinion of Counsel. Financial Security will furnish to the Underwriters, the Company and the Transferor on the closing date for the sale of the Securities an opinion of its General Counsel, to the effect set forth in Exhibit A attached hereto, dated such closing date and addressed to the Transferor, the Company and the Underwriters. (j) Consents and Reports of Independent Accountants. Financial Security will furnish to the Underwriters and the Company, upon request, as comfort from its independent accountants in respect of its financial condition, (i) at the expense of the Person specified in the Insurance Agreement, a copy of the Offering Circular, including either a manually signed consent or a manually signed report of Financial Security's independent accountants and (ii) the quarterly review letter by Financial Security's independent accountants in respect of the most recent interim financial statements of Financial Security. Nothing in this Agreement shall be construed as a representation or warranty by Financial Security concerning the rating of its claims-paying ability by Moody's Investors Service, Inc. or Standard & Poor's, a division of the McGraw-Hill Companies or any other rating agency (collectively, the "Rating Agencies"). The Rating Agencies, in assigning such ratings, take into account facts and assumptions not described in the Offering Circular and the facts and assumptions which are considered by the Rating Agencies, and the ratings issued thereby, are subject to change over time. Section 3. Representations, Warranties and Agreements of the Underwriters. Each Underwriter represents, warrants and agrees with respect to itself as follows: (a) Compliance With Laws. Such Underwriter will comply in all material respects with all legal requirements in connection with offers and sales of the Securities and make such offers and sales in the manner provided in the Offering Circular. -6- (b) Offering Document. Such Underwriter will not use, or distribute to other broker-dealers for use, any Offering Document in connection with the offer and sale of the Securities unless such Offering Document includes such information as has been furnished by Financial Security for inclusion therein and the information therein concerning Financial Security has been approved by Financial Security in writing. Financial Security hereby consents to the information in respect of Financial Security included in the Offering Circular. Each Offering Document will include the following statement: "The Policy is not covered by the property/casualty insurance security fund specified in Article 76 of the New York Insurance Law". (c) Underwriter Information. All material provided by such Underwriter for inclusion in the Offering Circular (as revised from time to time, the "Underwriter Information"), insofar as such information relates to such Underwriter, is true and correct in all material respects. In respect of the Offering Circular, the Underwriter Information is limited to the information set forth under the caption "Underwriting" and any information relating to any potential market-making, over-allotment or price stabilization activities of the related Underwriter in the Offering Circular. Section 4. Indemnification. (a) Financial Security agrees, upon the terms and subject to the conditions provided herein, to indemnify, defend and hold harmless each Transferor Party, each Company Party, and each Underwriter Party against (i) any and all Losses incurred by them with respect to the offer and sale of the Securities and resulting from Financial Security's breach of any of its representations, warranties or agreements set forth in Section 2 hereof and (ii) any and all Losses to which any Transferor Party, Company Party or Underwriter Party may become subject, under the Securities Act or otherwise, insofar as such Losses arise out of or result from an untrue statement of a material fact contained in any Offering Document or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission was made in the Financial Security Information included therein in accordance with the provisions hereof. (b) Each Underwriter agrees, severally and not jointly, upon the terms and subject to the conditions provided herein, to indemnify, defend and hold harmless each Financial Security Party against (i) any and all Losses incurred by them with respect to the offer and sale of the Securities and resulting from such Underwriter's breach of any of its representations, warranties or agreements set forth in Section 3 hereof and (ii) any and all Losses to which any Financial Security Party may become subject, under the Securities Act or otherwise, insofar as such Losses arise out of or result from an untrue statement of a material fact contained in any Offering Document or the omission to state therein a material fact required to be stated therein or necessary to make the statements -7- therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission was made in the Underwriter Information included therein. (c) Upon the incurrence of any Losses for which a party is entitled to indemnification hereunder, the Indemnifying Party shall reimburse the Indemnified Party promptly upon establishment by the Indemnified Party to the Indemnifying Party of the Losses incurred. Section 5. Indemnification Procedures. Except as provided below in Section 6 with respect to contribution, the indemnification provided herein by an Indemnifying Party shall be the exclusive remedy of any and all Indemnified Parties for the breach of a representation, warranty or agreement hereunder by an Indemnifying Party; provided, however, that each Indemnified Party shall be entitled to pursue any other remedy at law or in equity for any such breach so long as the damages sought to be recovered shall not exceed the Losses incurred thereby resulting from such breach. In the event that any action or regulatory proceeding shall be commenced or claim asserted which may entitle an Indemnified Party to be indemnified under this Agreement, such party shall give the Indemnifying Party written or telegraphic notice of such action or claim reasonably promptly after receipt of written notice thereof. The Indemnifying Party shall be entitled to participate in and, upon notice to the Indemnified Party, assume the defense of any such action or claim in reasonable cooperation with, and with the reasonable cooperation of, the Indemnified Party. The Indemnified Party will have the right to employ its own counsel in any such action in addition to the counsel of the Indemnifying Party, but the fees and expenses of such counsel will be at the expense of such Indemnified Party, unless (a) the employment of counsel by the Indemnified Party at its expense has been authorized in writing by the Indemnifying Party, (b) the Indemnifying Party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, or (c) the named parties to any such action or proceeding (including any impleaded parties) include both the Indemnifying Party and one or more Indemnified Parties, and the Indemnified Parties shall have been advised by counsel that there may be one or more legal defenses available to them which are different from or additional to those available to the Indemnifying Party (it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all Transferor Parties, one such firm for all Underwriter Parties relating to Prudential, one such firm for all Underwriter Parties relating to J.P. Morgan, one such firm for all Company Parties, and one such firm for all Financial Security Parties, as the case may be, which firm shall be designated in writing by the Transferor in respect of the Transferor Parties, by the relevant Underwriter in respect of the Underwriter Parties, by the Company in respect of the Company Parties and by Financial Security in respect of the Financial Security Parties), in each of which cases -8- the fees and expenses of counsel will be at the expense of the Indemnifying Party and all such fees and expenses will be reimbursed promptly as they are incurred. The Indemnifying Party shall not be liable for any settlement of any such claim or action unless the Indemnifying Party shall have consented thereto or be in default in its obligations hereunder. Any failure by an Indemnified Party to comply with the provisions of this Section shall relieve the Indemnifying Party of liability only if such failure is prejudicial to the position of the Indemnifying Party and then only to the extent of such prejudice. Section 6. Contribution. (a) To provide for just and equitable contribution if the indemnification provided by any Indemnifying Party is determined to be unavailable for any Indemnified Party (other than due to application of this Section), each Indemnifying Party shall contribute to the Losses arising from any breach of any of its representations, warranties or agreements contained in this Agreement on the basis of the relative fault of each of the parties as set forth in Section 6(b) below; provided, however, that an Indemnifying Party shall in no event be required to contribute to all Indemnified Parties an aggregate amount in excess of the Losses incurred by such Indemnified Parties resulting from the breach of representations, warranties or agreements contained in this Agreement. (b) The relative fault of each Indemnifying Party, on the one hand, and of each Indemnified Party, on the other, shall be determined by reference to, among other things, whether the breach of, or alleged breach of, any representations, warranties or agreements contained in this Agreement relates to information supplied by, or action within the control of, the Indemnifying Party or the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such breach. (c) The parties agree that Financial Security shall be solely responsible for the Financial Security Information and the Underwriters shall be solely responsible for the Underwriter Information and that the balance of each Offering Document shall be the responsibility of the Transferor and the Company as described in the Insurance Agreement. (d) Notwithstanding anything in this Section 6 to the contrary, an Underwriter shall not be required to contribute an amount in excess of the amount by which the total re-offering price at which the Securities underwritten by such Underwriter and distributed and offered to the public exceeds the amount paid under the Underwriting Agreement by such Underwriter for such Securities. (e) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. -9- (f) Upon the incurrence of any Losses entitled to contribution hereunder, the contributor shall reimburse the party entitled to contribution promptly upon establishment by the party entitled to contribution to the contributor of the Losses incurred. -10- Section 7. Miscellaneous. (a) Notices. All notices and other communications provided for under this Agreement shall be delivered to the address set forth below or to such other address as shall be designated by the recipient in a written notice to the other party or parties hereto. If to Financial Security: Financial Security Assurance Inc. 350 Park Avenue New York, NY 10022 Attention: Senior Vice President-- Surveillance (with a copy to the attention of the General Counsel) If to Transferor: Access Financial Receivables Corp. 400 Highway 169 South, Suite 410 St. Louis Park, Minnesota 55426-0365 Attention: General Counsel If to Company: Access Financial Lending Corp. 400 Highway 169 South, Suite 400 St. Louis Park, Minnesota 55426-0365 Attention: General Counsel If to Prudential: Prudential Securities Incorporated Asset-Backed Finance Group One New York Plaza, 15th Floor New York, New York 10292-2015 If to J.P. Morgan: J.P. Morgan Securities Inc. 60 Wall Street, 18th Floor New York, New York 10260-0060 -11- (b) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (c) Assignments. This Agreement may not be assigned by any party without the express written consent of each other party. Any assignment made in violation of this Agreement shall be null and void. (d) Amendments. Amendments of this Agreement shall be in writing signed by each party hereto. (e) Survival, Etc. The indemnity and contribution agreements contained in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnifying Party, (ii) the issuance of the Securities or (iii) any termination of this Agreement or the Policy. The indemnification provided in this Agreement will be in addition to any liability which the parties may otherwise have and shall in no way limit any obligations of the Transferor or the Company under the Underwriting Agreement or the Insurance Agreement, as applicable. (f) Counterparts. This Agreement may be executed in counterparts by the parties hereto, and all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. FINANCIAL SECURITY ASSURANCE INC. By_____________________________________ Name___________________________________ Authorized Officer ACCESS FINANCIAL LENDING CORP. By_____________________________________ Name Dan J. Cheever Title Chief Financial Officer ACCESS FINANCIAL RECEIVABLES CORP. By_____________________________________ Name___________________________________ Title__________________________________ PRUDENTIAL SECURITIES INCORPORATED By_____________________________________ Name___________________________________ Title__________________________________ J.P. MORGAN SECURITIES, INC. By_____________________________________ Name___________________________________ Title__________________________________ EXHIBIT A OPINION OF GENERAL COUNSEL Based upon the foregoing, I am of the opinion that: 1. Financial Security is a stock insurance company duly organized, validly existing and authorized to transact financial guaranty insurance business under the laws of the State of New York. 2. The Policy and the Agreements have been duly authorized, executed and delivered by Financial Security. 3. The Policy and the Agreements constitute valid and binding obligations of Financial Security, enforceable against Financial Security in accordance with their terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity and subject, in the case of the Indemnification Agreement, to principles of public policy limiting the right to enforce the indemnification provisions contained therein insofar as they relate to indemnification for liabilities arising under applicable securities laws. 4. The Policy is exempt from registration under the Securities Act of 1933, as amended (the "Act"). 5. Neither the execution or delivery by Financial Security of the Policy or the Agreements, nor the performance by Financial Security of its obligations thereunder, will conflict with any provision of the certificate of incorporation or the by-laws of Financial Security or, to the best of my knowledge, result in a breach of, or constitute a default under, any agreement or other instrument to which Financial Security is a party or by which it or any of its property is bound or, to the best of my knowledge, violate any judgment, order or decree applicable to Financial Security of any governmental or regulatory body, administrative agency, court or arbitrator having jurisdiction over Financial Security (except that in the published opinion of the Securities and Exchange Commission the indemnification provisions of the Indemnification Agreement, insofar as they relate to indemnification for liabilities arising under the Act, are against public policy as expressed in the Act and are therefore unenforceable). In addition, please be advised that I have reviewed the description of Financial Security under the caption "The Certificate Insurance Policy and the Certificate Insurer--Certificate Insurer" in the Prospectus Supplement dated May 22, 1997 (the "Offering Document") of the Transferor with respect to the Securities. The information -2- provided in the Offering Document with respect to Financial Security is limited and does not purport to provide the scope of disclosure required to be included in a prospectus with respect to a registrant under the Act in connection with the public offer and sale of securities of such registrant. Within such limited scope of disclosure, however, there has not come to my attention any information which would cause me to believe that the description of Financial Security referred to above, as of the date of the Offering Document or as of the date of this opinion, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that I express no opinion with respect to any financial statements or other financial information contained or referred to therein). -----END PRIVACY-ENHANCED MESSAGE-----