EXHIBIT 1
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
DEPOSITOR
U.S. BANK NATIONAL ASSOCIATION,
TRUSTEE
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
MASTER SERVICER AND SECURITIES ADMINISTRATOR
and
EMC MORTGAGE CORPORATION
SELLER AND COMPANY
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2004
Structured Asset Mortgage Investments II Inc.
Prime Mortgage Trust, Mortgage Pass-Through Certificates
Series 2004-1
TABLE OF CONTENTS
Page
ARTICLE I
Definitions..................................................................................................2
Section 1.01 Calculation of LIBOR.......................................................................37
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of Certificates.............................................38
Section 2.01 Conveyance of Mortgage Loans to Trustee....................................................38
Section 2.02 Acceptance of Mortgage Loans by Trustee....................................................41
Section 2.03 Assignment of Interest in the Mortgage Loan Purchase Agreement.............................43
Section 2.04 Substitution of Mortgage Loans.............................................................44
Section 2.05 Issuance of Certificates...................................................................45
Section 2.06 Representations and Warranties Concerning the Depositor....................................46
ARTICLE III
Administration and Servicing of Mortgage Loans..............................................................48
Section 3.01 Master Servicer............................................................................48
Section 3.02 REMIC-Related Covenants....................................................................49
Section 3.03 Monitoring of Servicers....................................................................49
Section 3.04 Fidelity Bond..............................................................................50
Section 3.05 Power to Act; Procedures...................................................................50
Section 3.06 Due-on-Sale Clauses; Assumption Agreements.................................................51
Section 3.07 Release of Mortgage Files..................................................................51
Section 3.08 Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.......52
Section 3.09 Standard Hazard Insurance and Flood Insurance Policies.....................................53
Section 3.10 Presentment of Claims and Collection of Proceeds...........................................54
Section 3.11 Maintenance of the Primary Mortgage Insurance Policies.....................................54
Section 3.12 Trustee to Retain Possession of Certain Insurance Policies and Documents...................54
Section 3.13 Realization Upon Defaulted Mortgage Loans..................................................55
Section 3.14 Compensation for the Master Servicer.......................................................55
Section 3.15 REO Property...............................................................................55
Section 3.16 Annual Officer's Certificate as to Compliance..............................................56
Section 3.17 Annual Independent Accountant's Servicing Report...........................................56
Section 3.18 Reports Filed with Securities and Exchange Commission......................................57
Section 3.19 The Company................................................................................58
Section 3.20 UCC........................................................................................58
Section 3.21 Optional Purchase of Defaulted Mortgage Loans..............................................58
ARTICLE IV
Accounts....................................................................................................59
Section 4.01 Protected Accounts.........................................................................59
Section 4.02 Master Servicer Collection Account.........................................................60
Section 4.03 Permitted Withdrawals and Transfers from the Master Servicer Collection Account............61
Section 4.04 Distribution Account.......................................................................62
Section 4.05 Permitted Withdrawals and Transfers from the Distribution Account..........................63
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ARTICLE V
Certificates................................................................................................65
Section 5.01 Certificates...............................................................................65
Section 5.02 Registration of Transfer and Exchange of Certificates......................................72
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..........................................75
Section 5.04 Persons Deemed Owners......................................................................75
Section 5.05 Transfer Restrictions on Residual Certificates.............................................76
Section 5.06 Restrictions on Transferability of Certificates............................................77
Section 5.07 ERISA Restrictions.........................................................................77
Section 5.08 Rule 144A Information......................................................................79
ARTICLE VI
Payments to Certificateholders..............................................................................80
Section 6.01 Distributions on the Certificates..........................................................80
Section 6.02 Allocation of Losses.......................................................................85
Section 6.03 Payments...................................................................................87
Section 6.04 Statements to Certificateholders...........................................................88
Section 6.05 Monthly Advances...........................................................................91
Section 6.06 Compensating Interest Payments.............................................................91
Section 6.07 Policy Matters.............................................................................91
Section 6.08 Reserve Fund...............................................................................94
Section 6.09 Rounding Account...........................................................................94
Section 6.10 Principal Distributions on the Insured Certificates........................................95
ARTICLE VII
The Master Servicer........................................................................................100
Section 7.01 Liabilities of the Master Servicer........................................................100
Section 7.02 Merger or Consolidation of the Master Servicer............................................100
Section 7.03 Indemnification of the Trustee, the Master Servicer and the Securities Administrator......100
Section 7.04 Limitations on Liability of the Master Servicer and Others................................101
Section 7.05 Master Servicer Not to Resign.............................................................102
Section 7.06 Successor Master Servicer.................................................................102
Section 7.07 Sale and Assignment of Master Servicing...................................................102
ARTICLE VIII
Default....................................................................................................104
Section 8.01 Events of Default.........................................................................104
Section 8.02 Trustee to Act; Appointment of Successor..................................................106
Section 8.03 Notification to Certificateholders........................................................107
Section 8.04 Waiver of Defaults........................................................................107
Section 8.05 List of Certificateholders................................................................107
ARTICLE IX
Concerning the Trustee and the Securities Administrator....................................................108
Section 9.01 Duties of Trustee.........................................................................108
Section 9.02 Certain Matters Affecting the Trustee and the Securities Administrator....................110
Section 9.03 Trustee and Securities Administrator Not Liable for Certificates or Mortgage Loans........112
Section 9.04 Trustee and Securities Administrator May Own Certificates.................................112
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Section 9.05 Trustee's and Securities Administrator's Fees and Expenses................................112
Section 9.06 Eligibility Requirements for Trustee and Securities Administrator.........................113
Section 9.07 Insurance.................................................................................113
Section 9.08 Resignation and Removal of the Trustee and Securities Administrator.......................114
Section 9.09 Successor Trustee and Successor Securities Administrator..................................115
Section 9.10 Merger or Consolidation of Trustee or Securities Administrator............................115
Section 9.11 Appointment of Co-Trustee or Separate Trustee.............................................115
Section 9.12 Federal Information Returns and Reports to Certificateholders; REMIC Administration.......117
ARTICLE X
Termination................................................................................................119
Section 10.01 Termination Upon Repurchase by the Depositor or its Designee or Liquidation of the
Mortgage Loans............................................................................119
Section 10.02 Additional Termination Requirements.......................................................121
ARTICLE XI
Miscellaneous Provisions...................................................................................123
Section 11.01 Intent of Parties.........................................................................123
Section 11.02 Amendment.................................................................................123
Section 11.03 Recordation of Agreement..................................................................124
Section 11.04 Limitation on Rights of Certificateholders................................................124
Section 11.05 Acts of Certificateholders................................................................125
Section 11.06 Governing Law.............................................................................126
Section 11.07 Notices...................................................................................126
Section 11.08 Severability of Provisions................................................................127
Section 11.09 Successors and Assigns....................................................................127
Section 11.10 Article and Section Headings..............................................................127
Section 11.11 Counterparts..............................................................................127
Section 11.12 Notice to Rating Agencies.................................................................127
Section 11.13 Radian Rights.............................................................................128
EXHIBITS
Exhibit A-1 - Form of Class A Certificates
Exhibit A-2 - Form of Class B Certificates
Exhibit A-3 - Form of Class PO Certificates
Exhibit A-4 - Form of Class II-X-1 Certificates
Exhibit A-5 - Form of Class R Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - [Reserved]
Exhibit D - Request for Release of Documents
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Custodial Agreement
Exhibit H-1 to H-5 - Servicing Agreements
Exhibit I - Assignment Agreements
Exhibit J - Mortgage Loan Purchase Agreement
Exhibit K - Certificate Guaranty Insurance Policy
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POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of July 1, 2004, among Structured
Asset Mortgage Investments II Inc., a Delaware corporation, as depositor (the
"Depositor"), U.S. Bank National Association, a national banking association,
not in its individual capacity but solely as trustee (the "Trustee"), ▇▇▇▇▇
Fargo Bank, National Association, as master servicer (in such capacity, the
"Master Servicer") and as securities administrator (in such capacity, the
"Securities Administrator"), and EMC Mortgage Corporation, as seller (in such
capacity, the "Seller") and as company (in such capacity, the "Company").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Depositor acquired the Mortgage Loans
from the Seller. On the Closing Date, the Depositor will sell the Mortgage Loans
and certain other property to the Trust Fund and receive in consideration
therefor Certificates evidencing the entire beneficial ownership interest in the
Trust Fund.
The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC I to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC I Regular Interests will be designated "regular
interests" in such REMIC and the Class R-I Certificate will be designated the
"residual interest" in such REMIC.
The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC II to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC II Regular Interests will be designated "regular
interests" in such REMIC and the Class R-II Certificate will be designated the
"residual interest" in such REMIC.
The Trustee on behalf of the Trust shall make an election for the assets
constituting REMIC III to be treated for federal income tax purposes as a REMIC.
On the Startup Day, the REMIC III Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-III Certificate will be
designated the "residual interest" in such REMIC.
The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of approximately $294,347,747. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicer, the Securities Administrator, the Seller, the Company and
the Trustee agree as follows:
ARTICLE I
Definitions
Whenever used in this Agreement, the following words and phrases, unless
otherwise expressly provided or unless the context otherwise requires, shall
have the meanings specified in this Article.
ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located, to the extent applicable to the Trustee or the
Master Servicer (except in its capacity as successor to a Servicer), or (y) as
provided in the applicable Servicing Agreement, to the extent applicable to any
Servicer, but in no event below the standard set forth in clause (x).
ACCOUNT: The Master Servicer Collection Account and the Protected Account
as the context may require.
ACCRUED CERTIFICATE INTEREST: For any Certificate for any Distribution
Date, the interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on the Current Principal Amount, or Notional Amount
in the case of any Interest Only Certificate, of such Certificate immediately
prior to such Distribution Date, on the basis of a 360-day year consisting of
twelve 30-day months, less (i) in the case of a Senior Certificate, such
Certificate's share of any Net Interest Shortfall from the related Mortgage
Loans and, after the Cross-Over Date, the interest portion of any Realized
Losses on the related Mortgage Loans allocated thereto in accordance with
Section 6.02(i) and (ii) in the case of a Subordinate Certificate, such
Certificate's share of any Net Interest Shortfall from the related Mortgage
Loans and the interest portion of any Realized Losses on the related Mortgage
Loans allocated thereto in accordance with Section 6.02(i).
ADJUSTABLE RATE CERTIFICATES: The Class I-A-7 Certificates and Class I-A-8
Certificates.
ADJUSTMENT AMOUNT: The amount, if any, by which the Special Hazard Loss
Amount (without giving effect to the deduction of the Adjustment Amount for such
anniversary) exceeds the lesser of (A) an amount calculated by the Depositor and
approved by the Rating Agencies, which amount shall not be less than $500,000,
and (B) the greater of (x) 1.0% (or if greater than 1.0%, the highest percentage
of Mortgage Loans by principal balance secured by Mortgaged Properties in any
California zip code) of the outstanding principal balance of all the Mortgage
Loans on the Distribution Date immediately preceding such anniversary and (y)
twice the outstanding principal balance of the Mortgage Loan which has the
largest outstanding principal balance on the Distribution Date immediately
preceding such anniversary.
AFFILIATE: As to any Person, any other Person controlling, controlled by
or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The
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Trustee may conclusively presume that a Person is not an Affiliate of another
Person unless a Responsible Officer of the Trustee has actual knowledge to the
contrary.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ALLOCABLE SHARE: With respect to each Class of Subordinate Certificates:
(a) as to any Distribution Date and amounts distributable pursuant to
clauses (i) and (iv) of the definition of Subordinate Optimal Principal Amount
for each Subgroup, the fraction, expressed as a percentage, the numerator of
which is the Current Principal Amount of such Class and the denominator of which
is the aggregate Current Principal Amount of all Classes of the Subordinate
Certificates; and
(b) as to any Distribution Date and amounts distributable pursuant to
clauses (ii), (iii) and (v) of the definition of Subordinate Optimal Principal
Amount, and as to each Class of Subordinate Certificates (other than the Class
of Subordinate Certificates having the lowest numerical designation as to which
the Class Prepayment Distribution Trigger shall not be applicable) for which (x)
the related Class Prepayment Distribution Trigger has been satisfied on such
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is the Current Principal Amount of such Class and the denominator of which
is the aggregate Current Principal Amount of all such Classes of Subordinate
Certificates and (y) the related Class Prepayment Distribution Trigger has not
been satisfied on such Distribution Date, 0%; provided that if on a Distribution
Date, the Current Principal Amount of any Class of Subordinate Certificates for
which the related Class Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts distributed pursuant to this
clause (b), to the extent of such Class's remaining Allocable Share, shall be
distributed to the remaining Classes of Subordinate Certificates which satisfy
the related Class Prepayment Distribution Trigger and to the Class of
Subordinate Certificates having the lowest numerical Class designation in
reduction of their respective Current Principal Amounts in the order of their
numerical Class designations.
APPLICABLE CREDIT RATING: For any long-term deposit or security, a credit
rating of AAA in the case of each of S&P and Fitch Ratings or Aaa in the case of
Moody's. For any short-term deposit or security, or a rating of A-l+ in the case
of each of S&P and Fitch Ratings or P-1 in the case of Moody's.
APPLICABLE STATE LAW: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of New York and (b) such other state
law whose applicability shall have been brought to the attention of the
Securities Administrator, Radian and the Trustee by either (i) an Opinion of
Counsel reasonably acceptable to the Securities Administrator and the Trustee
delivered to it by the Master Servicer or the Depositor, or (ii) written notice
from the appropriate taxing authority as to the applicability of such state law.
APPRAISED VALUE: For any Mortgaged Property related to a Mortgage Loan,
the amount set forth as the appraised value of such Mortgaged Property in an
appraisal made for the mortgage originator in connection with its origination of
the related Mortgage Loan.
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ASSIGNMENT AGREEMENTS: The agreements attached hereto as Exhibit I,
whereby the Servicing Agreements were assigned to the Trustee for the benefit of
the Certificateholders.
ASSIGNMENT OF PROPRIETARY LEASE: With respect to a Cooperative Loan, the
assignment of the related Cooperative Lease from the Mortgagor to the originator
of the Cooperative Loan.
ASSUMED FINAL DISTRIBUTION DATE: August 25, 2034, or if such day is not a
Business Day, the next succeeding Business Day.
AVAILABLE FUNDS: With respect to any Distribution Date, an amount equal to
the aggregate of the following amounts with respect to the Mortgage Loans: (a)
all previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
portion of Net Liquidation Proceeds) and all previously undistributed payments
on account of interest received after the Cut-off Date and on or prior to the
related Determination Date, (b) any Monthly Advances and Compensating Interest
Payments by the Servicers or the Master Servicer with respect to such
Distribution Date and (c) any reimbursed amount in connection with losses on
investments of deposits in an account, except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all Principal Prepayments and Liquidation Proceeds received
after the applicable Prepayment Period;
(iii) all payments, other than Principal Prepayments, that represent
early receipt of Scheduled Payments due on a date or dates subsequent to the
related Due Date;
(iv) amounts received on particular Mortgage Loans as late payments
of principal or interest and respecting which, and to the extent that, there are
any unreimbursed Monthly Advances;
(v) amounts representing Monthly Advances determined to be
Nonrecoverable Advances;
(vi) any investment earnings on amounts on deposit in the Master
Servicer Collection Account and the Distribution Account and amounts permitted
to be withdrawn from the Master Servicer Collection Account and the Distribution
Account pursuant to this Agreement;
(vii) amounts needed to pay the Servicing Fees or to reimburse any
Servicer or the Master Servicer for amounts due under the applicable Servicing
Agreement and this Agreement to the extent such amounts have not been retained
by, or paid previously to, such Servicer or the Master Servicer;
(viii) amounts needed to pay any fees with respect to any
lender-paid primary mortgage insurance policy; and
(ix) any expenses or other amounts reimbursable to the Trustee, the
Securities Administrator and the Custodian pursuant to Section 7.04(c) or
Section 9.05.
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AVERAGE LOSS SEVERITY PERCENTAGE: With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the Loss Severity Percentages for each Mortgage Loan which had a Realized Loss
and the denominator of which is the number of Mortgage Loans which had Realized
Losses.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as codified
in 11 U.S.C.ss.ss.101-1330.
BANKRUPTCY COVERAGE TERMINATION DATE: The Distribution Date upon which the
Bankruptcy Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
BANKRUPTCY LOSS AMOUNT: On each Distribution Date, $100,000, minus the
aggregate amount of previous Bankruptcy Losses.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, any Deficient
Valuation or Debt Service Reduction related to such Mortgage Loan as reported by
the applicable Servicer to the Master Servicer.
BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other than
the Private Certificates and the Residual Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which the New York Stock Exchange or Federal Reserve is closed or on which
banking institutions in the jurisdiction in which the Trustee, Radian, the
Master Servicer, any Servicer or the Securities Administrator is located are
authorized or obligated by law or executive order to be closed.
CALENDAR QUARTER: January 1 to March 31, April 1 to June 30, July 1 to
September 30, or October 1 to December 31, as applicable.
CERTIFICATE: Any mortgage pass-through certificate evidencing a beneficial
ownership interest in the Trust Fund signed and countersigned by the Trustee in
substantially the forms annexed hereto as Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇ and A-5
with the blanks therein appropriately completed.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a Certificate
registered in the name of the Depository or its nominee.
CERTIFICATE REGISTER: The register maintained pursuant to Section 5.02.
CERTIFICATEHOLDER: A Holder of a Certificate.
CLASS: With respect to the Certificates, ▇-▇-▇, ▇-▇-▇, ▇-▇-▇, ▇-▇-▇,
▇-▇-▇, ▇-▇-▇, ▇-▇-▇, ▇-▇-▇, ▇-▇▇, ▇▇-▇-▇, II-A-2, II-A-3, II-PO, II-X-1, R-I,
R-II, R-III, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ and B-6.
CLASS I-PO CERTIFICATE CASH SHORTFALL: As defined in Section 6.01(a)(vi).
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CLASS II-PO CERTIFICATE CASH SHORTFALL: As defined in Section
6.01(a)(vii).
CLASS I-PO CERTIFICATE DEFERRED AMOUNT: As to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
dates to the Class I-PO Certificates in respect of the principal portion of
Realized Losses in respect of Discount Mortgage Loans in Subgroup I-1 and the
Class I-PO Certificate Cash Shortfall and all amounts previously allocated in
respect of such losses and such shortfalls to the Class I-PO Certificates, and
not distributed on prior Distribution Dates.
CLASS II-PO CERTIFICATE DEFERRED AMOUNT: As to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
dates to the Class II-PO Certificates in respect of the principal portion of
Realized Losses in respect of Discount Mortgage Loans in Subgroup II-1 and the
Class II-PO Certificate Cash Shortfall and all amounts previously allocated in
respect of such losses and such shortfalls to the Class II-PO Certificates, and
not distributed on prior Distribution Dates.
CLASS PO CERTIFICATE CASH CERTIFICATE SHORTFALL: The Class I-PO
Certificate Cash Shortfall or the Class II-PO Certificate Cash Shortfall, as
applicable.
CLASS PO CERTIFICATE PRINCIPAL DISTRIBUTION AMOUNT: The Class I-PO
Certificates and the Class II-PO Certificates shall be entitled to distributions
from Subgroup I-1 and Subgroup II-2, respectively. For each Class of Class I-PO
Certificates or II-PO Certificates, as applicable, with respect to each
Distribution Date will be an amount equal to the sum of:
(i) the applicable PO Percentage of all scheduled payments of
principal due on each Discount Mortgage Loan in the related Subgroup on
the related Due Date as specified in the amortization schedule at the time
applicable thereto (after adjustment for previous principal prepayments
but before any adjustment to such amortization schedule by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period);
(ii) the applicable PO Percentage of the Scheduled Principal Balance
of each Discount Mortgage Loan in related Subgroup which was the subject
of a prepayment in full received by the Master Servicer during the
applicable Prepayment Period;
(iii) the applicable PO Percentage of all partial prepayments of
principal of each Discount Mortgage Loan in the related Subgroup received
during the applicable Prepayment Period;
(iv) the lesser of (a) the applicable PO Percentage of the sum of
(A) all Net Liquidation Proceeds allocable to principal on each Discount
Mortgage Loan in the related Subgroup which became a Liquidated Mortgage
Loan during the related Prepayment Period (other than a Discount Mortgage
Loan described in clause (B)) and (B) the Scheduled Principal Balance of
each such Discount Mortgage Loan in the related Subgroup purchased by an
insurer from the Trustee during the related Prepayment Period pursuant to
the related Primary Mortgage Insurance Policy, if any, or otherwise; and
(b) the applicable PO Percentage of the sum of (A) the Scheduled Principal
Balance of each
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Discount Mortgage Loan in the related Subgroup which became a Liquidated
Mortgage Loan during the related Prepayment Period (other than a Discount
Mortgage Loan described in clause (B)) and (B) the Scheduled Principal
Balance of each such Mortgage Loan in the related Subgroup that was
purchased by an insurer from the Trustee during the related Prepayment
Period pursuant to the related Primary Mortgage Insurance Policy, if any,
or otherwise; and
(v) the applicable PO Percentage of the sum of (a) the Scheduled
Principal Balance of each Discount Mortgage Loan in the related Subgroup
which was repurchased by the Seller in connection with such Distribution
Date and (b) the difference, if any, between the Scheduled Principal
Balance of a Discount Mortgage Loan in the related Subgroup that has been
replaced by the Seller with a substitute Discount Mortgage Loan pursuant
to this Agreement in connection with such Distribution Date and the
Scheduled Principal Balance of such substitute Discount Mortgage Loan.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balance of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.
CLASS R CERTIFICATES: The Class R-I, Class R-II and Class R-III
Certificates.
CLOSING DATE: July 30, 2004.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENT: As defined in Section 6.06.
COOPERATIVE: A private, cooperative housing corporation which owns or
leases land and all or part of a building or buildings, including apartments,
spaces used for commercial purposes and common areas therein and whose board of
directors authorizes, among other things, the sale of Cooperative Stock.
COOPERATIVE APARTMENT: A dwelling unit in a multi-dwelling building owned
or leased by a Cooperative, which unit the Mortgagor has an exclusive right to
occupy pursuant to the terms of a proprietary lease or occupancy agreement.
COOPERATIVE LEASE: With respect to a Cooperative Loan, the proprietary
lease or occupancy agreement with respect to the Cooperative Apartment occupied
by the Mortgagor and relating to the related Cooperative Stock, which lease or
agreement confers an exclusive right to the holder of such Cooperative Stock to
occupy such apartment.
COOPERATIVE LOAN: Any of the Mortgage Loans made in respect of a
Cooperative Apartment, evidenced by a Mortgage Note and secured by (i) a
Security Agreement, (ii) the related Cooperative Stock Certificate, (iii) an
assignment of the Cooperative Lease, (iv) financing statements and (v) a stock
power (or other similar instrument), and ancillary thereto, a
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recognition agreement between the Cooperative and the originator of the
Cooperative Loan, each of which was transferred and assigned to the Trustee
pursuant to Section 2.01 and are from time to time held as part of the Trust
Fund.
COOPERATIVE STOCK: With respect to a Cooperative Loan, the single
outstanding class of stock, partnership interest or other ownership instrument
in the related Cooperative.
COOPERATIVE STOCK CERTIFICATE: With respect to a Cooperative Loan, the
stock certificate or other instrument evidencing the related Cooperative Stock.
CORRESPONDING CERTIFICATES: With respect to each REMIC II Regular
Interest, the Class with the same designation.
CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at US Bank Corporate
Trust Services, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Services/PRIME 2004-1. For purposes of registration
and transfer and exchange only, the Corporate Trust Office shall be located at
U.S. Bank National Association, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Drop Window, ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate (other than an
Interest Only Certificate) as of any Distribution Date, the initial principal
amount of such Certificate, and reduced by (i) all amounts distributed on
previous Distribution Dates on such Certificate with respect to principal, (ii)
the principal portion of all Realized Losses allocated prior to such
Distribution Date to such Certificate, taking account of the Loss Allocation
Limitation and (iii) in the case of a Subordinate Certificate, such
Certificate's pro rata share, if any, of the applicable Subordinate Certificate
Writedown Amount for previous Distribution Dates. With respect to any Class of
Certificates (other than an Interest Only Certificate), the Current Principal
Amount thereof will equal the sum of the Current Principal Amounts of all
Certificates in such Class. Notwithstanding the foregoing, solely for purposes
of giving consents, directions, waivers, approvals, requests and notices, the
Class R-I, Class R-II and Class R-III Certificates after the Distribution Date
on which they each receive the distribution of the last dollar of their
respective original principal amount shall be deemed to have Current Principal
Amounts equal to their respective Current Principal Amounts on the day
immediately preceding such Distribution Date. Exclusively for the purpose of
determining any subrogation rights of Radian arising under Section 6.07 hereof,
the Current Principal Amount of the Class I-A-5 Certificates shall not be
reduced by the amount of any payments made by Radian in respect of principal on
such Certificates under the Policy, except to the extent such payment shall have
been reimbursed to Radian pursuant to the provisions of this Agreement.
CUSTODIAL AGREEMENT: An agreement, dated as of the Closing Date among the
Depositor, the Master Servicer, the Trustee and the Custodian in substantially
the form of Exhibit G hereto.
-8-
CUSTODIAN: ▇▇▇▇▇ Fargo Bank, National Association, or any successor
custodian appointed pursuant to the provisions hereof and of the Custodial
Agreement.
CUT-OFF DATE: July 1, 2004.
Cut-off Date Balance: approximately $294,347,747.
DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
DECEASED HOLDER: A Certificate Owner of an Insured Certificate who was a
natural person living at the time such interest was acquired and whose
authorized personal representative, surviving tenant by the entirety, surviving
joint tenant or surviving tenant in common or other person empowered to act on
behalf of a deceased Certificate Owner causes to be furnished to the Depository
Participant evidence of death satisfactory to the Depository Participant and any
tax waivers requested by the Depository Participant.
DEFICIENCY AMOUNT: As of any Distribution Date, an amount equal to the sum
of:
(a) any interest shortfall allocated to the Class I-A-5
Certificates, except for any Net Interest Shortfalls allocated to
the Class I-A-5 Certificates;
(b) the principal portion of any Realized Losses allocated to the
Class I-A-5 Certificates; and
(c) the Current Principal Amount of the Class I-A-5 Certificates to
the extent unpaid on the Assumed Final Distribution Date (after
taking into account all distributions on that date).
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of the
Mortgaged Property by a court of competent jurisdiction in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
DEPOSITOR: Structured Asset Mortgage Investments II Inc., a Delaware
corporation, or its successors in interest.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede &
Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a) hereof.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
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DESIGNATED DEPOSITORY INSTITUTION: A depository institution (commercial
bank, federal savings bank, mutual savings bank or savings and loan association)
or trust company (which may include the Trustee), the deposits of which are
fully insured by the FDIC to the extent provided by law.
DETERMINATION DATE: With respect to each Mortgage Loan, the Determination
Date as defined in the related Servicing Agreement.
DISCOUNT MORTGAGE LOAN: Any Group I Mortgage Loan with a Net Mortgage Rate
less than 5.2500% per annum and any Group II Mortgage Loan with a Net Mortgage
Rate less than 4.5000% per annum.
DISQUALIFIED ORGANIZATION: Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the ▇▇▇▇▇▇▇ Mac or any successor thereto, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code or (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Residual Certificate by such Person
may cause any REMIC contained in the Trust or any Person having an ownership
interest in the Residual Certificate (other than such Person) to incur a
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in a Residual Certificate
to such Person. The terms "United States," "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions.
DISTRIBUTION ACCOUNT: The trust account or accounts created and maintained
pursuant to Section 4.04, which shall be denominated "U.S. Bank National
Association, as Trustee f/b/o holders of Structured Asset Mortgage Investments
II Inc., Prime Mortgage Trust, Mortgage Pass-Through Certificates, Series 2004-1
- Distribution Account." The Distribution Account shall be an Eligible Account.
DISTRIBUTION ACCOUNT DEPOSIT DATE: The Business Day prior to each
Distribution Date.
DISTRIBUTION DATE: The 25th day of any month, beginning in August 2004,
or, if such 25th day is not a Business Day, the Business Day immediately
following.
DTC CUSTODIAN: U.S. Bank National Association, or its successors in
interest as custodian for the Depository.
DUE DATE: With respect to each Mortgage Loan, the date in each month on
which its Scheduled Payment is due if such due date is the first day of a month
and otherwise is deemed to
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be the first day of the following month or such other date specified in the
related Servicing Agreement.
DUE PERIOD: With respect to any Distribution Date and each Mortgage Loan,
the period commencing on the second day of the month preceding the month in
which the Distribution Date occurs and ending at the close of business on the
first day of the month in which the Distribution Date occurs.
ELIGIBLE ACCOUNT: Any of (i) a segregated account maintained with a
federal or state chartered depository institution (A) the short-term obligations
of which are rated A-1 or better by S&P, F-1 by Fitch Ratings and P-1 by ▇▇▇▇▇'▇
at the time of any deposit therein or (B) insured by the FDIC (to the limits
established by such the FDIC), the uninsured deposits in which account are
otherwise secured such that, as evidenced by an Opinion of Counsel (obtained by
the Person requesting that the account be held pursuant to this clause (i))
delivered to the Trustee prior to the establishment of such account, the
Certificateholders will have a claim with respect to the funds in such account
and a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments, each of which shall mature not later
than the Business Day immediately preceding the Distribution Date next following
the date of investment in such collateral or the Distribution Date if such
Permitted Investment is an obligation of the institution that maintains the
Distribution Account) securing such funds that is superior to claims of any
other depositors or general creditors of the depository institution with which
such account is maintained, (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company with trust powers acting in its fiduciary capacity or (iii) a segregated
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Distribution Account will not have an adverse effect on the
then-current ratings assigned to the Classes of Certificates then rated by the
Rating Agencies determined without regard to the Policy). Eligible Accounts may
bear interest.
EMC: EMC Mortgage Corporation.
EMC SERVICING AGREEMENT: With respect to Mortgage Loans originated by
Wachovia, the Servicing Agreement dated as of July 1, 2004, between the
Depositor and EMC, as attached hereto as Exhibit H-1 as modified by the related
Assignment Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT: An event of default described in Section 8.01.
EXCESS BANKRUPTCY LOSS: Any Bankruptcy Loss, or portion thereof (i)
occurring after the Bankruptcy Coverage Termination Date or (ii) if on or prior
to such date, in excess of the then-applicable Bankruptcy Loss Amount.
EXCESS FRAUD LOSS: Any Fraud Loss or portion thereof (i) occurring after
the Fraud Coverage Termination Date with respect thereto or (ii) if on or prior
to such date, in excess of the then-applicable Fraud Loss Amount.
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EXCESS LOSS: Any Excess Fraud Loss, Excess Bankruptcy Loss, Excess Special
Hazard Loss or Extraordinary Loss.
EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
EXCESS SPECIAL HAZARD LOSS: Any Special Hazard Loss occurring after the
Special Hazard Termination Date.
EXTRAORDINARY LOSS : Any Realized Loss resulting from damage to a
mortgaged property that was occasioned by war, civil insurrection, certain
governmental actions, nuclear reaction and certain other risks.
▇▇▇▇▇▇ ▇▇▇: Federal National Mortgage Association or any successor
thereto.
FITCH RATINGS: Fitch, Inc.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FINAL CERTIFICATION: The certification substantially in the form of
Exhibit Three to the Custodial Agreement.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of Certificates,
the fractional undivided interest evidenced by any Certificate of such Class the
numerator of which is the Current Principal Amount, or Notional Amount in the
case of the Interest Only Certificates, of such Certificate and the denominator
of which is the Current Principal Amount, or Notional Amount in the case of the
Interest Only Certificates, of such Class. With respect to the Certificates in
the aggregate, the fractional undivided interest evidenced by (i) each class of
Residual Certificates will be deemed to equal 0.25%, (ii) each Class of Interest
Only Certificates will be deemed to equal 1.0% multiplied by a fraction, the
numerator of which is the Notional Amount of such Certificate and the
denominator of which is the aggregate Notional Amount of its respective Class
and (iii) a Certificate of any other Class will be deemed to equal 97.25%
multiplied by a fraction, the numerator of which is the Current Principal Amount
of such Certificate and the denominator of which is the aggregate Current
Principal Amount of all the Certificates; provided, however, the percentage in
clause (iii) above shall be increased by 1.0% upon the retirement of each Class
of Interest Only Certificates.
FRAUD COVERAGE TERMINATION DATE: The Distribution Date upon which the
Fraud Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
FRAUD LOSS: Any Realized Loss attributable to fraud in the origination of
the related Mortgage Loan, as reported by the applicable Servicer to the Master
Servicer.
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FRAUD LOSS AMOUNT: Upon the initial issuance of the Certificates, 1.00% of
the aggregate Scheduled Principal Balances of the Mortgage Loans. As of any
Distribution Date during the first three years after the Cut-off Date, the
initial Fraud Loss Amount minus the aggregate amount of Fraud Losses that would
have been allocated to the Subordinate Certificates in the absence of the Loss
Allocation Limit since the Cut-off Date. As of any Distribution Date from the
fourth and fifth year following the Cut-off Date, (1) the lesser of (a) the
applicable Fraud Loss Amount as of the most recent year following the Cut-off
Date and (b) 0.50% of the aggregate outstanding principal balance of all
Mortgage Loans as of the most recent year following the Cut-off Date minus (2)
the Fraud Losses that would have been allocated to the Subordinate Certificates
in the absence of the Loss Allocation Limit since the most recent year following
the Cut-off Date. After the fifth year following the Cut-off Date, the Fraud
Loss Amount shall be zero.
▇▇▇▇▇▇▇ MAC: ▇▇▇▇▇▇▇ Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
GMAC: GMAC Mortgage Company.
GMAC SERVICING AGREEMENT: The Servicing Agreement, dated as of May 1,
2001, between the Seller and GMAC, attached hereto as Exhibit H-2, as modified
by the related Assignment Agreement.
GLOBAL CERTIFICATE: Any Private Certificate registered in the name of the
Depository or its nominee, beneficial interests in which are reflected on the
books of the Depository or on the books of a Person maintaining an account with
such Depository (directly or as an indirect participant in accordance with the
rules of such depository).
GROUP I MORTGAGE LOAN: The Mortgage Loans with respect to the Class I-A-1,
Class I-A-2, Class I-A-3, Class I-A-4, Class I-A-5, Class I-A-6, Class I-A-7,
Class I-A-8, Class I-PO, Clas R-I, Class R-II and Class R-III Certificates.
GROUP II MORTGAGE LOAN: The Mortgage Loans with respect to the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-PO and Class II-X-1 Certificates.
HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor, the Master Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained. With respect
to the Class I-A-5 Certificates, Radian to the extent of any Radian
Reimbursement Amount.
INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the Custodian and
the Securities Administrator and their officers, directors, agents and employees
and, with respect to the Trustee, any separate co-trustee and its officers,
directors, agents and employees.
-13-
INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Depositor or the Master
Servicer and of any Affiliate of the Depositor or the Master Servicer, (b) does
not have any direct financial interest or any material indirect financial
interest in the Depositor or the Master Servicer or any Affiliate of the
Depositor or the Master Servicer and (c) is not connected with the Depositor or
the Master Servicer or any Affiliate as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
INDIVIDUAL CERTIFICATE: Any Private Certificate registered in the name of
the Holder other than the Depository or its nominee.
INDIVIDUAL INSURED CERTIFICATE: An Insured Certificate that evidences
$1,000 initial Current Principal Amount.
INITIAL CERTIFICATION: The certification substantially in the form of
Exhibit One to the Custodial Agreement.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements of
Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act or any
entity all of the equity holders in which come within such paragraphs.
INDEMNIFICATION AGREEMENT: The Indemnification Agreement dated as of July
30, 2004, among the Insurer, the Depositor, the Seller and Bear, ▇▇▇▇▇▇▇ & Co.
Inc.
INSURANCE POLICY: With respect to any Mortgage Loan, any standard hazard
insurance policy, flood insurance policy or title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance Policy
covering any Mortgage Loan or Mortgaged Property other than amounts required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note or
Security Instrument and other than amounts used to repair or restore the
Mortgaged Property or to reimburse insured expenses.
INSURED CERTIFICATES: The Class I-A-5 Certificates.
INSURED PAYMENT: (a) As of any Distribution Date, any Deficiency Amount
and (b) any Preference Amount.
INSURER: Radian Asset Assurance Inc.
INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for each
Class of Certificates, the one-month period preceding the month in which such
Distribution Date occurs, except for the Class I-A-7 Certificates and Class
I-A-8 Certificates which have an interest accrual period beginning on the 25th
day of the month preceding the month in which the Distribution Date occurs and
ending on the 24th day of the month in which the Distribution Date occurs, in
each case commencing in August 2004.
INTEREST DETERMINATION DATE: With respect to each Distribution Date, the
second LIBOR Business Day immediately preceding the commencement of the related
Interest Accrual Period.
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INTEREST ONLY CERTIFICATES: The Class I-A-8 Certificates and Class II-X-1
Certificates.
INTEREST SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:
(a) With respect to partial principal prepayments received during the
relevant Prepayment Period: the difference between (i) one month's interest at
the applicable Net Mortgage Rate on the amount of such prepayment and (ii) the
amount of interest for the calendar month of such prepayment (adjusted to the
applicable Net Mortgage Rate) received at the time of such prepayment;
(b) With respect to principal prepayments in full received during the
relevant Prepayment Period: the difference between (i) one month's interest at
the applicable Net Mortgage Rate on the Scheduled Principal Balance of such
Mortgage Loan immediately prior to such prepayment and (ii) the amount of
interest for the calendar month of such prepayment (adjusted to the applicable
Net Mortgage Rate) received at the time of such prepayment; and
(c) With respect to Relief Act Mortgage Loans: the excess of (i) 30 days'
interest (or, in the case of a principal prepayment in full, interest to the
date of prepayment) on the Scheduled Principal Balance thereof (or, in the case
of a partial principal prepayment, on the amount so prepaid) at the related Net
Mortgage Rate over (ii) 30 days' interest (or, in the case of a principal
prepayment in full, interest to the date of prepayment) on such Scheduled
Principal Balance (or, in the case of a partial principal prepayment in part, on
the amount so prepaid) at the Net Mortgage Rate required to be paid by the
Mortgagor as limited by application of the Relief Act.
INTERIM CERTIFICATION: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.
INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which purchases any of the Private Certificates in
connection with such purchase, substantially in the form set forth as Exhibit
F-1 hereto.
ISSUER: Prime Mortgage Trust 2004-1.
LENDER-PAID PMI RATE: With respect to each Mortgage Loan covered by a
lender-paid primary mortgage insurance policy, the amount payable to the related
insurer, as stated in the Mortgage Loan Schedule.
LIBOR: With respect to any Distribution Date, the arithmetic mean of the
London interbank offered rate quotations for one-month U.S. Dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or Sunday or (ii) a
day on which banking institutions in London, England and New York City are
required or authorized by law to be closed.
-15-
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
related Servicer or the Master Servicer has determined that all amounts it
expects to recover from or on account of such Mortgage Loan have been recovered.
LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the date
on which the Master Servicer or the related Servicer has certified that such
Mortgage Loan has become a Liquidated Mortgage Loan.
LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer or the related Servicers in connection with the liquidation of such
Mortgage Loan and the related Mortgaged Property, such expenses including (a)
property protection expenses, (b) property sales expenses, (c) foreclosure and
sale costs, including court costs and reasonable attorneys' fees, and (d)
similar expenses reasonably paid or incurred in connection with liquidation.
LIQUIDATION PROCEEDS: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.
LIVING OWNER: A Certificate Owner of an Insured Certificate other than a
Deceased Holder.
LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the
Original Value of the related Mortgaged Property.
LOCKOUT CERTIFICATES: The Class I-A-6 Certificates.
LOCKOUT PERCENTAGE: On any Distribution Date occurring during the periods
set forth below will be as follows:
Period (dates inclusive) Lockout Prepayment Percentage
August 25, 2004 - July 25, 2009 0%
August 25, 2009 - July 25, 2010 30%
August 25, 2010 - July 25, 2011 40%
August 25, 2011 - July 25, 2012 60%
August 25, 2012 - July 25, 2013 80%
August 25, 2013 and thereafter 100%
LOCKOUT PRINCIPAL AMOUNT: For any Distribution Date, an amount equal to
the Lockout Percentage multiplied by the Lockout Pro Rata Optimal Principal
Amount.
LOCKOUT PRO RATA OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, shall be an amount equal to the product of (x) the Subgroup
I-1 Principal Distribution Amount for such Distribution Date (without regard to
the Subgroup I-1 Senior Percentage or the Subgroup I-1 Senior Prepayment
Percentage) multiplied by (y) a fraction, the numerator of
-16-
which is the sum of the Current Principal Amount of the Class I-A-6 Certificates
immediately prior to such distribution date and the denominator of which is the
sum of the Non-PO Percentages of the Scheduled Principal Balances of the
Mortgage Loans in Subgroup I-1.
LOSS ALLOCATION LIMIT: The meaning specified in Section 6.02(e) hereof.
LOSS SEVERITY PERCENTAGE: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
Scheduled Principal Balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
LOST NOTES: The original Mortgage Notes that have been lost, as indicated
on the Mortgage Loan Schedule.
MASTER SERVICER: As of the Closing Date, ▇▇▇▇▇ Fargo Bank, National
Association and, thereafter, its respective successors in interest who meet the
qualifications of the Servicing Agreements and this Agreement.
MASTER SERVICER CERTIFICATION: A written certification covering servicing
of the Mortgage Loans by all Servicers and signed by an officer of the Master
Servicer that complies with (i) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended from
time to time, and (ii) the February 21, 2003 Statement by the Staff of the
Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer and the Depositor following a negotiation in good faith to
determine how to comply with any such new requirements.
MASTER SERVICER COLLECTION ACCOUNT: The trust account or accounts created
and maintained pursuant to Section 4.02, which shall be denominated "U.S. Bank
National Association, as Trustee f/b/o holders of Structured Asset Mortgage
Investments II Inc., Prime Mortgage Trust, Mortgage Pass-Through Certificates,
Series 2004-1 - Master Servicer Collection Account." The Master Servicer
Collection Account shall be an Eligible Account.
MASTER SERVICING COMPENSATION: The meaning specified in Section 3.14.
MATERIAL DEFECT: The meaning specified in Section 2.02(a).
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
-17-
MERS(R) SYSTEM: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered with
MERS on the MERS(R) System.
MOM LOAN: With respect to any Mortgage Loan, MERS acting as the mortgagee
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof, or as nominee
for any subsequent assignee of the originator pursuant to an assignment of
mortgage to MERS.
MONTHLY ADVANCE: An advance of principal or interest required to be made
by the applicable Servicer pursuant to the related Servicing Agreement or the
Master Servicer pursuant to Section 6.05.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MORTGAGE FILE: The mortgage documents listed in Section 2.01(b) pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
MORTGAGE INTEREST RATE: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is initially equal to the "Mortgage Interest Rate" set forth with respect
thereto on the Mortgage Loan Schedule.
MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule (which shall include, without
limitation, (i) with respect to each Cooperative Loan, the related Mortgage
Note, Security Agreement, Assignment of Proprietary Lease, Cooperative Stock
Certificate, Cooperative Lease and Mortgage File and all rights appertaining
thereto, and (ii) with respect to each Mortgage Loan other than a Cooperative
Loan, each related Mortgage Note, Mortgage and Mortgage File and all rights
appertaining thereto), including a Mortgage Loan the property securing which has
become an REO Property.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of July 30, 2004, between EMC Mortgage Corporation, as seller, and
Structured Asset Mortgage Investments II Inc., as purchaser, and all amendments
thereof and supplements thereto, attached as Exhibit J.
MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.
MORTGAGE NOTE: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.
-18-
MORTGAGED PROPERTY: Land and improvements securing the indebtedness of a
Mortgagor under the related Mortgage Loan or, in the case of REO Property, such
REO Property, or, in the case of a Cooperative Loan, the related Cooperative
Lease and Cooperative Stock.
MORTGAGOR: The obligor on a Mortgage Note.
NATIONAL CITY: National City Mortgage Company.
NATIONAL CITY SERVICING AGREEMENT: The Purchase, Warranties and Servicing
Agreement, dated as of October 1, 2001, between the Seller and National City,
attached hereto as Exhibit H-4, as modified by the related Assignment Agreement.
NET INTEREST SHORTFALL: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan, Liquidation
Proceeds net of (i) Liquidation Expenses which are payable therefrom to the
related Servicer or the Master Servicer in accordance with the related Servicing
Agreement or this Agreement and (ii) unreimbursed advances by the related
Servicer or the Master Servicer and Monthly Advances.
NET MORTGAGE RATE: With respect to each Mortgage Loan, the Mortgage
Interest Rate in effect from time to time less the Servicing Fee.
NEXSTAR: Nexstar Financial Corporation, or its successor in interest.
NEXSTAR SERVICING AGREEMENT: With respect to the Mortgage Loans originated
by Nexstar, the Purchase, Warranties and Servicing Agreement dated as of May 1,
2002 between the Seller and Nexstar, attached hereto as Exhibit H-3 as modified
by the related Assignment Agreement.
NON-DISCOUNT MORTGAGE LOAN: Any Mortgage Loan with a Net Mortgage Rate
higher than 5.500% per annum.
NON-OFFERED SUBORDINATE CERTIFICATES: The Class B-4, Class B-5 and Class
B-6 Certificates.
NON-PO PERCENTAGE: With respect to any Group I Mortgage Loan with a Net
Mortgage Rate less than 5.2500% per annum, a fraction, expressed as a
percentage, equal to (x) the Net Mortgage Rate thereof divided by (y) 5.2500%
per annum. With respect to any Group II Mortgage Loan with a Net Mortgage Rate
less than 4.5000% per annum, a fraction, expressed as a percentage, equal to (x)
the Net Mortgage Rate thereof divided by (y) 4.5000% per annum.
NONRECOVERABLE ADVANCE: Any advance or Monthly Advance (i) which was
previously made or is proposed to be made by the Master Servicer, the Trustee
(as successor Master Servicer) or the applicable Servicer and (ii) which, in the
good faith judgment of the Master Servicer, the Trustee or the applicable
Servicer, will not or, in the case of a proposed advance or Monthly Advance,
would not, be ultimately recoverable by the Master Servicer, the Trustee (as
successor Master Servicer) or the applicable Servicer from Liquidation Proceeds,
Insurance
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Proceeds or future payments on the Mortgage Loan for which such advance or
Monthly Advance was made or is proposed to be made.
NOTIONAL AMOUNT: With respect to (1) the Class I-A-8 Certificates, as of
any date of determination, is equal to the Current Principal Amount of the Class
I-A-7 Certificates and (2) the Class II-X-1 Certificates, as of any date of
determination, is equal to the aggregate Scheduled Principal Balance of the
group II Mortgage Loans with a Net Mortgage Rate greater than 5.2500%. Reference
to the Notional Amount of the Interest Only Certificates is solely for
convenience in calculations and does not represent the right to receive any
distributions allocable to principal. For federal income tax purposes, the
equivalent of clause (1) shall be equal to the Uncertificated Principal Balance
of REMIC II Regular Interest A-7. For federal income tax purposes, the Class
II-X-1 Certificates will not have a Notional Amount, but will be entitled to
100% of amounts distributed on REMIC II Regular Interest II-X-1.
OFFERED CERTIFICATES: The Senior Certificates and Offered Subordinate
Certificates.
OFFERED SUBORDINATE CERTIFICATES: The Class ▇-▇, Class B-2 and Class B-3
Certificates.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a Vice President or Assistant
Vice President or other authorized officer of the Master Servicer or the
Depositor, as applicable, and delivered to the Trustee, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel who is or are acceptable
to the Trustee or Radian or the Master Servicer, as applicable, and who, unless
required to be Independent (an "Opinion of Independent Counsel"), may be
internal counsel for the Company, the Master Servicer or the Depositor.
ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the aggregate Current
Principal Amounts of each Class of Subordinate Certificates as of the Closing
Date.
ORIGINAL VALUE: The value of a Mortgaged Property based, in the case of
the purchase of the Mortgaged Property, on the lower of an appraisal or the
sales price of such Mortgaged Property or, in the case of a refinancing, on an
appraisal.
OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage Loan
which, prior to such Due Date, was not the subject of a Principal Prepayment in
full, did not become a Liquidated Mortgage Loan and was not purchased or
replaced.
OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust Fund less any Net Liquidation Proceeds with respect
thereto to the extent applied to principal.
PASS-THROUGH RATE: As to each Class of Certificates, the REMIC I Regular
Interests and the REMIC II Regular Interests, the rate of interest determined as
provided with respect thereto,
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in Section 5.01(c). Any monthly calculation of interest at a stated rate shall
be based upon annual interest at such rate divided by twelve.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:
(i) direct obligations of, and obligations the timely payment of
which are fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof (including
the Trustee or the Master Servicer or its Affiliates acting in its commercial
banking capacity) and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or the
short-term debt rating and/or the long-term unsecured debt obligations of such
depository institution or trust company at the time of such investment or
contractual commitment providing for such investment have the Applicable Credit
Rating or better from each Rating Agency and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the FDIC;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or guaranteed by
an agency or instrumentality of the United States of America, the obligations of
which are backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii)(a) above where the Trustee holds
the security therefor;
(iv) securities bearing interest or sold at a discount issued by any
corporation (including the Trustee or the Master Servicer or its Affiliates)
incorporated under the laws of the United States of America or any state thereof
that have the Applicable Credit Rating or better from each Rating Agency at the
time of such investment or contractual commitment providing for such investment;
provided, however, that securities issued by any particular corporation will not
be Permitted Investments to the extent that investments therein will cause the
then outstanding principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate Outstanding Principal
Balances of all the Mortgage Loans and Permitted Investments held as part of the
Trust;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) having the
Applicable Credit Rating or better from each Rating Agency at the time of such
investment;
(vi) a Reinvestment Agreement issued by any bank, insurance company
or other corporation or entity;
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(vii) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency as evidenced
in writing by each Rating Agency to the Trustee; and
(viii) any money market or common trust fund having the Applicable
Credit Rating or better from each Rating Agency, including any such fund for
which the Trustee or Master Servicer or any affiliate of the Trustee or Master
Servicer acts as a manager or an advisor; provided, however, that no instrument
or security shall be a Permitted Investment if such instrument or security
evidences a right to receive only interest payments with respect to the
obligations underlying such instrument or if such security provides for payment
of both principal and interest with a yield to maturity in excess of 120% of the
yield to maturity at par or if such instrument or security is purchased at a
price greater than par.
PERMITTED TRANSFEREE: Any Person other than a Disqualified Organization or
an "electing large partnership" (as defined by Section 775 of the Code).
PERSON: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PHYSICAL CERTIFICATES: The Residual Certificates and the Private
Certificates.
POLICY: The irrevocable Financial Guaranty Insurance Policy, No.
FANI-0527-04212-NY, including any endorsements thereto, issued by Radian with
respect to the Class I-A-5 Certificates, in the form attached hereto as Exhibit
K.
PO PERCENTAGE: With respect to any Group I Mortgage Loan with a Net
Mortgage Rate less than 5.2500% per annum, 5.2500% per annum minus the Net
Mortgage Rate thereof divided by 5.2500% per annum. With respect to any Group II
Mortgage Loan with a Net Mortgage Rate less than 4.5000% per annum, 4.5000% per
annum minus the Net Mortgage Rate thereof divided by 4.5000% per annum.
PREFERENCE AMOUNT: Any amount previously distributed to Holders of the
Class I-A-5 Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
PREPAYMENT CHARGE: With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.
PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date, the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans resulting from (a) prepayments in full
received during the related Prepayment Period and (b) the partial prepayments
received during the related Prepayment Period to the extent applied prior to the
Due Date in the month of the Distribution Date.
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PREPAYMENT PERIOD: With respect to any Distribution Date is the period
commencing on the 16th day of the month prior to the month in which the related
Distribution Date occurs and ending on the 15th day of the month in which such
Distribution Date occurs in the case of the Mortgage Loans for which EMC is the
servicer and such period as is provided in the related Servicing Agreement with
respect to the other Servicers.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related Security Instrument, if any or any replacement
policy therefor through the related Interest Accrual Period for such Class
relating to a Distribution Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date to the
extent that it is not accompanied by an amount as to interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment, including Insurance Proceeds and Repurchase Proceeds,
but excluding the principal portion of Net Liquidation Proceeds received at the
time a Mortgage Loan becomes a Liquidated Mortgage Loan.
PRIVATE CERTIFICATES: The Class B-4, Class B-5 and Class B-6 Certificates.
PROTECTED ACCOUNT: An account established and maintained for the benefit
of Certificateholders by each Servicer with respect to the related Mortgage
Loans and with respect to REO Property pursuant to the respective Servicing
Agreements.
QIB: A Qualified Institutional Buyer as defined in Rule 144A promulgated
under the Securities Act.
QUALIFIED INSURER: Any insurance company duly qualified as such under the
laws of the state or states in which the related Mortgaged Property or Mortgaged
Properties is or are located, duly authorized and licensed in such state or
states to transact the type of insurance business in which it is engaged and
approved as an insurer by the Master Servicer, so long as the claims paying
ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
RADIAN: Radian Asset Assurance, an indirect wholly owned subsidiary of
Radian Group Inc., organized and created under the laws of the State of New
York, or any successor thereto.
RADIAN CONTACT PERSON: The officer designated by the Master Servicer to
provide information to Radian pursuant to Section 6.07(i).
RADIAN DEFAULT: As defined in Section 6.07(l).
RADIAN REIMBURSEMENT AMOUNT: Shall mean the sum of (a) the aggregate
unreimbursed amount of any payments made by Radian under the Policy, together
with interest on such amount from the date of payment by Radian until paid in
full, (b) all costs and expenses of Radian in connection with any action,
proceeding or investigation affecting the Trust Fund or the rights or
obligations of Radian under this Agreement or under the Policy, including any
judgment or
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settlement entered into affecting Radian or Radian's interests, together with
interest thereon and (c) any other amounts owed to Radian under this Agreement
or the Indemnification Agreement, together with interest thereon.
RANDOM LOT: With respect to any Distribution Date, the method by which the
Depository will determine which Insured Certificates will be paid, using its
established random lot procedures or, if the Insured Certificates are no longer
represented by a Book-Entry Certificate, using the Trustee's procedures.
RATING AGENCIES: S&P and Fitch Ratings.
REALIZED LOSS: With respect to a Mortgage Loan is (i) a Bankruptcy Loss or
(ii) as to any Liquidated Mortgage Loan, the unpaid principal balance thereof
plus accrued and unpaid interest thereon at the Mortgage Interest Rate through
the last day of the month of liquidation less the Net Liquidation Proceeds with
respect to such Mortgage Loan and the related Mortgaged Property. In addition,
to the extent the Master Servicer receives Subsequent Recoveries with respect to
any Mortgage Loan, the amount of the Realized Loss with respect to that Mortgage
Loan will be reduced to the extent such recoveries are applied to reduce the
Current Principal Amount of any class of Certificates on any Distribution Date.
RECORD DATE: With respect to any Distribution Date, for each Class of
Certificates, will be the close of business on the last Business Day of the
month preceding the month in which such Distribution Date occurs, except for the
Class I-A-7 Certificates and Class I-A-8 Certificates which have a record date
of the Business Day prior to the Distribution Date.
REINVESTMENT AGREEMENTS: One or more reinvestment agreements, acceptable
to the Rating Agencies, from a bank, insurance company or other corporation or
entity (including the Trustee).
RELIEF ACT: The Servicemembers Civil Relief Act or similar state law.
RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the Code.
REMIC I: That group of assets contained in the Trust Fund designated as a
REMIC consisting of (i) the Mortgage Loans, (ii) the Master Servicer Collection
Account, (iii) any REO Property relating to the Mortgage Loans, (iv) the rights
with respect to any related Servicing Agreement, (v) the rights with respect to
any related Assignment Agreement and (vi) any proceeds of the foregoing.
REMIC I INTERESTS: The REMIC I Regular Interests and the Class R-I
Certificates.
REMIC I REGULAR INTERESTS: REMIC I Regular Interests I-1-A, I-1-ZZZ,
I-2-A, I-2-ZZZ, I-PO, II-1-A, II-1-ZZZ, II-2-A, II-2-ZZZ, II-3-A, II-3-ZZZ,
II-PO, II-IO
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REMIC I SUBORDINATED BALANCE RATIO: The ratio among the Uncertificated
Principal Balances of each of the REMIC I Regular Interests ending with the
designation "A," equal to the ratio among, with respect to each such REMIC I
Regular Interest, the excess of (x) the aggregate Scheduled Principal Balance of
the Mortgage Loans in the related Subgroup over (y) the Current Principal Amount
of the Senior Certificates in the related Subgroup.
REMIC II: That group of assets contained in the Trust Fund designated as a
REMIC consisting of the REMIC I Regular Interests.
REMIC II INTERESTS: The REMIC II Regular Interests and the Class R-II
Certificates.
REMIC II REGULAR INTERESTS: REMIC II Regular Interests ▇-▇-▇, ▇-▇-▇,
▇-▇-▇, ▇-▇-▇, ▇-▇-▇, ▇-▇-▇, I-A-7, I-PO, II-A-1, II-A-2, II-A-3, II-PO, II-IO,
R-III, ▇-▇, ▇-▇, ▇-▇, ▇-▇, B-5 and B-6.
REMIC III: That group of assets contained in the Trust Fund designated as
a REMIC consisting of the REMIC II Regular Interests.
REMIC III INTERESTS: The REMIC III Regular Certificates and the Class
R-III Certificates.
REMIC III REGULAR CERTIFICATES: The Class I-A-1, Class I-A-2, Class I-A-3,
Class I-A-4 , Class I-A-5, Class I-A-6, Class I-A-7, Class I-A-8, Class I-PO,
Class B-1, Class B-2, Class B-3 , Class B-4, Class B-5 and Class B-6
Certificates.
REMIC OPINION: An Opinion of Independent Counsel, to the effect that the
proposed action described therein would not, under the REMIC Provisions, (i)
cause any REMIC to fail to qualify as a REMIC while any regular interest in such
REMIC is outstanding, (ii) result in a tax on prohibited transactions with
respect to any REMIC or (iii) constitute a taxable contribution to any REMIC
after the Startup Day.
REMIC PROVISIONS: The provisions of the federal income tax law relating to
the REMIC, which appear at Sections 860A through 860G of the Code, and related
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
REO PROPERTY: A Mortgaged Property acquired in the name of the Trustee,
for the benefit of Certificateholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Seller pursuant
to the Mortgage Loan Purchase Agreement or Article II of this Agreement, an
amount equal to the sum of (i)(a) 100% of the Outstanding Principal Balance of
such Mortgage Loan as of the date of repurchase (or if the related Mortgaged
Property was acquired with respect thereto, 100% of the Outstanding Principal
Balance at the date of the acquisition), plus (b) accrued but unpaid interest on
the Outstanding Principal Balance at the related Mortgage Interest Rate, through
and including the last day of the month of repurchase, plus (c) any unreimbursed
Monthly Advances and servicing advances payable to the Servicer of the Mortgage
Loan or to the Master Servicer and (ii) any
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costs and damages (if any) incurred by the Trust in connection with any
violation of such Mortgage Loan of any predatory lending laws.
REPURCHASE PROCEEDS: The Repurchase Price in connection with any
repurchase of a Mortgage Loan by the Seller and any cash deposit in connection
with the substitution of a Mortgage Loan.
REQUEST FOR RELEASE: A request for release in the form attached hereto as
Exhibit D.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.
RESERVE FUND: A fund established at the time of the issuance of the
Certificates solely for the benefit of the Class I-A-5 Certificates by an
initial deposit into the Reserve Fund of $20,000 by Bear, ▇▇▇▇▇▇▇ & Co. Inc.
RESIDUAL CERTIFICATES: Any of the Class R Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement, and any other officer
of the Trustee to whom a matter arising hereunder may be referred.
ROUNDING ACCOUNT: With respect to the Insured Certificates, the account
created and maintained for such Insured Certificates pursuant to Section 6.09.
ROUNDING AMOUNT: With respect to the Rounding Account, the amount of
funds, if any, needed to be withdrawn and used to round the amount of any
distributions in reduction of the Current Principal Amount of the Insured
Certificates upward to the next higher integral multiple of $1,000.
RULE 144A CERTIFICATE: The certificate to be furnished by each purchaser
of a Private Certificate (which is also a Physical Certificate) which is a
Qualified Institutional Buyer as defined under Rule 144A promulgated under the
Securities Act, substantially in the form set forth as Exhibit F-2 hereto.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and
its successors in interest.
SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.
SCHEDULED PRINCIPAL: The principal portion of any Scheduled Payment.
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SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (i) the unpaid principal balance of such Mortgage Loan as of
the close of business on the related Due Date (i.e., taking account of the
principal payment to be made on such Due Date and irrespective of any
delinquency in its payment), as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any bankruptcy or similar proceeding occurring after the Cut-off Date
(other than a Deficient Valuation) or any moratorium or similar waiver or grace
period) and less (ii) any Principal Prepayments (including the principal portion
of Net Liquidation Proceeds) received during or prior to the related Prepayment
Period; provided that the Scheduled Principal Balance of a Liquidated Mortgage
Loan is zero.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: ▇▇▇▇▇ Fargo Bank, National Association, or its
successor in interest, or any successor securities administrator appointed as
herein provided.
SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT
OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO
(A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN
THE POOLING AND SERVICING AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH
OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR
IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY OTHER APPLICABLE JURISDICTION. THIS CERTIFICATE MAY NOT BE
ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED [in the case of a Residual Certificate
or a Private Certificate] UNLESS THE OPINION OF COUNSEL REQUIRED BY
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SECTION 5.07 OF THE POOLING AND SERVICING AGREEMENT IS PROVIDED [in the case of
the Class B-4, Class B-5 and Class B-6 Certificates]:, UNLESS THE TRANSFEREE
CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE
AND THE SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I)
WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN
INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED
TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, ▇▇▇ ▇▇-▇▇, ▇▇▇ ▇▇-▇, ▇▇▇
95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY
DUTIES ON THE PART OF THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE MASTER
SERVICER, ANY SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN
OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED
BY A REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF
AN INSTITUTIONAL ACCREDITED INVESTOR."
SECURITY AGREEMENT: With respect to a Cooperative Loan, the agreement
creating a security interest in favor of the originator in the related
Cooperative Stock.
SECURITY INSTRUMENT: A written instrument creating a valid first lien on a
Mortgaged Property securing a Mortgage Note, which may be any applicable form of
mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.
SELLER: EMC Mortgage Corporation, as Mortgage Loan seller under the
Mortgage Loan Purchase Agreement.
SENIOR CERTIFICATES: The Class I-A-1, Class I-A-2, Class I-A-3, Class
I-A-4, Class I-A-5, Class I-A-6, Class I-A-7, Class I-A-8, Class I-PO, Class
II-A-1, Class II-A-2, Class II-A-3, Class II-PO, Class II-X-1, Class R-I, Class
R-II and Class R-III Certificates.
SERVICER: With respect to each Mortgage Loan, EMC, GMAC, National City,
WFBNA or Nexstar.
SERVICER REMITTANCE DATE: With respect to each Mortgage Loan, the date set
forth in the related Servicing Agreement.
SERVICING AGREEMENTS: The EMC Servicing Agreement, Nexstar Servicing
Agreement, National City Servicing Agreement, WFBNA Servicing Agreement and GMAC
Servicing Agreement.
SERVICING FEE: As to any Mortgage Loan and Distribution Date, an amount
equal to the product of (i) the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the preceding calendar month and (ii) the applicable
Servicing Fee Rate.
SERVICING FEE RATE: As to any Mortgage Loan, a per annum rate as set forth
in the Mortgage Loan Schedule.
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SERVICING OFFICER: Any officer of the related Servicer or Master Servicer
involved in or responsible for the administration and servicing or master
servicing, as applicable, of the Mortgage Loans as to which officer evidence,
reasonably acceptable to the Trustee, of due authorization of such officer, by
such Servicer or Master Servicer has been furnished from time to time to the
Trustee and Radian.
SPECIAL HAZARD LOSS: A Realized Loss attributable to damage or a direct
physical loss suffered by a Mortgaged Property (including any Realized Loss due
to the presence or suspected presence of hazardous wastes or substances on a
Mortgaged Property) other than any such damage or loss covered by a hazard
policy or a flood insurance policy required to be maintained in respect of such
Mortgaged Property under this Agreement or any loss due to normal wear and tear
or certain other causes.
SPECIAL HAZARD LOSS AMOUNT: Upon the initial issuance of the Certificates,
$2,943,477. As of any Distribution Date, the Special Hazard Loss Amount will
equal the initial Special Hazard Loss Amount, minus the sum of (i) the aggregate
amount of Special Hazard Losses that would have been previously allocated to the
Subordinate Certificates in the absence of the Loss Allocation Limit and (ii)
the Adjustment Amount.
SPECIAL HAZARD TERMINATION DATE: The Distribution Date upon which the
Special Hazard Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
STARTUP DAY: July 30, 2004.
SUBGROUP: Any of Subgroup I-1, Subgroup I-2, Subgroup II-1, Subgroup II-2
and Subgroup II-3.
SUBGROUP I-1: All of the Group I Mortgage Loans with a Net Mortgage Rate
of less than or equal to 5.2500% per annum, plus the Subgroup I-1 Fraction of
the principal balance of any group I Mortgage Loan with a Net Mortgage Rate
greater than 5.2500% per annum and less than 8.0000% per annum.
SUBGROUP I-1 CERTIFICATES: The Class I-A-1, Class I-A-2, Class I-A-3,
Class I-A-4, Class I-A-5, Class I-A-6, Class R-I, Class R-II, Class R-III
Certificates.
SUBGROUP I-1 FRACTION: With respect to any Group I Mortgage Loan with a
Net Mortgage Rate of greater than 5.2500% per annum and less than 8.0000% per
annum, a fraction, (x) the numerator of which is equal to 8.0000% minus the Net
Mortgage Rate of such Mortgage Loan, and (y) the denominator of which is equal
to 2.750%.
SUBGROUP I-2: The Subgroup I-2 Fraction of the principal balance of any
Group I Mortgage Loan with a Net Mortgage Rate of greater than 5.2500% per annum
and less than 8.0000% per annum and any Group I Mortgage Loan with a Net
Mortgage Rate of 8.0000% per annum.
SUBGROUP I-2 CERTIFICATES: The Class I-A-7 Certificates.
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SUBGROUP I-2 FRACTION: With respect to any Group I Mortgage Loan with a
Net Mortgage Rate of greater than 5.2500% per annum and less than 8.0000% per
annum, a fraction, (x) the numerator of which is equal to the Net Mortgage Rate
of such Mortgage Loan minus 5.2500%, and (y) the denominator of which is equal
to 2.750%.
SUBGROUP II-1: All of the Group II Mortgage Loans with a Net Mortgage Rate
of less than or equal to 4.5000% per annum plus the Subgroup II-1 Fraction of
the principal balance of any Group II Mortgage Loan with a Net Mortgage Rate of
greater than 4.5000% per annum and less than 5.0000% per annum.
SUBGROUP II-1 CERTIFICATES: The Class II-A-1 Certificates.
SUBGROUP II-1 FRACTION: With respect to any Group II Mortgage Loan with a
Net Mortgage Rate of greater than 4.5000% per annum and less than 5.0000% per
annum, a fraction, (x) the numerator of which is equal to 5.0000% minus the Net
Mortgage Rate of such Mortgage Loan, and (y) the denominator of which is equal
to 0.5000%.
SUBGROUP II-2: All of the Group II Mortgage Loans with a Net Mortgage Rate
of 5.0000% per annum plus the Subgroup II-2A Fraction of the principal balance
of any Group II Mortgage Loan with a Net Mortgage Rate of greater than 4.5000%
per annum and less than 5.0000% per annum and the Subgroup II-2B Fraction of the
principal balance of any Group II Mortgage Loan with a Net Mortgage Rate greater
than 5.0000% per annum and less than 5.2500% per annum.
SUBGROUP II-2 CERTIFICATES: The Class II-A-2 Certificates.
SUBGROUP II-2A FRACTION: With respect to any Group II Mortgage Loan with a
Net Mortgage Rate of greater than 4.5000% per annum and less than 5.0000% per
annum, a fraction, (x) the numerator of which is equal to Net Mortgage Rate of
such Mortgage Loan minus 4.5000%, and (y) the denominator of which is equal to
0.50000%.
SUBGROUP II-2B FRACTION: With respect to any Group II Mortgage Loan with a
Net Mortgage Rate of greater than 5.0000% per annum and less than 5.2500% per
annum, a fraction, (x) the numerator of which is equal to 5.2500% minus the Net
Mortgage Rate of such Mortgage Loan, and (y) the denominator of which is equal
to 0.250%.
SUBGROUP II-3: All of the Group II Mortgage Loans with a Net Mortgage Rate
of greater than or equal to 5.250% per annum, plus the Subgroup II-3 Fraction of
the principal balance of any Mortgage Loan with a Net Mortgage Rate greater than
5.0000% per annum and less than 5.2500% per annum.
SUBGROUP II-3 CERTIFICATES: The Class II-A-3 Certificates.
SUBGROUP II-3 FRACTION: With respect to any Group II Mortgage Loan with a
Net Mortgage Rate of greater than 5.0000% per annum and less than 5.2500% per
annum, a fraction,
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(x) the numerator of which is equal to the Net Mortgage Rate of such Mortgage
Loan minus 5.0000%, and (y) the denominator of which is equal to 0.250%.
SUBGROUP PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Distribution
Date and each of Subgroup I-1, Subgroup I-2, Subgroup II-1, Subgroup II-2 and
Subgroup II-3 Certificates, an amount equal to the sum, without duplication, of
the following (but in no event greater than the aggregate Current Principal
Amounts of each the Subgroup I-1, Subgroup I-2, Subgroup II-1, Subgroup II-2 and
Subgroup II-3 Certificates, as applicable, immediately prior to such
Distribution Date):
(1) the applicable Subgroup Senior Percentage of the Non-PO
Percentage of the principal portion of all Scheduled Payments due on each
Outstanding Mortgage Loan in the related Subgroup on the related Due Date
as specified in the amortization schedule at the time applicable thereto
(after adjustments for previous Principal Prepayments but before any
adjustment to such amortization schedule by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period);
(2) the applicable Subgroup Senior Prepayment Percentage of the
Non-PO Percentage of the Scheduled Principal Balance of each Mortgage Loan
in the related Subgroup which was the subject of a Principal Prepayment in
full received by the Master Servicer during the related Prepayment Period;
(3) the applicable Subgroup Senior Prepayment Percentage of the
Non-PO Percentage of all Principal Prepayments in part received by the
Master Servicer during the related Prepayment Period with respect to each
Mortgage Loan in the related Subgroup;
(4) the lesser of (a) the applicable Subgroup Senior Prepayment
Percentage of the Non-PO Percentage of the sum of (A) all Net Liquidation
Proceeds allocable to principal received in respect of each Mortgage Loan
in the related Subgroup which became a Liquidated Mortgage Loan during the
related Prepayment Period (other than Mortgage Loans described in the
immediately following clause (B)) and all Subsequent Recoveries received
in respect of each Liquidated Mortgage Loan in the related Subgroup during
the related Due Period and (B) the Scheduled Principal Balance of each
such Mortgage Loan in the related Subgroup purchased by an insurer from
the Trustee during the related Prepayment Period pursuant to the related
Primary Mortgage Insurance Policy, if any, or otherwise; and (b) the
applicable Subgroup Senior Percentage of the Non-PO Percentage of the sum
of (A) the Scheduled Principal Balance of each Mortgage Loan in the
related Subgroup which became a Liquidated Mortgage Loan during the
related Prepayment Period (other than the Mortgage Loans described in the
immediately following clause (B)) and all Subsequent Recoveries received
in respect of each Liquidated Mortgage Loan in the related Subgroup during
the related Due Period and (B) the Scheduled Principal Balance of each
such Mortgage Loan in the related Subgroup that was purchased by an
insurer from the Trust during the related Prepayment Period pursuant to
the related Primary Mortgage Insurance Policy, if any or otherwise; and
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(5) the applicable Subgroup Senior Prepayment Percentage of the sum
of (a) the Scheduled Principal Balance of each Mortgage Loan in the
related Subgroup which was repurchased by the Seller in connection with
such Distribution Date and (b) the excess, if any, of the Scheduled
Principal Balance of a Mortgage Loan in the related Subgroup that has been
replaced by the Seller with a substitute Mortgage Loan pursuant to the
Mortgage Loan Purchase Agreement in connection with such Distribution Date
over the Scheduled Principal Balance of such substitute Mortgage Loan.
SUBGROUP SENIOR PERCENTAGE: With respect to each Subgroup, the lesser of
(a) 100% and (b) the percentage (carried to six places rounded up) obtained by
dividing the Current Principal Amount of the Senior Certificates of such
Subgroup (other than any Principal Only Certificates), immediately prior to such
Distribution Date, by the aggregate Scheduled Principal Balance of the Mortgage
Loans in the related Subgroup (other than the PO Percentage thereof with respect
to the related Discount Mortgage Loans) as of the beginning of the related Due
Period. The initial Subgroup Senior Percentage for the Group I Senior
Certificates will be approximately 98.20%, and initial Subgroup Senior
Percentage for the Group II Senior Certificates will be approximately 98.19%.
SUBGROUP SENIOR PREPAYMENT PERCENTAGE: The Subgroup Senior Prepayment
Percentage for the Subgroup I-1, Subgroup I-2, Subgroup II-1, Subgroup II-2 and
Subgroup II-3 Certificates, on any Distribution Date occurring during the
periods set forth below will be as follows:
Period (dates inclusive) Subgroup Senior Prepayment Percentage
August 25, 2004 - July 25, 2009 100%
August 25, 2009 - July 25, 2010 Subgroup Senior Percentage for the
related Subgroup Certificates plus 70%
of the related Subordinate Percentage.
August 25, 2010 - July 25, 2011 Subgroup Senior Percentage for the
related Subgroup Certificates plus 60%
of the related Subordinate Percentage.
August 25, 2012 - July 25, 2012 Subgroup Senior Percentage for the
related Subgroup Certificates plus 40%
of the related Subordinate Percentage.
August 25, 2013 - July 25, 2013 Subgroup Senior Percentage for the
related Subgroup Certificates plus 20%
of the related Subordinate Percentage.
August 25, 2012 and thereafter Subgroup Senior Percentage for the
related Subgroup Certificates.
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Any scheduled reduction to the Subgroup Senior Prepayment Percentage for
the Subgroup I-1, Subgroup I-2, Subgroup II-1, Subgroup II-2 and Subgroup II-3
Certificates shall not be made as of any Distribution Date unless, as of the
last day of the month preceding such Distribution Date (1) the aggregate
Scheduled Principal Balance of the Mortgage Loans delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure and such
Mortgage Loans with respect to which the related Mortgaged Property has been
acquired by the trust) averaged over the last six months, as a percentage of the
aggregate Current Principal Amount of the Subordinate Certificates does not
exceed 50% and (2) cumulative Realized Losses on the Mortgage Loans do not
exceed (a) 30% of the aggregate Current Principal Amount of the Original
Subordinate Principal Balance if such Distribution Date occurs between and
including August 2009 and July 2010, (b) 35% of the Original Subordinate
Principal Balance if such Distribution Date occurs between and including August
2010 and July 2011, (c) 40% of the Original Subordinate Principal Balance if
such Distribution Date occurs between and including August 2011 and July 2012,
(d) 45% of the Original Subordinate Principal Balance if such Distribution Date
occurs between and including August 2012 and July 2013, and (e) 50% of the
Original Subordinate Principal Balance if such Distribution Date occurs during
or after August 2013.
Notwithstanding the foregoing, if on any Distribution Date, the
percentage, the numerator of which is the aggregate Current Principal Amount of
the Senior Certificates immediately preceding such Distribution Date, and the
denominator of which is the Scheduled Principal Balance of the Mortgage Loans
(other than the PO Percentage thereof with respect to the Discount Mortgage
Loans) as of the beginning of the related Due Period, exceeds such percentage as
of the Cut-off Date, then the Subgroup Senior Prepayment Percentage with respect
to the Senior Certificates of each Subgroup for such Distribution Date will
equal 100%.
SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any Distribution Date, the
amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of applicable Realized Losses in reduction of the Current Principal
Amounts of the Certificates on such Distribution Date) exceeds (b) the aggregate
Scheduled Principal Balances of the Mortgage Loans on the Due Date related to
such Distribution Date.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following from each
Subgroup (but in no event greater than the aggregate Current Principal Amount of
the Subordinate Certificates immediately prior to such Distribution Date):
(i) the applicable Subordinate Percentage of the Non-PO Percentage
of the principal portion of all Scheduled Payments due on each Outstanding
Mortgage Loan in the related Subgroup on the related Due Date as specified
in the amortization schedule at the time applicable thereto (after
adjustment for previous Principal Prepayments but before any adjustment to
such amortization schedule
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by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period);
(ii) the applicable Subordinate Prepayment Percentage of the Non-PO
Percentage of the Scheduled Principal Balance of each Mortgage Loan in the
related Subgroup that was the subject of a Principal Prepayment in full
received by the Master Servicer during the related Prepayment Period;
(iii) the applicable Subordinate Prepayment Percentage of the Non-PO
Percentage of each Principal Prepayment in part received during the
related Prepayment Period with respect to each Mortgage Loan in the
related Subgroup;
(iv) the excess, if any, of (a) all Net Liquidation Proceeds
allocable to principal received during the related Prepayment Period in
respect of each Liquidated Mortgage Loan in the related Subgroup over (b)
the sum of the amounts distributable to the related Senior
Certificateholders pursuant to clause (4) of the definition of Subgroup
Principal Distribution Amount and Class PO Certificate Principal
Distribution Amount on such Distribution Date;
(v) the applicable Subordinate Prepayment Percentage of the Non-PO
Percentage of the sum of (a) the Scheduled Principal Balance of each
Mortgage Loan in the related Subgroup which was repurchased by the Seller
in connection with respect to such Distribution Date and (b) the
difference, if any, between the Scheduled Principal Balance of a Mortgage
Loan in the related Subgroup that has been replaced by the Seller with a
Substitute Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement
in connection with such Distribution Date over the Scheduled Principal
Balance of such Substitute Mortgage Loan; and
(vi) on the Distribution Date on which the Current Principal Amounts
of the related Senior Certificates (other than the Interest Only
Certificates and Class PO Certificates), have all been reduced to zero,
100% of the related Subgroup Principal Distribution Amount. After the
aggregate Current Principal Amount of the Subordinate Certificates has
been reduced to zero, the Subordinate Optimal Principal Amount shall be
zero.
SUBORDINATE PERCENTAGE: As of any Distribution Date and with respect to
any Subgroup, 100% minus the related Subgroup Senior Percentage for the Senior
Certificates related to such Subgroup. The initial Subordinate Percentage for
each of Subgroup I-1 and Subgroup I-2 will be approximately 1.80%, and the
initial Subordinate Percentage for each of Subgroup II-1, Subgroup II-2 and
Subgroup II-3 will be approximately 1.81%.
SUBORDINATE PREPAYMENT PERCENTAGE: As of any Distribution Date and with
respect to any Subgroup, 100% minus the related Subgroup Senior Prepayment
Percentage for such Subgroup, except that on any Distribution Date after the
Current Principal Amount of each class of Senior Certificates have each been
reduced to zero, the Subordinate Prepayment Percentage for the Subordinate
Certificates with respect to such Subgroup will equal 100%.
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SUBSEQUENT RECOVERIES: Any amount recovered by a Servicer or the Master
Servicer (net of reimburseable expenses) with respect to a Liquidated Mortgage
Loan with respect to which a Realized Loss was incurred after the liquidation or
disposition of such Mortgage Loan.
SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee pursuant
to the related Servicing Agreement, the Mortgage Loan Purchase Agreement or
Section 2.04 of this Agreement, as applicable, in each case, (i) which has an
Outstanding Principal Balance not greater nor materially less than the Mortgage
Loan for which it is to be substituted; (ii) which has a Mortgage Interest Rate
and Net Mortgage Rate not less than, and not materially greater than, such
Mortgage Loan; (iii) which has a maturity date not materially earlier or later
than such Mortgage Loan and not later than the latest maturity date of any
Mortgage Loan; (iv) which is of the same property type and occupancy type as
such Mortgage Loan; (v) which has a Loan-to-Value Ratio not greater than the
Loan-to-Value Ratio of such Mortgage Loan; (vi) which is current in payment of
principal and interest as of the date of substitution; and (vii) as to which the
payment terms do not vary in any material respect from the payment terms of the
Mortgage Loan for which it is to be substituted.
TAX ADMINISTRATION AND TAX MATTERS PERSON: The Securities Administrator or
any successor thereto or assignee thereof shall serve as tax administrator
hereunder and as agent for the Tax Matters Person. The Holder of each Class of
Residual Certificates shall be the Tax Matters Person for the related REMIC, as
more particularly set forth in Section 9.12 hereof.
TERMINATION PURCHASE PRICE: The price, calculated as set forth in Section
10.01, to be paid in connection with the repurchase of the Mortgage Loans
pursuant to Section 10.01.
TRUST FUND OR TRUST: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans and the other assets described in Section
2.01(a).
TRUSTEE: U.S. Bank National Association, or its successor in interest, or
any successor trustee appointed as herein provided.
UNCERTIFICATED PRINCIPAL BALANCE: With respect to any REMIC I Regular
Interest or REMIC II Regular Interest (other than REMIC I Regular Interest II-IO
and REMIC II Regular Interest II-IO) as of any Distribution Date, the initial
principal amount of such Regular Interest, reduced by (i) all amounts
distributed on previous Distribution Dates on such Regular Interest with respect
to principal, and (ii) the principal portion of all Realized Losses allocated
prior to such Distribution Date to such Regular Interest, taking account of the
Loss Allocation Limit.
UNDERLYING SELLER: With respect to each Mortgage Loan, EMC, National City
or GMAC, as indicated on the Mortgage Loan Schedule.
UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or related
REO Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant the related Servicing Agreement, without
regard to whether or not such policy is maintained.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation or partnership (including an entity treated as a corporation or
partnership for federal income tax
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purposes) created or organized in, or under the laws of, the United States or
any state thereof or the District of Columbia (except, in the case of a
partnership, to the extent provided in regulations), provided that, for purposes
solely of the Class R Certificates, no partnership or other entity treated as a
partnership for United States federal income tax purposes shall be treated as a
United States Person unless all persons that own an interest in such partnership
either directly or through any entity that is not a corporation for United
States federal income tax purposes are United States Persons, or an estate whose
income is subject to United States federal income tax regardless of its source,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more such United
States Persons have the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
which have not yet been issued, a trust which was in existence on August 20,
1996 (other than a trust treated as owned by the grantor under subpart E of part
I of subchapter J of chapter 1 of the Code), and which was treated as a United
States person on August 20, 1996 may elect to continue to be treated as a United
States person notwithstanding the previous sentence.
WFBNA: ▇▇▇▇▇ Fargo Bank, National Association, or its successor in
interest.
WFBNA SERVICING AGREEMENT: With respect to the Mortgage Loans originated
by WFBNA, the Purchase, Warranties and Servicing Agreement dated as of May 1,
2002 between the Seller and WFBNA, attached hereto as Exhibit H-5 as modified by
the related Assignment Agreement.
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Section 1.01 Calculation of LIBOR.
LIBOR applicable to the calculation of the Pass-Through Rate on the
Adjustable Rate Certificates for any Interest Accrual Period will be determined
on each Interest Determination Date. On each Interest Determination Date, LIBOR
shall be established by the Securities Administrator and, as to any Interest
Accrual Period, will equal the rate for one month United States dollar deposits
that appears on the Telerate Screen Page 3750 as of 11:00 a.m., London" time, on
such Interest Determination Date. "Telerate Screen Page 3750" means the display
designated as page 3750 on the Telerate Service (or such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks). If such rate does not appear on such page (or
such other page as may replace that page on that service, or if such service is
no longer offered, LIBOR shall be so established by use of such other service
for displaying LIBOR or comparable rates as may be reasonably selected by the
Securities Administrator), the rate will be the Reference Bank Rate. The
"Reference Bank Rate" will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by the reference banks (which shall be any
three major banks that are engaged in transactions in the London interbank
market, selected by the Securities Administrator) as of 11:00 a.m., London time,
on the Interest Determination Date to prime banks in the London interbank market
for a period of one month in amounts approximately equal to the aggregate
Current Principal Amount of the Adjustable Rate Certificates then outstanding.
The Securities Administrator will request the principal London office of each of
the reference banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations
rounded up to the nearest whole multiple of 0.03125%. If on such date fewer than
two quotations are provided as requested, the rate will be the arithmetic mean
of the rates quoted by one or more major banks in New York City, selected by the
Securities Administrator, as of 11:00 a.m., New York City time, on such date for
loans in U.S. Dollars to leading European banks for a period of one month in
amounts approximately equal to the aggregate Current Principal Amount of the
Adjustable Rate Certificates then outstanding. If no such quotations can be
obtained, the rate will be LIBOR for the prior Distribution Date; PROVIDED
HOWEVER, if, under the priorities described above, LIBOR for a Distribution Date
would be based on LIBOR for the previous Distribution Date for the third
consecutive Distribution Date, the Securities Administrator shall select an
alternative comparable index (over which the Securities Administrator e has no
control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.
The establishment of LIBOR by the Securities Administrator on any Interest
Determination Date and the Securities Administrator's subsequent calculation of
the Pass-Through Rate applicable to the Adjustable Rate Certificates for the
relevant Interest Accrual Period, in the absence of manifest error, will be
final and binding. Promptly following each Interest Determination Date the
Securities Administrator shall supply the Master Servicer with the results of
its determination of LIBOR on such date.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01 Conveyance of Mortgage Loans to Trustee.
(a) The Depositor concurrently with the execution and delivery of this
Agreement, sells, transfers and assigns to the Trust without recourse all its
right, title and interest in and to (i) the Mortgage Loans identified in the
Mortgage Loan Schedule, including all interest and principal due with respect to
the Mortgage Loans after the Cut-off Date, but excluding any payments of
principal and interest due on or prior to the Cut-off Date; (ii) such assets as
shall from time to time be credited or are required by the terms of this
Agreement to be credited to the Master Servicer Collection Account, (iii) such
assets relating to the Mortgage Loans as from time to time may be held by the
Servicers in Protected Accounts, the Master Servicer in the Master Servicer
Collection Account and the Trustee in the Distribution Account, (iv) any REO
Property, (v) the Required Insurance Policies and any amounts paid or payable by
the insurer under any Insurance Policy (to the extent the mortgagee has a claim
thereto), (vi) the Mortgage Loan Purchase Agreement to the extent provided in
Subsection 2.03(a), (vii) the rights with respect to the Servicing Agreements as
assigned to the Trustee on behalf of the Certificateholders by the Assignment
Agreements, (viii) the Policy, the Class I-A-5 Policy Payments Account, the
Rounding Account and the Reserve Fund and (ix) any proceeds of the foregoing.
Although it is the intent of the parties to this Agreement that the conveyance
of the Depositor's right, title and interest in and to the Mortgage Loans and
other assets in the Trust Fund pursuant to this Agreement shall constitute a
purchase and sale and not a loan, in the event that such conveyance is deemed to
be a loan, it is the intent of the parties to this Agreement that the Depositor
shall be deemed to have granted to the Trustee a first priority perfected
security interest in all of the Depositor's right, title and interest in, to and
under the Mortgage Loans and other assets in the Trust Fund, and that this
Agreement shall constitute a security agreement under applicable law. The
Depositor, the Master Servicer and the Trustee agree that it is not intended
that any mortgage loan be conveyed to the Trust that is either (i) a "High-Cost
Home Loan" as defined in the New Jersey Home Ownership Act effective November
27, 2003 or (ii) a "High-Cost Home Loan" as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004.
(b) In connection with the above transfer and assignment, the Depositor
hereby delivers to the Custodian, as agent for the Trustee, with respect to (I)
each Mortgage Loan (other than a Cooperative Loan):
(i) the original Mortgage Note, endorsed without recourse to the
order of the Trustee and showing an unbroken chain of endorsements from
the originator thereof to the Person endorsing it to the Trustee, or lost
note affidavit together with a copy of the related Mortgage Note;
(ii) the original Mortgage and, if the related Mortgage Loan is a
MOM Loan, noting the presence of the MIN and language indicating that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if the
original is not available, a copy), with evidence of such recording
indicated thereon (or if clause (w) in the proviso below applies, shall be
in recordable form);
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(iii) unless the Mortgage Loan is a MOM Loan, a certified copy of
the assignment (which may be in the form of a blanket assignment if
permitted in the jurisdiction in which the Mortgaged Property is located)
to "U.S. Bank National Association, as Trustee", with evidence of
recording with respect to each Mortgage Loan in the name of the Trustee
thereon (or if clause (w) in the proviso below applies or for Mortgage
Loans with respect to which the related Mortgaged Property is located in a
state other than Maryland or an Opinion of Counsel has been provided as
set forth in this Section 2.01(b), shall be in recordable form);
(iv) all intervening assignments of the Security Instrument, if
applicable and only to the extent available to the Depositor with evidence
of recording thereon;
(v) the original or a copy of the policy or certificate of primary
mortgage guaranty insurance, to the extent available, if any;
(vi) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title
insurance; and
(vii) originals of all modification agreements, if applicable and
available.
and (II) with respect to each Cooperative Loan so assigned:
(i) The original Mortgage Note, endorsed without recourse to the
order of the Trustee and showing an unbroken chain of endorsements from
the originator thereof to the Person endorsing it to the Trustee, or lost
note affidavit, together with a copy of the related Mortgage Note;
(ii) A counterpart of the Cooperative Lease and the Assignment of
Proprietary Lease to the originator of the Cooperative Loan with
intervening assignments showing an unbroken chain of title from such
originator to the Trustee;
(iii) The related Cooperative Stock Certificate, representing the
related Cooperative Stock pledged with respect to such Cooperative Loan,
together with an undated stock power (or other similar instrument)
executed in blank;
(iv) The original recognition agreement by the Cooperative of the
interests of the mortgagee with respect to the related Cooperative Loan
and any transfer documents related to the recognition agreement;
(v) The Security Agreement;
(vi) Copies of the original UCC-1 financing statement, and any
continuation statements, filed by the originator of such Cooperative Loan
as secured party, each with evidence of recording thereof, evidencing the
interest of the originator under the Security Agreement and the Assignment
of Proprietary Lease;
(vii) Copies of the filed UCC-3 assignments of the security interest
referenced in clause (vi) above showing an unbroken chain of title from
the originator to the Trustee, each
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with evidence of recording thereof, evidencing the interest of the
originator under the Security Agreement and the Assignment of Proprietary
Lease;
(viii) An executed assignment of the interest of the originator in
the Security Agreement and Assignment of Proprietary Lease, showing an
unbroken chain of title from the originator to the Trustee; and
(ix) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Cooperative Loan;
PROVIDED, HOWEVER, that in lieu of the foregoing, the Depositor may deliver to
the Custodian, as agent of the Trustee, the following documents, under the
circumstances set forth below: (w) in lieu of the original Security Instrument,
assignments to the Trustee or intervening assignments thereof which have been
delivered, are being delivered or will, upon receipt of recording information
relating to the Security Instrument required to be included thereon, be
delivered to recording offices for recording and have not been returned to the
Depositor in time to permit their delivery as specified above, the Depositor may
deliver a true copy thereof with a certification by the Depositor, on the face
of such copy, substantially as follows: "Certified to be a true and correct copy
of the original, which has been transmitted for recording"; (x) in lieu of the
Security Instrument, assignment to the Trustee or intervening assignments
thereof, if the applicable jurisdiction retains the originals of such documents
(as evidenced by a certification from the Depositor to such effect) the
Depositor may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; (y) in lieu of the Mortgage
Notes relating to the Mortgage Loans identified on Exhibit 5 to the Mortgage
Loan Purchase Agreement, the Depositor may deliver lost note affidavits from the
Seller; and (z) the Depositor shall not be required to deliver intervening
assignments or Mortgage Note endorsements between the related Underlying Seller
and the Seller, between the Seller and the Depositor, and between the Depositor
and the Trustee; and provided, further, however, that in the case of Mortgage
Loans which have been prepaid in full after the Cut-off Date and prior to the
Closing Date, the Depositor, in lieu of delivering the above documents, may
deliver to the Trustee or the Custodian, as its agent, a certification to such
effect and shall deposit all amounts paid in respect of such Mortgage Loans in
the Master Servicer Collection Account on the Closing Date. The Depositor shall
deliver such original documents (including any original documents as to which
certified copies had previously been delivered) to the Trustee or the Custodian,
as its agent, promptly after they are received. The Depositor shall cause the
Seller, at its expense, to cause each assignment of the Security Instrument to
the Trustee to be recorded not later than 180 days after the Closing Date,
unless (a) such recordation is not required by the Rating Agencies or an Opinion
of Counsel addressed to the Trustee and Radian has been provided to the Trustee
(with a copy to the Custodian) and Radian which states that recordation of such
Security Instrument is not required to protect the interests of the
Certificateholders in the related Mortgage Loans or (b) MERS is identified on
the Mortgage or on a properly recorded assignment of the Mortgage as the
mortgagee of record solely as nominee for the Seller and its successor and
assigns; provided, however, notwithstanding the foregoing, each assignment shall
be submitted for recording by the Seller in the manner described above, at no
expense to the Trust or the Trustee or the Custodian, as its agent, upon the
earliest to occur of: (i) reasonable direction by the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 25% of the
Trust, (ii) the occurrence of an Event of Default, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller and (iv) the
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occurrence of a servicing transfer as described in Section 8.02 hereof.
Notwithstanding the foregoing, if the Seller fails to pay the cost of recording
the assignments, such expense will be paid by the Trustee and the Trustee shall
be reimbursed for such expenses by the Trust in accordance with Section 9.05.
Section 2.02 Acceptance of Mortgage Loans by Trustee.
(a) The Trustee acknowledges the sale, transfer and assignment of the
Trust Fund to it by the Depositor and receipt of, subject to further review and
the exceptions which may be noted pursuant to the procedures described below,
and declares that it holds, the documents (or certified copies thereof)
delivered to the Custodian, as its agent, pursuant to Section 2.01, and declares
that it will continue to hold those documents and any amendments, replacements
or supplements thereto and all other assets of the Trust Fund delivered to it as
Trustee in trust for the use and benefit of all present and future Holders of
the Certificates and Radian. On the Closing Date, the Custodian, with respect to
the Mortgage Loans, shall acknowledge with respect to each Mortgage Loan by
delivery to the Depositor, Radian and the Trustee of an Initial Certification
receipt of the Mortgage File, but without review of such Mortgage File, except
to the extent necessary to confirm that such Mortgage File contains the related
Mortgage Note or lost note affidavit. No later than 90 days after the Closing
Date (or, with respect to any Substitute Mortgage Loan, within five Business
Days after the receipt by the Trustee or Custodian thereof), the Trustee agrees,
for the benefit of the Certificateholders and Radian, to review or cause to be
reviewed by the Custodian on its behalf (under the Custodial Agreement), each
Mortgage File delivered to it and to execute and deliver, or cause to be
executed and delivered, to the Depositor, Radian and the Trustee an Interim
Certification. In conducting such review, the Trustee or Custodian will
ascertain whether all required documents have been executed and received, and
based on the Mortgage Loan Schedule, whether those documents relate, determined
on the basis of the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans it has received, as identified in the Mortgage Loan
Schedule. In performing any such review, the Trustee or the Custodian, as its
agent, may conclusively rely on the purported due execution and genuineness of
any such document and on the purported genuineness of any signature thereon. If
the Trustee or the Custodian, as its agent, finds any document constituting part
of the Mortgage File has not been executed or received, or to be unrelated,
determined on the basis of the Mortgagor name, original principal balance and
loan number, to the Mortgage Loans identified in Exhibit B or to appear
defective on its face (a "Material Defect"), the Trustee or the Custodian, as
its agent, shall promptly notify the Seller. In accordance with the Mortgage
Loan Purchase Agreement, the Seller shall correct or cure any such defect within
ninety (90) days from the date of notice from the Trustee or the Custodian, as
its agent, of the defect and if the Seller fails to correct or cure the defect
within such period, and such defect materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan, the Trustee
shall enforce the Seller's obligation under the Mortgage Loan Purchase Agreement
to, within 90 days from the Trustee's or the Custodian's notification, provide a
Substitute Mortgage Loan (if within two years of the Closing Date) or purchase
such Mortgage Loan at the Repurchase Price; provided that, if such defect would
cause the Mortgage Loan to be other than a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code, any such cure or repurchase must occur within 90
days from the date such breach was discovered; provided, however, that if such
defect relates solely to the inability of the Seller to deliver the original
Security Instrument or
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intervening assignments thereof, or a certified copy because the originals of
such documents, or a certified copy have not been returned by the applicable
jurisdiction, the Seller shall not be required to purchase such Mortgage Loan if
the Seller delivers such original documents or certified copy promptly upon
receipt, but in no event later than 360 days after the Closing Date. The
foregoing repurchase obligation shall not apply in the event that the Seller
cannot deliver such original or copy of any document submitted for recording to
the appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Seller shall
instead deliver a recording receipt of such recording office or, if such receipt
is not available, a certificate confirming that such documents have been
accepted for recording, and delivery to the Trustee or the Custodian, as its
agent, shall be effected by the Seller within thirty days of its receipt of the
original recorded document.
(b) No later than 180 days after the Closing Date, the Trustee or the
Custodian, as its agent, will review, for the benefit of the Certificateholders
and Radian, the Mortgage Files delivered to it and will execute and deliver or
cause to be executed and delivered to the Depositor, Radian and the Trustee a
Final Certification. In conducting such review, the Trustee or the Custodian, as
its agent, will ascertain whether an original of each document required to be
recorded has been returned from the recording office with evidence of recording
thereon or a certified copy has been obtained from the recording office. If the
Trustee or the Custodian, as its agent, finds a Material Defect, the Trustee or
the Custodian, as its agent, shall promptly notify the Seller (provided,
however, that with respect to those documents described in subsections
(b)(I)(iv), (v), and (vii) of Section 2.01, the Trustee's and Custodian's
obligations shall extend only to the documents actually delivered to the
Custodian pursuant to such subsections). In accordance with the Mortgage Loan
Purchase Agreement, the Seller shall correct or cure any such defect within 90
days from the date of notice from the Trustee or the Custodian, as its agent, of
the Material Defect and if the Seller is unable to cure such defect within such
period, and if such defect materially and adversely affects the interests of the
Certificateholders in the related Mortgage Loan, the Trustee shall enforce the
Seller's obligation under the Mortgage Loan Purchase Agreement to, within 90
days from the Trustee's or Custodian's notification, provide a Substitute
Mortgage Loan (if within two years of the Closing Date) or purchase such
Mortgage Loan at the Repurchase Price, provided that, if such defect would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure, repurchase or substitution must occur
within 90 days from the date such breach was discovered, provided, however, that
if such defect relates solely to the inability of the Seller to deliver the
original Security Instrument or intervening assignments thereof, or a certified
copy, because the originals of such documents or a certified copy, have not been
returned by the applicable jurisdiction, the Seller shall not be required to
purchase such Mortgage Loan, if the Seller delivers such original documents or
certified copy promptly upon receipt, but in no event later than 360 days after
the Closing Date. The foregoing repurchase obligation shall not apply in the
event that the Seller cannot deliver such original or copy of any document
submitted for recording to the appropriate recording office in the applicable
jurisdiction because such document has not been returned by such office;
provided that the Seller shall instead deliver a recording receipt of such
recording office or, if such receipt is not available, a certificate confirming
that such documents have been accepted for recording, and delivery to the
Trustee or the Custodian, as its agent, shall be effected by the Seller within
thirty days of its receipt of the original recorded document.
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(c) In the event that a Mortgage Loan is purchased by the Seller in
accordance with Subsections 2.02(a) or (b) above, the Seller shall remit to the
Master Servicer the Repurchase Price for deposit in the Master Servicer
Collection Account and the Seller shall provide to the Securities Administrator,
the Trustee and Radian written notification detailing the components of the
Repurchase Price. Upon deposit of the Repurchase Price in the Master Servicer
Collection Account, the Depositor shall notify the Trustee and the Custodian, as
agent of the Trustee (upon receipt of a Request for Release in the form of
Exhibit D attached hereto with respect to such Mortgage Loan), shall release to
the Seller the related Mortgage File and the Trustee shall execute and deliver
all instruments of transfer or assignment, without recourse, representation or
warranty, furnished to it by the Seller, as are necessary to vest in the Seller
title to and rights under the Mortgage Loan. Such purchase shall be deemed to
have occurred on the date on which the Repurchase Price in immediately available
funds is received by the Trustee. The Trustee shall amend the Mortgage Loan
Schedule, which was previously delivered to it by the Depositor in a form agreed
to between the Depositor and the Trustee, to reflect such repurchase and shall
promptly notify the Rating Agencies, Radian and the Master Servicer of such
amendment. The obligation of the Seller to repurchase or substitute for any
Mortgage Loan a Substitute Mortgage Loan as to which such a defect in a
constituent document exists shall be the sole remedy respecting such defect
available to the Certificateholders and Radian or to the Trustee on their
behalf.
Section 2.03 Assignment of Interest in the Mortgage Loan Purchase
Agreement.
(a) The Depositor hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement, including but not limited to the Depositor's rights and
obligations pursuant to the Servicing Agreements (noting that the Seller has
retained the right in the event of breach of the representations, warranties and
covenants, if any, with respect to the related Mortgage Loans of the related
Servicer under the related Servicing Agreement to enforce the provisions thereof
and to seek all or any available remedies). The obligations of the Seller to
substitute or repurchase, as applicable, a Mortgage Loan shall be the Trustee's
and the Certificateholders' sole remedy for any breach thereof. At the request
of the Trustee, the Depositor shall take such actions as may be necessary to
enforce the above right, title and interest on behalf of the Trustee, the
Certificateholders and Radian or shall execute such further documents as the
Trustee may reasonably require in order to enable the Trustee to carry out such
enforcement.
(b) If the Depositor, the Securities Administrator or the Trustee
discovers a breach of any of the representations and warranties set forth in the
Mortgage Loan Purchase Agreement, which breach materially and adversely affects
the value of the interests of Certificateholders or the Trustee in the related
Mortgage Loan, the party discovering the breach shall give prompt written notice
of the breach to the other parties. The Seller, within 90 days of its discovery
or receipt of notice that such breach has occurred (whichever occurs earlier),
shall cure the breach in all material respects or, subject to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, shall
purchase the Mortgage Loan or any property acquired with respect thereto from
the Trustee; provided, however, that if there is a breach of any representation
set forth in the Mortgage Loan Purchase Agreement or Section 2.04 of this
Agreement, as applicable, and the Mortgage Loan or the related property acquired
with respect thereto has been sold, then the Seller shall pay, in lieu of the
Repurchase Price, any excess of the
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Repurchase Price over the Net Liquidation Proceeds received upon such sale. If
the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall be
paid to the Seller to the extent not required by law to be paid to the borrower.
Any such purchase by the Seller shall be made by providing an amount equal to
the Repurchase Price to the Master Servicer for deposit in the Master Servicer
Collection Account and written notification detailing the components of such
Repurchase Price. The Depositor shall notify the Trustee and submit to the
Custodian, as agent for the Trustee, a Request for Release, and the Custodian
shall release, or the Trustee shall cause the Custodian to release, to the
Seller the related Mortgage File and the Trustee shall execute and deliver all
instruments of transfer or assignment furnished to it by the Seller, without
recourse, representation or warranty as are necessary to vest in the Seller
title to and rights under the Mortgage Loan or any property acquired with
respect thereto. Such purchase shall be deemed to have occurred on the date on
which the Repurchase Price in available funds is received by the Trustee. The
Master Servicer shall amend the Mortgage Loan Schedule to reflect such
repurchase and shall promptly notify the Trustee, Radian and the Rating Agencies
of such amendment. Enforcement of the obligation of the Seller to purchase (or
substitute a Substitute Mortgage Loan for) any Mortgage Loan or any property
acquired with respect thereto (or pay the Repurchase Price as set forth in the
above proviso) as to which a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on their behalf.
Section 2.04 Substitution of Mortgage Loans.
Notwithstanding anything to the contrary in this Agreement, in lieu of
purchasing a Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement or
Sections 2.02 or 2.03 of this Agreement, the Seller may, no later than the date
by which such purchase by the Seller would otherwise be required, tender to the
Trustee a Substitute Mortgage Loan accompanied by a certificate of an authorized
officer of the Seller that such Substitute Mortgage Loan conforms to the
requirements set forth in the definition of "Substitute Mortgage Loan" in this
Agreement; provided, however, that substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, in lieu of
purchase shall not be permitted after the termination of the two-year period
beginning on the Startup Day; provided, further, that if the breach would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or substitution must occur within 90 days
from the date the breach was discovered. The Custodian, as agent for the
Trustee, shall examine the Mortgage File for any Substitute Mortgage Loan in the
manner set forth in Section 2.02(a) and the Trustee or the Custodian, as its
agent, shall notify the Seller, in writing, within five Business Days after
receipt, whether or not the documents relating to the Substitute Mortgage Loan
satisfy the requirements of the fifth sentence of Subsection 2.02(a). Within two
Business Days after such notification, the Seller shall provide to the Trustee
for deposit in the Distribution Account the amount, if any, by which the
Outstanding Principal Balance as of the next preceding Due Date of the Mortgage
Loan for which substitution is being made, after giving effect to the Scheduled
Principal due on such date, exceeds the Outstanding Principal Balance as of such
date of the Substitute Mortgage Loan, after giving effect to Scheduled Principal
due on such date, which amount shall be treated for the purposes of this
Agreement as if it were the payment by the Seller of the Repurchase Price for
the purchase of a Mortgage Loan by the Seller. After such notification to the
Seller and, if any such excess exists, upon receipt of such deposit, the Trustee
shall accept such Substitute Mortgage Loan which shall thereafter be deemed to
be a Mortgage
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Loan hereunder. In the event of such a substitution, accrued interest on the
Substitute Mortgage Loan for the month in which the substitution occurs and any
Principal Prepayments made thereon during such month shall be the property of
the Trust Fund and accrued interest for such month on the Mortgage Loan for
which the substitution is made and any Principal Prepayments made thereon during
such month shall be the property of the Seller. The Scheduled Principal on a
Substitute Mortgage Loan due on the Due Date in the month of substitution shall
be the property of the Seller and the Scheduled Principal on the Mortgage Loan
for which the substitution is made due on such Due Date shall be the property of
the Trust Fund. Upon acceptance of the Substitute Mortgage Loan (and delivery to
the Custodian of a Request for Release for such Mortgage Loan), the Custodian,
as agent for the Trustee, shall release to the Seller the related Mortgage File
related to any Mortgage Loan released pursuant to the Mortgage Loan Purchase
Agreement or Section 2.04 of this Agreement, as applicable, and shall execute
and deliver all instruments of transfer or assignment, without recourse,
representation or warranty in form as provided to it as are necessary to vest in
the Seller title to and rights under any Mortgage Loan released pursuant to the
Mortgage Loan Purchase Agreement or Section 2.04 of this Agreement, as
applicable. The Seller shall deliver to the Custodian the documents related to
the Substitute Mortgage Loan in accordance with the provisions of the Mortgage
Loan Purchase Agreement or Subsections 2.01(b) and 2.02(b) of this Agreement, as
applicable, with the date of acceptance of the Substitute Mortgage Loan deemed
to be the Closing Date for purposes of the time periods set forth in those
Subsections. The representations and warranties set forth in the Mortgage Loan
Purchase Agreement shall be deemed to have been made by the Seller with respect
to each Substitute Mortgage Loan as of the date of acceptance of such Mortgage
Loan by the Trustee. The Master Servicer shall amend the Mortgage Loan Schedule
to reflect such substitution and shall provide a copy of such amended Mortgage
Loan Schedule to the Trustee, Radian and the Rating Agencies.
Section 2.05 Issuance of Certificates.
(a) The Trustee acknowledges the assignment to it of the Mortgage Loans
and the other assets comprising the Trust Fund and, concurrently therewith, has
signed, and countersigned and delivered to the Depositor, in exchange therefor,
Certificates in such authorized denominations representing such Fractional
Undivided Interests as the Depositor has requested. The Trustee agrees that it
will hold the Mortgage Loans and such other assets as may from time to time be
delivered to it segregated on the books of the Trustee in trust for the benefit
of the Certificateholders.
(b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests, and the other assets of REMIC II for the
benefit of the holders of the REMIC II Interests. The Trustee acknowledges
receipt of the REMIC I Regular Interests (which are uncertificated) and the
other assets of REMIC II and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the REMIC II
Interests.
(c) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests, and the other
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assets of REMIC III for the benefit of the holders of the REMIC III
Certificates. The Trustee acknowledges receipt of the REMIC II Regular Interests
(which are uncertificated) and the other assets of REMIC III and declares that
it holds and will hold the same in trust for the exclusive use and benefit of
the holders of the REMIC III Certificates.
Section 2.06 Representations and Warranties Concerning the Depositor.
The Depositor hereby represents and warrants to the Trustee, the Master
Servicer and the Securities Administrator as follows:
(i) the Depositor (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
(b) is qualified and in good standing as a foreign corporation to do
business in each jurisdiction where such qualification is necessary,
except where the failure so to qualify would not reasonably be expected to
have a material adverse effect on the Depositor's business as presently
conducted or on the Depositor's ability to enter into this Agreement and
to consummate the transactions contemplated hereby;
(ii) the Depositor has full corporate power to own its property, to
carry on its business as presently conducted and to enter into and perform
its obligations under this Agreement;
(iii) the execution and delivery by the Depositor of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Depositor; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
the Depositor or its properties or the articles of incorporation or
by-laws of the Depositor, except those conflicts, breaches or defaults
which would not reasonably be expected to have a material adverse effect
on the Depositor's ability to enter into this Agreement and to consummate
the transactions contemplated hereby;
(iv) the execution, delivery and performance by the Depositor of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any state, federal or other governmental authority or agency, except those
consents, approvals, notices, registrations or other actions as have
already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a valid and binding obligation of the
Depositor enforceable against it in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar laws affecting
the enforcement of the rights of creditors generally);
(vi) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened against the Depositor, before or by
any court, administrative agency,
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arbitrator or governmental body (i) with respect to any of the
transactions contemplated by this Agreement or (ii) with respect to any
other matter which in the judgment of the Depositor will be determined
adversely to the Depositor and will if determined adversely to the
Depositor materially and adversely affect the Depositor's ability to enter
into this Agreement or perform its obligations under this Agreement; and
the Depositor is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by this Agreement; and
(vii) immediately prior to the transfer and assignment to the
Trustee, each Mortgage Note and each Mortgage were not subject to an
assignment or pledge, and the Depositor had good and marketable title to
and was the sole owner thereof and had full right to transfer and sell
such Mortgage Loan to the Trustee free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 Master Servicer.
The Master Servicer shall supervise, monitor and oversee the obligation of
the Servicers to service and administer their respective Mortgage Loans in
accordance with the terms of the applicable Servicing Agreements and shall have
full power and authority to do any and all things which it may deem necessary or
desirable in connection with such master servicing and administration. In
performing its obligations hereunder, the Master Servicer shall act in a manner
consistent with Accepted Master Servicing Practices. Furthermore, the Master
Servicer shall oversee and consult with each Servicer as necessary from
time-to-time to carry out the Master Servicer's obligations hereunder, shall
receive, review and evaluate all reports, information and other data provided to
the Master Servicer by each Servicer and shall cause each Servicer to perform
and observe the covenants, obligations and conditions to be performed or
observed by such Servicer under its applicable Servicing Agreement. The Master
Servicer shall independently and separately monitor each Servicer's servicing
activities with respect to each related Mortgage Loan, reconcile the results of
such monitoring with such information provided in the previous sentence on a
monthly basis and coordinate corrective adjustments to the Servicers' and Master
Servicer's records, and based on such reconciled and corrected information, the
Master Servicer shall provide such information to the Securities Administrator
as shall be necessary in order for it to prepare the statements specified in
Section 6.04, and prepare any other information and statements required to be
forwarded by the Master Servicer hereunder. The Master Servicer shall reconcile
the results of its Mortgage Loan monitoring with the actual remittances of the
Servicers pursuant to the applicable Servicing Agreements.
The Trustee shall furnish the Servicers and the Master Servicer with any
powers of attorney and other documents in form as provided to it necessary or
appropriate to enable the Servicers and the Master Servicer to service and
administer the related Mortgage Loans and REO Property.
The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, Radian, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; provided, however, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.
The Trustee shall execute and deliver to the related Servicer and the
Master Servicer any court pleadings, requests for trustee's sale or other
documents necessary or desirable to (i) the foreclosure or trustee's sale with
respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Security Instrument;
(iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any
other rights or remedies provided by the Mortgage Note or Security Instrument or
otherwise available at law or equity.
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Section 3.02 REMIC-Related Covenants.
For as long as each REMIC shall exist, the Trustee and the Securities
Administrator shall act in accordance herewith to assure continuing treatment of
such REMIC as a REMIC, and the Trustee and the Securities Administrator shall
comply with any directions of the Depositor, the related Servicer or the Master
Servicer to assure such continuing treatment. In particular, the Trustee shall
not (a) sell or permit the sale of all or any portion of the Mortgage Loans or
of any investment of deposits in an Account unless such sale is as a result of a
repurchase of the Mortgage Loans pursuant to this Agreement or the Trustee and
Radian has received a REMIC Opinion addressed to the Trustee and Radian prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreement or Section 2.04 of
this Agreement, as applicable, accept any contribution to any REMIC after the
Startup Day without receipt of a REMIC Opinion addressed to the Trustee and
Radian.
Section 3.03 Monitoring of Servicers.
(a) The Master Servicer shall be responsible for reporting to the Trustee
and the Depositor the compliance by each Servicer with its duties under the
related Servicing Agreement. In the review of each Servicer's activities, the
Master Servicer may rely upon an officer's certificate of the Servicer (or
similar document signed by an officer of the Servicer) with regard to such
Servicer's compliance with the terms of its Servicing Agreement. In the event
that the Master Servicer, in its judgment, determines that a Servicer should be
terminated in accordance with its Servicing Agreement, or that a notice should
be sent pursuant to such Servicing Agreement with respect to the occurrence of
an event that, unless cured, would constitute grounds for such termination, the
Master Servicer shall notify the Depositor, Radian and the Trustee thereof and
the Master Servicer shall issue such notice or take such other action as it
deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee, the
Certificateholders and Radian, shall enforce the obligations of each Servicer
under the related Servicing Agreement, and shall, in the event that a Servicer
fails to perform its obligations in accordance with the related Servicing
Agreement, subject to the preceding paragraph, terminate the rights and
obligations of such Servicer thereunder and act as servicer of the related
Mortgage Loans or to cause the Trustee to enter in to a new Servicing Agreement
with a successor Servicer selected by the Master Servicer; provided, however, it
is understood and acknowledged by the parties hereto that there will be a period
of transition (not to exceed 90 days) before the actual servicing functions can
be fully transferred to such successor Servicer. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of Servicing
Agreements and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Master Servicer, in
its good faith business judgment, would require were it the owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such enforcement at
its own expense, provided that the Master Servicer shall not be required to
prosecute or defend any legal action except to the extent that the Master
Servicer shall have received reasonable indemnity for its costs and expenses in
pursuing such action.
(c) To the extent that the costs and expenses of the Master Servicer
related to any termination of a Servicer, appointment of a successor Servicer or
the transfer and assumption of
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servicing by the Master Servicer with respect to any Servicing Agreement
(including, without limitation, (i) all legal costs and expenses and all due
diligence costs and expenses associated with an evaluation of the potential
termination of the Servicer as a result of an event of default by such Servicer
and (ii) all costs and expenses associated with the complete transfer of
servicing, including all servicing files and all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the successor servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the successor service to service the
Mortgage Loans in accordance with the related Servicing Agreement) are not fully
and timely reimbursed by the terminated Servicer, the Master Servicer shall be
entitled to reimbursement of such costs and expenses from the Master Servicer
Collection Account.
(d) The Master Servicer shall require each Servicer to comply with the
remittance requirements and other obligations set forth in the related Servicing
Agreement.
(e) If the Master Servicer acts as Servicer, it will not assume liability
for the representations and warranties of the Servicer, if any, that it
replaces.
Section 3.04 Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a blanket
fidelity bond and an errors and omissions insurance policy, affording coverage
with respect to all directors, officers, employees and other Persons acting on
such Master Servicer's behalf, and covering errors and omissions in the
performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
Section 3.05 Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and shall have
full power and authority, subject to the REMIC Provisions and the provisions of
Article X hereof, to do any and all things that it may deem necessary or
desirable in connection with the master servicing and administration of the
Mortgage Loans, including but not limited to the power and authority (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement and the related
Servicing Agreement, as applicable; provided, however, that the Master Servicer
shall not (and, consistent with its responsibilities under Section 3.03, shall
not permit any Servicer to) knowingly or intentionally take any action, or fail
to take (or fail to cause to be taken) any action reasonably within its control
and the scope of duties more specifically set forth herein, that, under the
REMIC Provisions, if taken or not taken, as the case may be, would cause any
REMIC to fail to qualify as a REMIC or result in the imposition of a tax upon
the Trust Fund (including but not limited to the tax on prohibited transactions
as defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the Code) unless the Master Servicer and
Radian have received an Opinion of Counsel (but not at the expense of the Master
Servicer)
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to the effect that the contemplated action would not cause any REMIC to fail to
qualify as a REMIC or result in the imposition of a tax upon any REMIC. The
Trustee shall furnish the Master Servicer, upon written request from a Servicing
Officer, with any powers of attorney empowering the Master Servicer or any
Servicer to execute and deliver instruments of satisfaction or cancellation, or
of partial or full release or discharge, and to foreclose upon or otherwise
liquidate Mortgaged Property, and to appeal, prosecute or defend in any court
action relating to the Mortgage Loans or the Mortgaged Property, in accordance
with the applicable Servicing Agreement and this Agreement, and the Trustee
shall execute and deliver such other documents, as the Master Servicer may
request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance
with Accepted Master Servicing Practices (and the Trustee shall have no
liability for misuse of any such powers of attorney by the Master Servicer or
any Servicer). If the Master Servicer or the Trustee has been advised that it is
likely that the laws of the state in which action is to be taken prohibit such
action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 9.11 hereof. In the
performance of its duties hereunder, the Master Servicer shall be an independent
contractor and shall not, except in those instances where it is taking action in
the name of the Trustee, be deemed to be the agent of the Trustee.
Section 3.06 Due-on-Sale Clauses; Assumption Agreements.
To the extent provided in the applicable Servicing Agreement, to the
extent Mortgage Loans contain enforceable due-on-sale clauses, the Master
Servicer shall cause the Servicers to enforce such clauses in accordance with
the applicable Servicing Agreement. If applicable law prohibits the enforcement
of a due-on-sale clause or such clause is otherwise not enforced in accordance
with the applicable Servicing Agreement, and, as a consequence, a Mortgage Loan
is assumed, the original Mortgagor may be released from liability in accordance
with the applicable Servicing Agreement.
Section 3.07 Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or
the receipt by any Servicer of a notification that payment in full has been
escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Servicer will, if required
under the applicable Servicing Agreement (or if the Servicer does not, the
Master Servicer may), promptly furnish to the Custodian, on behalf of the
Trustee, two copies of a certification substantially in the form of Exhibit D
hereto signed by a Servicing Officer or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the Protected Account maintained by the applicable Servicer
pursuant to Section 4.01 or by the applicable Servicer pursuant to its Servicing
Agreement have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the applicable Servicer the
related Mortgage File. Upon receipt of such certification and request, the
Custodian, on behalf of the Trustee, shall promptly release the related Mortgage
File to the applicable Servicer and the Trustee and Custodian shall have no
further responsibility with regard to such Mortgage File.
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Upon any such payment in full, each Servicer is authorized, to give, as agent
for the Trustee, as the mortgagee under the Mortgage that secured the Mortgage
Loan, an instrument of satisfaction (or assignment of mortgage without recourse)
regarding the Mortgaged Property subject to the Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of such payment, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Protected Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan and in accordance with the applicable Servicing Agreement,
the Trustee shall execute such documents as shall be prepared and furnished to
the Trustee by a Servicer or the Master Servicer (in form reasonably acceptable
to the Trustee) and as are necessary to the prosecution of any such proceedings.
The Custodian, on behalf of the Trustee, shall, upon the request of a Servicer
or the Master Servicer, and delivery to the Custodian, on behalf of the Trustee,
of two copies of a request for release signed by a Servicing Officer
substantially in the form of Exhibit D (or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer), release the related Mortgage File held in its possession or
control to the Servicer or the Master Servicer, as applicable. Such request for
release shall obligate the Servicer or the Master Servicer to return the
Mortgage File to the Custodian on behalf of the Trustee, when the need therefor
by the Servicer or the Master Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Mortgage File shall be
released by the Custodian, on behalf of the Trustee, to the Servicer or the
Master Servicer.
Section 3.08 Documents, Records and Funds in Possession of Master Servicer
To Be Held for Trustee.
(a) The Master Servicer shall transmit and each Servicer (to the extent
required by the related Servicing Agreement) shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer or such Servicer from time to time as are required by the terms
hereof, or in the case of the Servicers, the applicable Servicing Agreement, to
be delivered to the Trustee or Custodian. Any funds received by the Master
Servicer or by a Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer or by a Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit
of the Trustee and the Certificateholders subject to the Master Servicer's right
to retain or withdraw from the Master Servicer Collection Account the Master
Servicing Compensation and other amounts provided in this Agreement, and to the
right of each Servicer to retain its Servicing Fee and other amounts as provided
in the applicable Servicing Agreement. The Master Servicer shall, and (to the
extent provided in the applicable Servicing Agreement) shall cause each Servicer
to, provide access to information and documentation regarding the Mortgage Loans
to the Trustee, its agents and accountants at any time upon reasonable request
and during normal business hours, Radian and to Certificateholders that are
savings and loan associations, banks or insurance companies, the Office of
Thrift Supervision, the FDIC and the supervisory agents and examiners of the
Office of Trust Supervision and the FDIC or examiners of any other federal or
state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or
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other regulatory authority, such access to be afforded without charge but only
upon reasonable request in writing and during normal business hours at the
offices of the Master Servicer designated by it. In fulfilling such a request
the Master Servicer shall not be responsible for determining the sufficiency of
such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee, Radian and the Certificateholders and shall be and remain the sole
and exclusive property of the Trustee; provided, however, that the Master
Servicer and each Servicer shall be entitled to setoff against, and deduct from,
any such funds any amounts that are properly due and payable to the Master
Servicer or such Servicer under this Agreement or the applicable Servicing
Agreement.
Section 3.09 Standard Hazard Insurance and Flood Insurance Policies.
(a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicers under the related Servicing Agreements to maintain
or cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreements. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
applicable Servicing Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
(b) Pursuant to Section 4.01 and 4.02, any amounts collected by the
Servicers or the Master Servicer, or by any Servicer, under any insurance
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into the
Master Servicer Collection Account, subject to withdrawal pursuant to Section
4.02 and 4.03. Any cost incurred by the Master Servicer or any Servicer in
maintaining any such insurance if the Mortgagor defaults in its obligation to do
so shall be added to the amount owing under the Mortgage Loan where the terms of
the Mortgage Loan so permit; provided, however, that the addition of any such
cost shall not be taken into account for purposes of calculating the
distributions to be made to Certificateholders and shall be recoverable by the
Master Servicer or such Servicer pursuant to Section 4.02 and 4.03.
Section 3.10 Presentment of Claims and Collection of Proceeds.
The Master Servicer shall (to the extent provided in the applicable
Servicing Agreement) cause the related Servicer to prepare and present on behalf
of the Trustee, Radian and the Certificateholders all claims under the Insurance
Policies and take such actions (including the negotiation, settlement,
compromise or enforcement of the insured's claim) as shall be necessary to
realize recovery under such policies. Any proceeds disbursed to the Master
Servicer (or disbursed to a Servicer and remitted to the Master Servicer) in
respect of such policies, bonds or contracts shall be promptly deposited in the
Master Servicer Collection Account upon receipt,
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except that any amounts realized that are to be applied to the repair or
restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).
Section 3.11 Maintenance of the Primary Mortgage Insurance Policies.
(a) The Master Servicer shall not take, or permit any Servicer (to the
extent such action is prohibited under the applicable Servicing Agreement) to
take, any action that would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the Master
Servicer or such Servicer, would have been covered thereunder. The Master
Servicer shall use its best reasonable efforts to cause each Servicer (to the
extent required under the related Servicing Agreement) to keep in force and
effect (to the extent that the Mortgage Loan requires the Mortgagor to maintain
such insurance), primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. The Master Servicer shall not, and shall not permit
any Servicer (to the extent required under the related Servicing Agreement) to,
cancel or refuse to renew any such Primary Mortgage Insurance Policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to present, or to cause each Servicer (to
the extent required under the related Servicing Agreement) to present, on behalf
of the Trustee, Radian and the Certificateholders, claims to the insurer under
any Primary Mortgage Insurance Policies and, in this regard, to take such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policies respecting defaulted Mortgage Loans. Pursuant to
Section 4.01 and 4.02, any amounts collected by the Master Servicer or any
Servicer under any Primary Mortgage Insurance Policies shall be deposited in the
Master Servicer Collection Account, subject to withdrawal pursuant to Sections
4.02 and 4.03.
Section 3.12 Trustee to Retain Possession of Certain Insurance Policies
and Documents.
The Trustee (or the Custodian, as directed by the Trustee), shall retain
possession and custody of the originals (to the extent available) of any Primary
Mortgage Insurance Policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
Custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or the Custodian, as directed by the
Trustee), upon the execution or receipt thereof the originals of any Primary
Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.
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Section 3.13 Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall cause each Servicer (to the extent required
under the related Servicing Agreement) to foreclose upon, repossess or otherwise
comparably convert the ownership of Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments, all
in accordance with the applicable Servicing Agreement.
Section 3.14 Compensation for the Master Servicer.
The Master Servicer will be entitled to all income and gain realized from
any investment of funds in the Distribution Account and the Master Servicer
Collection Account, pursuant to Article IV, for the performance of its
activities hereunder. Servicing compensation in the form of assumption fees, if
any, late payment charges, as collected, if any, or otherwise (but not including
any prepayment premium or penalty) shall be retained by the applicable Servicer
and shall not be deposited in the Protected Account. The Master Servicer shall
be required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement.
Section 3.15 REO Property.
(a) In the event the Trust Fund acquires ownership of any REO Property in
respect of any related Mortgage Loan, the deed or certificate of sale shall be
issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders and Radian. The Master Servicer shall, to the extent provided
in the applicable Servicing Agreement, cause the applicable Servicer to sell any
REO Property as expeditiously as possible and in accordance with the provisions
of this Agreement and the related Servicing Agreement, as applicable. Pursuant
to its efforts to sell such REO Property, the Master Servicer shall cause the
applicable Servicer to protect and conserve, such REO Property in the manner and
to the extent required by the applicable Servicing Agreement, in accordance with
the REMIC Provisions and in a manner that does not result in a tax on "net
income from foreclosure property" or cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall, to the extent required by the related
Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property in
the Protected Account.
(c) The Master Servicer and the applicable Servicer, upon the final
disposition of any REO Property, shall be entitled to reimbursement for any
related unreimbursed Monthly Advances and other unreimbursed advances as well as
any unpaid Servicing Fees from Liquidation Proceeds received in connection with
the final disposition of such REO Property; provided, that any such unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.
(d) To the extent provided in the related Servicing Agreement, the
Liquidation Proceeds from the final disposition of the REO Property, net of any
payment to the Master
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Servicer and the applicable Servicer as provided above shall be deposited in the
Protected Account on or prior to the Determination Date in the month following
receipt thereof and be remitted by wire transfer in immediately available funds
to the Master Servicer for deposit into the related Master Servicer Collection
Account on the next succeeding Servicer Remittance Date.
Section 3.16 Annual Officer's Certificate as to Compliance.
(a) The Master Servicer shall deliver to the Trustee, Radian and the
Rating Agencies on or before August 1 of each year, commencing on August 1,
2005, an Officer's Certificate, certifying that with respect to the period
ending December 31 of the prior year: (i) such Servicing Officer has reviewed
the activities of such Master Servicer during the preceding calendar year or
portion thereof and its performance under this Agreement, (ii) to the best of
such Servicing Officer's knowledge, based on such review, such Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof, (iii) nothing has come to the attention of such
Servicing Officer to lead such Servicing Officer to believe that any Servicer
has failed to perform any of its duties, responsibilities and obligations under
its Servicing Agreement in all material respects throughout such year, or, if
there has been a material default in the performance or fulfillment of any such
duties, responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof.
(b) Copies of such statements shall be provided to any Certificateholder
upon request, by the Master Servicer or by the Trustee at the Master Servicer's
expense if the Master Servicer failed to provide such copies (unless (i) the
Master Servicer shall have failed to provide the Trustee with such statement or
(ii) the Trustee shall be unaware of the Master Servicer's failure to provide
such statement).
Section 3.17 Annual Independent Accountant's Servicing Report.
If the Master Servicer has, during the course of any fiscal year, directly
serviced any of the Mortgage Loans, then the Master Servicer at its expense
shall cause a nationally recognized firm of independent certified public
accountants to furnish a statement to the Trustee, Radian, the Rating Agencies
and the Depositor on or before March 1 of each year, commencing on March 1, 2005
to the effect that, with respect to the most recently ended fiscal year, such
firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
▇▇▇▇▇▇▇ Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by ▇▇▇▇▇▇▇ Mac
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requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies. If such report discloses exceptions that are material, the Master
Servicer shall advise the Trustee whether such exceptions have been or are
susceptible of cure, and will take prompt action to do so.
Section 3.18 Reports Filed with Securities and Exchange Commission.
Within 15 days after each Distribution Date, the Securities Administrator
shall, in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System ("▇▇▇▇▇"), a Form 8-K (or other
comparable form containing the comparable information or other information
mutually agreed upon) with a copy of the statement to the Certificateholders for
such Distribution Date as an exhibit thereto. Prior to January 30 in any year,
the Securities Administrator shall, in accordance with industry standards and
only if instructed by the Depositor, file a Form 15 Suspension Notice with
respect to the Trust Fund, if applicable. Prior to (i) March 15, 2005 and (ii)
unless and until a Form 15 Suspension Notice shall have been filed, prior to
March 15 of each year thereafter, the Master Servicer shall provide the
Securities Administrator with a Master Servicer Certification, together with a
copy of the annual independent accountant's servicing report of each Servicer
(or, in the case of U.S. Central, its sub-servicers) and annual statement of
compliance of each Servicer (and, in the case of U.S. Central, its
sub-servicers), in each case, required to be delivered pursuant to the related
Servicing Agreement, and, if applicable, the annual independent accountant's
servicing report and annual statement of compliance to be delivered by the
Master Servicer pursuant to Sections 3.16 and 3.17. Prior to (i) March 31, 2005,
or such earlier filing date as may be required by the Commission, and (ii)
unless and until a Form 15 Suspension Notice shall have been filed, March 31 of
each year thereafter, or such earlier filing date as may be required by the
Commission, the Securities Administrator shall file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust. Such Form 10-K
shall include the Master Servicer Certification and other documentation provided
by the Master Servicer pursuant to the second preceding sentence. The Depositor
hereby grants to the Securities Administrator a limited power of attorney to
execute and file each such document on behalf of the Depositor. Such power of
attorney shall continue until either the earlier of (i) receipt by the
Securities Administrator from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The Depositor agrees to
promptly furnish to the Securities Administrator, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement and the Mortgage Loans as the Securities
Administrator reasonably deems appropriate to prepare and file all necessary
reports with the Commission. The Securities Administrator shall have no
responsibility to file any items other than those specified in this Section
3.18; provided, however, the Securities Administrator will cooperate with the
Depositor in connection with any additional filings with respect to the Trust
Fund as the Depositor deems necessary under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Fees and expenses incurred by the Securities
Administrator in connection with this Section 3.18 shall not be reimbursable
from the Trust Fund.
Section 3.19 The Company.
On the Closing Date, the Company will receive from the Depositor a payment
of $5,000.
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Section 3.20 UCC.
The Depositor shall inform the Trustee in writing of any Uniform
Commercial Code financing statements that were filed on the Closing Date in
connection with the Trust with stamped recorded copies of such financing
statements to be delivered to the Trustee promptly upon receipt by the
Depositor. The Trustee agrees to monitor and notify the Depositor if any
continuation statements for such Uniform Commercial Code financing statements
need to be filed. If directed by the Depositor in writing, the Trustee will file
any such continuation statements solely at the expense of the Depositor. The
Depositor shall file any financing statements or amendments thereto required by
any change in the Uniform Commercial Code.
Section 3.21 Optional Purchase of Defaulted Mortgage Loans.
(a) With respect to any Mortgage Loan which as of the first day of a
Calendar Quarter is delinquent in payment by 90 days or more or is an REO
Property, the Company shall have the right to purchase such Mortgage Loan from
the Trust at a price equal to the Repurchase Price; provided however (i) that
such Mortgage Loan is still 90 days or more delinquent or is an REO Property as
of the date of such purchase and (ii) this purchase option, if not theretofore
exercised, shall terminate on the date prior to the last day of the related
Calendar Quarter. This purchase option, if not exercised, shall not be
thereafter reinstated unless the delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or more delinquent or becomes an REO Property,
in which case the option shall again become exercisable as of the first day of
the related Calendar Quarter.
(b) If at any time the Company remits to the Master Servicer a payment for
deposit in the Master Servicer Collection Account covering the amount of the
Repurchase Price for such a Mortgage Loan, and the Company provides to the
Trustee a certification signed by a Servicing Officer stating that the amount of
such payment has been deposited in the Master Servicer Collection Account, then
the Trustee shall execute the assignment of such Mortgage Loan to the Company at
the request of the Company without recourse, representation or warranty and the
Company shall succeed to all of the Trustee's right, title and interest in and
to such Mortgage Loan, and all security and documents relative thereto. Such
assignment shall be an assignment outright and not for security. The Company
will thereupon own such Mortgage, and all such security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.
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ARTICLE IV
Accounts
Section 4.01 Protected Accounts.
(a) The Master Servicer shall enforce the obligation of each Servicer to
establish and maintain a Protected Account in accordance with the applicable
Servicing Agreement, with records to be kept with respect thereto on a Mortgage
Loan by Mortgage Loan basis, into which accounts shall be deposited within 48
hours (or as of such other time specified in the related Servicing Agreement) of
receipt, all collections of principal and interest on any Mortgage Loan and any
REO Property received by a Servicer, including Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, and advances made from the Servicer's own funds
(less servicing compensation as permitted by the applicable Servicing Agreement
in the case of any Servicer) and all other amounts to be deposited in the
Protected Account. The Servicer is hereby authorized to make withdrawals from
and deposits to the related Protected Account for purposes required or permitted
by this Agreement. To the extent provided in the related Servicing Agreement,
the Protected Account shall be held by a Designated Depository Institution and
segregated on the books of such institution in the name of the Trustee for the
benefit of Certificateholders and Radian.
(b) To the extent provided in the related Servicing Agreement, amounts on
deposit in a Protected Account may be invested in Permitted Investments in the
name of the Trustee for the benefit of Certificateholders and, except as
provided in the preceding paragraph, not commingled with any other funds. Such
Permitted Investments shall mature, or shall be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Master Servicer Collection Account, and shall be
held until required for such deposit. The income earned from Permitted
Investments made pursuant to this Section 4.01 shall be paid to the related
Servicer under the applicable Servicing Agreement, and the risk of loss of
moneys required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the related Servicer. The
related Servicer (to the extent provided in the Servicing Agreement) shall
deposit the amount of any such loss in the Protected Account within two Business
Days of receipt of notification of such loss but not later than the second
Business Day prior to the Distribution Date on which the moneys so invested are
required to be distributed to the Certificateholders.
(c) To the extent provided in the related Servicing Agreement and subject
to this Article IV, on or before each Servicer Remittance Date, the related
Servicer shall withdraw or shall cause to be withdrawn from its Protected
Accounts and shall immediately deposit or cause to be deposited in the Master
Servicer Collection Account amounts representing the following collections and
payments (other than with respect to principal of or interest on the Mortgage
Loans due on or before the Cut-off Date):
(i) Scheduled Payments on the Mortgage Loans received or any related
portion thereof advanced by such Servicer pursuant to its Servicing
Agreement which were due on or before the related Due Date, net of the
amount thereof comprising its Servicing Fee or any fees with respect to
any lender-paid primary mortgage insurance policy;
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(ii) Full Principal Prepayments and any Liquidation Proceeds
received by such Servicer with respect to the Mortgage Loans in the
related Prepayment Period, with interest to the date of prepayment or
liquidation, net of the amount thereof comprising its Servicing Fee;
(iii) Partial Principal Prepayments received by such Servicer for
the Mortgage Loans in the related Prepayment Period; and
(iv) Any amount to be used as a Monthly Advance.
(d) Withdrawals may be made from an Account only to make remittances as
provided in Section 4.01(c), 4.02 and 4.03; to reimburse the Master Servicer or
a Servicer for Monthly Advances which have been recovered by subsequent
collections from the related Mortgagor; to remove amounts deposited in error; to
remove fees, charges or other such amounts deposited on a temporary basis; or to
clear and terminate the account at the termination of this Agreement in
accordance with Section 10.01. As provided in Sections 4.01(a) and 4.02(b)
certain amounts otherwise due to the Servicers may be retained by them and need
not be deposited in the Master Servicer Collection Account.
Section 4.02 Master Servicer Collection Account.
(a) The Master Servicer shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders and Radian, the Master
Servicer Collection Account as a segregated trust account or accounts. The
Master Servicer Collection Account shall be an Eligible Account. The Master
Servicer will deposit in the Master Servicer Collection Account as identified by
the Master Servicer and as received by the Master Servicer, the following
amounts:
(i) Any amounts withdrawn from a Protected Account;
(ii) Any Monthly Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Net Liquidation Proceeds received by
or on behalf of the Master Servicer or which were not deposited in a
Protected Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by the Seller pursuant to the Mortgage Loan Purchase Agreement
or Sections 2.02 or 2.03 hereof, any amounts which are to be treated
pursuant to Section 2.04 of this Agreement as the payment of a Repurchase
Price in connection with the tender of a Substitute Mortgage Loan by the
Seller, the Repurchase Price with respect to any Mortgage Loans purchased
by the Company pursuant to Section 3.21, and all proceeds of any Mortgage
Loans or property acquired with respect thereto repurchased by the
Depositor or its designee pursuant to Section 10.01;
(v) Any amounts required to be deposited with respect to losses on
investments of deposits in an Account; and
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(vi) Any other amounts received by or on behalf of the Master
Servicer and required to be deposited in the Master Servicer Collection
Account pursuant to this Agreement.
(b) All amounts deposited to the Master Servicer Collection Account shall
be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders and Radian in accordance with the terms and
provisions of this Agreement. The requirements for crediting the Master Servicer
Collection Account or the Distribution Account shall be exclusive, it being
understood and agreed that, without limiting the generality of the foregoing,
payments in the nature of (i) prepayment or late payment charges or assumption,
tax service, statement account or payoff, substitution, satisfaction, release
and other like fees and charges and (ii) the items enumerated in Subsections
4.05(a)(i), (ii), (iii), (iv), (vi), (vii), (viii), (ix), (x), (xi) and (xii),
need not be credited by the Master Servicer or the related Servicer to the
Distribution Account or the Master Servicer Collection Account, as applicable.
In the event that the Master Servicer shall deposit or cause to be deposited to
the Distribution Account any amount not required to be credited thereto, the
Trustee, upon receipt of a written request therefor signed by a Servicing
Officer of the Master Servicer, shall promptly transfer such amount to the
Master Servicer, any provision herein to the contrary notwithstanding.
(c) The amount at any time credited to the Master Servicer Collection
Account may be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments (which may be
managed or advised by the Master Servicer or its affiliate) as directed by
Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings on
amounts on deposit in the Master Servicer Account from time to time shall be for
the account of the Master Servicer. The Master Servicer from time to time shall
be permitted to withdraw or receive distribution of any and all investment
earnings from the Master Servicer Collection Account. The risk of loss of moneys
required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the Master Servicer. The Master
Servicer shall deposit the amount of any such loss in the Master Servicer
Collection Account within two Business Days of receipt of notification of such
loss but not later than the second Business Day prior to the Distribution Date
on which the moneys so invested are required to be distributed to the
Certificateholders.
Section 4.03 Permitted Withdrawals and Transfers from the Master Servicer
Collection Account.
(a) The Master Servicer will, from time to time on demand of a Servicer or
the Securities Administrator, make or cause to be made such withdrawals or
transfers from the Master Servicer Collection Account as the Master Servicer has
designated for such transfer or withdrawal pursuant to this Agreement and the
related Servicing Agreement. The Master Servicer may clear and terminate the
Master Servicer Collection Account pursuant to Section 10.01 and remove amounts
from time to time deposited in error.
(b) On an ongoing basis, the Master Servicer shall withdraw from the
Master Servicer Collection Account (i) any expenses, costs and liabilities
recoverable by the Trustee, the Master Servicer or the Securities Administrator
or the Custodian pursuant to Sections 3.03, 7.04 and
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9.05 and (ii) any amounts payable to the Master Servicer as set forth in Section
3.14; provided however, that the Master Servicer shall be obligated to pay from
its own funds any amounts which it is required to pay under Section 7.03(a).
(c) In addition, on or before each Distribution Account Deposit Date, the
Master Servicer shall deposit in the Distribution Account (or remit to the
Trustee for deposit therein) any Monthly Advances required to be made by the
Master Servicer with respect to the Mortgage Loans.
(d) No later than 3:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all Available Funds on deposit
in the Master Servicer Collection Account with respect to the related
Distribution Date to the Trustee for deposit in the Distribution Account.
Section 4.04 Distribution Account.
(a) The Trustee shall establish and maintain in the name of the Trustee,
for the benefit of the Certificateholders and Radian, the Distribution Account
as a segregated trust account or accounts.
(b) All amounts deposited to the Distribution Account shall be held by the
Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders and Radian in accordance with the terms and provisions of
this Agreement.
(c) The Distribution Account shall constitute a trust account of the Trust
Fund segregated on the books of the Trustee and held by the Trustee in trust in
its Corporate Trust Office, and the Distribution Account and the funds deposited
therein shall not be subject to, and shall be protected from, all claims, liens,
and encumbrances of any creditors or depositors of the Trustee or the Master
Servicer (whether made directly, or indirectly through a liquidator or receiver
of the Trustee or the Master Servicer). The Distribution Account shall be an
Eligible Account. The amount at any time credited to the Distribution Account
shall be (i) held in cash and fully insured by the FDIC to the maximum coverage
provided thereby or (ii) invested in the name of the Trustee, in such Permitted
Investments (which may be managed or advised by the Master Servicer or its
affiliate) as may be selected by the Master Servicer or deposited in demand
deposits with such depository institutions as may be selected by the Master
Servicer, provided that time deposits of such depository institutions would be a
Permitted Investment. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Date if the obligor for such Permitted Investment is the
Trustee or, if such obligor is any other Person, the Business Day preceding such
Distribution Date. All investment earnings on amounts on deposit in the
Distribution Account or benefit from funds uninvested therein from time to time
shall be for the account of the Master Servicer. The Master Servicer shall be
permitted to withdraw or receive distribution of any and all investment earnings
from the Distribution Account on each Distribution Date. If there is any loss on
a Permitted Investment or demand deposit, the Master Servicer shall remit the
amount of the loss to the Trustee who shall deposit such amount in the
Distribution Account. With respect to the Distribution Account and the funds
deposited therein, the Master Servicer shall take such action as may be
necessary to ensure that the Certificateholders shall be entitled to the
priorities
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afforded to such a trust account (in addition to a claim against the estate of
the Trustee) as provided by 12 U.S.C. ss. 92a(e), and applicable regulations
pursuant thereto, if applicable, or any applicable comparable state statute
applicable to state chartered banking corporations.
Section 4.05 Permitted Withdrawals and Transfers from the Distribution
Account.
(a) The Trustee will, from time to time on demand of the Master Servicer
or the Securities Administrator, make or cause to be made such withdrawals or
transfers from the Distribution Account as the Master Servicer has designated
for such transfer or withdrawal pursuant to this Agreement and the Servicing
Agreements or as the Securities Administrator has instructed hereunder for the
following purposes (limited in the case of amounts due the Master Servicer to
those not withdrawn from the Master Servicer Collection Account in accordance
with the terms of this Agreement):
(i) to reimburse the Master Servicer or any Servicer for any Monthly
Advance of its own funds, the right of the Master Servicer or a Servicer
to reimbursement pursuant to this subclause (i) being limited to amounts
received on a particular Mortgage Loan (including, for this purpose, the
Repurchase Price therefor, Insurance Proceeds and Liquidation Proceeds)
which represent late payments or recoveries of the principal of or
interest on such Mortgage Loan respecting which such Monthly Advance was
made;
(ii) to reimburse the Master Servicer or any Servicer from Insurance
Proceeds or Liquidation Proceeds relating to a particular Mortgage Loan
for amounts expended by the Master Servicer or such Servicer in good faith
in connection with the restoration of the related Mortgaged Property which
was damaged by an Uninsured Cause or in connection with the liquidation of
such Mortgage Loan;
(iii) to reimburse the Master Servicer or any Servicer from
Insurance Proceeds relating to a particular Mortgage Loan for insured
expenses incurred with respect to such Mortgage Loan and to reimburse the
Master Servicer or such Servicer from Liquidation Proceeds from a
particular Mortgage Loan for Liquidation Expenses incurred with respect to
such Mortgage Loan; provided that the Master Servicer shall not be
entitled to reimbursement for Liquidation Expenses with respect to a
Mortgage Loan to the extent that (i) any amounts with respect to such
Mortgage Loan were paid as Excess Liquidation Proceeds pursuant to clause
(xi) of this Subsection 4.03 (a) to the Master Servicer; and (ii) such
Liquidation Expenses were not included in the computation of such Excess
Liquidation Proceeds;
(iv) to reimburse the Master Servicer or any Servicer for advances
of funds (other than Monthly Advances) made with respect to the Mortgage
Loans, and the right to reimbursement pursuant to this subclause being
limited to amounts received on the related Mortgage Loan (including, for
this purpose, the Repurchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late recoveries of the payments for
which such advances were made;
(v) to reimburse the Master Servicer or any Servicer for any Monthly
Advance or advance, after a Realized Loss has been allocated with respect
to the related
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Mortgage Loan if the Monthly Advance or advance has not been reimbursed
pursuant to clauses (i) and (iv);
(vi) to pay the Master Servicer as set forth in Section 3.14;
(vii) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 3.03,
7.04(c) and (d);
(viii) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not retained
by the related Servicer;
(ix) to reimburse or pay any Servicer any such amounts as are due
thereto under the applicable Servicing Agreement and have not been
retained by or paid to the Servicer, to the extent provided in the related
Servicing Agreement;
(x) to reimburse the Trustee, the Securities Administrator or the
Custodian for expenses, costs and liabilities incurred by or reimbursable
to it pursuant to this Agreement;
(xi) to remove amounts deposited in error; and
(xii) to clear and terminate the Distribution Account pursuant to
Section 10.01.
(b) The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(iv) or with respect to any such amounts which would have been covered by such
subclauses had the amounts not been retained by the Master Servicer without
being deposited in the Distribution Account under Section 4.02(b).
(c) On each Distribution Date, the Trustee shall distribute the Available
Funds to the extent on deposit in the Distribution Account to the Holders of the
Certificates and Radian in accordance with distribution instructions provided to
it by the Securities Administrator no later than two Business Days prior to such
Distribution Date and determined by the Securities Administrator in accordance
with Section 6.01.
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ARTICLE V
Certificates
Section 5.01 Certificates.
(a) The Depository, the Depositor and the Trustee have entered into a
Depository Agreement dated as of the Closing Date (the "Depository Agreement").
Except for the Residual Certificates, the Private Certificates and the
Individual Certificates and as provided in Subsection 5.01(b), the Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to a successor to the Depository; (ii)
ownership and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iii) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (iv) the Trustee shall deal with the
Depository as representative of such Certificate Owners of the respective Class
of Certificates for purposes of exercising the rights of Certificateholders
under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (v) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants.
The Residual Certificates and the Private Certificates are initially
Physical Certificates. If at any time the Holders of all of the Certificates of
one or more such Classes request that the Trustee cause such Class to become
Global Certificates, the Trustee and the Depositor will take such action as may
be reasonably required to cause the Depository to accept such Class or Classes
for trading if it may legally be so traded.
All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor within 30 days or (ii) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions.
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(c) (i) REMIC I will be evidenced by (x) the REMIC I Regular Interests
(designated below), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in REMIC I and have the principal
balances and accrue interest at the Pass-Through Rates equal to those set forth
in this Section 5.01(c)(i) and (y) the Class R-I Certificates, which is hereby
designated as the single "residual interest" in REMIC I.
REMIC I INTEREST INITIAL BALANCE PASS-THROUGH RATE RELATED SUBGROUP
---------------- --------------- ----------------- ----------------
I-1-A $ 2,218.00 5.25% Subgroup I-1
I-1-ZZZ $ 123,174,572.00 5.25% Subgroup I-1
I-2-A $ 236.97 8.00% Subgroup I-2
I-2-ZZZ $ 13,159,936.03 8.00% Subgroup I-2
I-PO $ 67,955.00 0.00% Subgroup I-1
II-1-A $ 1,687.64 4.50% Subgroup II-1
II-1-ZZZ $ 93,219,997.36 4.50% Subgroup II-1
II-2-A $ 890.07 5.00% Subgroup II-2
II-2-ZZZ $ 49,164,440.93 5.00% Subgroup II-2
II-3-A $ 266.07 5.25% Subgroup II-3
II-3-ZZZ $ 14,696,836.93 5.25% Subgroup II-3
II-PO $ 858,661.00 0.00% Subgroup II-1
II-X-1 (1) (2) Subgroup II-3
R-I $ 50.00 5.25% Subgroup I-1
(1) REMIC II Regular Interest II-X-1 will have a Notional Amount equal to the
aggregate Scheduled Principal Balance of the Group II Mortgage Loans with a Net
Mortgage Rate greater than 5.25%.
(2) REMIC I Regular Interest II-X-1 will accrue interest at a per annum rate
equal to the excess, if any, of (a) the weighted average Net Mortgage Rate on
each Group II Mortgage Loans with a Net Mortgage Rate greater than 5.2500% over
(b) 5.2500% per annum.
Distributions of principal shall be deemed to be made to the REMIC I
Regular Interests, in each case from the related Subgroup, first, to each REMIC
I Regular Interest ending with the designation "A," so that the Uncertificated
Principal Balance of each such REMIC I Regular Interest is equal to 0.1% of the
excess of (x) the aggregate Scheduled Principal Balance of the Mortgage Loans in
the related Subgroup over (y) the Current Principal Amount of the Senior
Certificate in such Subgroup (except that if any such excess is a larger number
than in the preceding distribution period, the least amount of principal shall
be distributed to such REMIC I Regular Interests such that the REMIC I
Subordinated Balance Ratio is maintained); and second, any remaining principal
in each Subgroup to the related REMIC I Regular Interest ending with the
designation ZZZ (provided that a portion of the remaining principal equal to the
Class PO Certificate Principal Distribution Amount attributable to the Discount
Mortgage Loans will be distributed to REMIC I Regular Interest PO). Realized
Losses from each Subgroup shall be applied after all distributions have been
made on each Distribution Date, first, to the related REMIC I Regular Interest
ending with the designation "A," so that the Uncertificated Principal Balance of
each such REMIC I Regular Interest is equal to 0.1% of the excess of (x) the
aggregate Scheduled Principal Balance of the Mortgage Loans in the related
Subgroup over (y) the Current Principal Amount of the Senior Certificate in the
related Subgroup (except that if any
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such excess is a larger number than in the preceding distribution period, the
least amount of Realized Losses shall be applied to such REMIC I Regular
Interests such that the REMIC I Subordinated Balance Ratio is maintained); and
second, any remaining Realized Losses from each Subgroup shall be allocated to
the related REMIC I Regular Interests ending with the designation ZZZ (except
that if a Realized Loss is recognized with respect to a Discount Mortgage Loan,
the applicable portion of such Realized Loss will be allocated to REMIC I
Regular Interest PO).
(ii) REMIC II will be evidenced by (x) the REMIC II Regular
Interests (designated below), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in
REMIC II and have the principal balances and accrue interest at the
Pass-Through Rates equal to those set forth in this Section 5.01(c)(ii)
and (y) the Class R-II Certificate, which is hereby designated as the
single "residual interest" in REMIC II.
REMIC II INTEREST INITIAL BALANCE PASS-THROUGH RATE RELATED GROUP
----------------- --------------- ----------------- -------------
I-A-1 $ 34,500,000.00 5.2500% Group I
I-A-2 $ 56,390,000.00 5.2500% Group I
I-A-3 $ 395,000.00 5.2500% Group I
I-A-4 $ 7,577,692.00 5.2500% Group I
I-A-5 $ 10,000,000.00 5.2500% Group I
I-A-6 $ 12,096,000.00 5.2500% Group I
I-A-7 $ 12,923,202.00 8.0000% Group I
I-PO $ 67,955.00 0.0000% Group I
II-A-1 $ 91,534,041.00 4.5000% Group II
II-A-2 $ 48,275,263.00 5.0000% Group II
II-A-3 $ 14,431,033.00 5.2500% Group II
II-PO $ 858,661.00 0.0000% Group II
II-X-1 $ 10,727,607.00 (2) Group II
R-I $ 50.00 5.2500% Group I
R-II $ 50.00 5.2500% Group I
R-III $ 50.00 5.2500% Group I
B-1 $ 2,943,000.00 (2) N/A
B-2 $ 884,000.00 (2) N/A
B-3 $ 588,000.00 (2) N/A
B-4 $ 295,000.00 (2) N/A
B-5 $ 441,000.00 (2) N/A
B-6 $ 147,747.00 (2) N/A
(1) REMIC II Regular Interest II-X-1 will not have a Pass-Through Rate, but will
be entitled to 100% of amounts distributed on REMIC I Regular Interest II-X-1.
(2) The Pass-Through Rate on the Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates will be a per annum rate equal to the
weighted average of the Pass-Through Rates on REMIC I Regular Interests I-1-A,
I-2-A, II-1-A, II-2-A and II-3-A, weighted on the basis of the Uncertificated
Principal Balance of each such REMIC I Regular Interest.
Interest shall be payable to the REMIC II Regular Interests at the
applicable Pass-Through Rate on the related Uncertificated Principal Balance.
Principal shall be payable to, and
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shortfalls, losses and prepayments are allocable to, the REMIC II Regular
Interests as such amounts are payable and allocable to the Corresponding
Certificates.
(iii) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:
DESIGNATION INITIAL PRINCIPAL AMOUNT PASS-THROUGH RATE
----------- ------------------------ -----------------
I-A-1 $34,500,000 5.2500%
I-A-2 $56,390,000 5.2500%
I-A-3 $395,000 5.2500%
I-A-4 $7,577,692 5.2500%
I-A-5 $10,000,000 5.2500%
I-A-6 $12,096,000 5.2500%
I-A-7 $12,923,202 (1)
I-A-8 (2) (3)
I-PO $67,955 0.0000%
II-A-1 $91,534,041 4.5000%
II-A-2 $48,275,263 5.0000%
II-A-3 $14,431,033 5.2500%
II-PO $858,661 0.0000%
II-X-1 (4) 0.2949%
R-I $50 5.2500%
R-II $50 5.2500%
R-III $50 5.2500%
B-1 $2,943,000 (7)
B-2 $884,000 (7)
B-3 $588,000 (7)
B-4 $295,000 (7)
B-5 $441,000 (7)
B-6 $147,747 (7)
(1) The Class I-A-7 Certificates will bear interest at a Pass-Through
Rate equal to approximately 1.850% per annum for the first
Distribution Date, and thereafter at an adjustable Pass-Through Rate
equal to 0.500% per annum plus LIBOR, subject to a minimum rate of
0.500% per annum and a maximum rate equal to 8.0000% per annum.
(2) The Class I-A-8 Certificates do not have an initial Current
Principal Amount. The Class I-A-8 Certificates have an initial
Notional Amount of $12,923,202. For federal income tax purposes, the
Class I-A-8 Certificates will have a Notional Amount equal to REMIC
II Regular Interest I-A-7.
(3) The Class I-A-8 Certificates will bear interest at a Pass-Through
Rate equal to approximately 6.150% per annum for the first
Distribution Date, and thereafter at an adjustable Pass-Through Rate
equal to 7.500% per annum minus LIBOR, subject to a minimum rate of
0.0000% per annum and a maximum rate equal to 7.500% per annum.
(4) The Class II-X-1 Certificates do not have an initial Current
Principal Amount. The Class I-X-1 Certificates have an initial
Notional Amount equal to the aggregate Scheduled Principal Balance
of the Group II Mortgage Loans with a Net Mortgage Rate greater than
5.2500% per annum. The initial Notional Amount of the Class II-X-1
Certificates is equal to $10,727,607. For federal income tax
purposes, the Class II-X-1 Certificates will not have a Notional
Amount, but will be entitled to 100% of amounts distributed on REMIC
I Regular Interest II-X-1.
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(5) The Class II-X-1 Certificates will bear interest each Distribution
Date on their notional amount at a variable pass-through rate equal
to the excess, if any, of (a) the weighted average Net Mortgage
Rates on the Group II Mortgage Loans with a Net Mortgage Rate
greater than 5.2500% over (b) 5.2500% per annum. The pass-through
rate for the initial interest accrual period is approximately
0.2949% per annum. For federal income tax purposes, the Class II-X-1
Certificates will not have a Pass-Through Rate, but will be entitled
to 100% of amounts distributed on REMIC I Regular Interest II-X-1.
(6) The Class B Certificates will each will bear interest at a variable
pass-through rate equal to the weighted average of 5.2500%, 8.0000%
, 4.5000%, 5.0000% and 5.2500% per annum, weighted on the basis of
the aggregate Scheduled Principal Balance of the Mortgage Loans
included in Subgroup I-1, Subgroup I-2, Subgroup II-1, Subgroup II-2
and Subgroup II-3, respectively (other than the PO Percentage of the
Scheduled Principal Balance of such Mortgage Loans), minus the
aggregate Current Principal Amount of the Subgroup I-1, Subgroup
I-2, Subgroup II-1, Subgroup II-2 and Subgroup II-3 Certificates,
respectively. The pass-through rate for the initial interest accrual
period is approximately 5.0921% per annum. For federal income tax
purposes, however, the Class B Certificates will bear interest at a
variable Pass-Through Rate equal to the weighted average of the
Pass-Through Rates on REMIC II Regular Interests ▇-▇, ▇-▇, ▇-▇, ▇-▇,
B-5 and B-6, weighted on the basis of the Uncertificated Principal
Balance of each such REMIC II Regular Interest immediately preceding
the related Distribution Date.
(d) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date in the Trust Fund has been
designated as the "latest possible maturity date" for the REMIC I Regular
Interests, REMIC II Regular Interests and the Certificates.
(e) With respect to each Distribution Date, each Class of Certificates
shall accrue interest during the related Interest Accrual Period. With respect
to each Distribution Date and each such Class of Certificates, interest shall be
calculated, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount (or Notional Amount in the case
of the Interest Only Certificates) of such Class applicable to such Distribution
Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibits ▇-▇, ▇-▇ and A-3. On original issuance, the Trustee shall sign,
countersign and shall deliver the Certificates at the direction of the
Depositor. Pending the preparation of definitive Certificates of any Class, the
Trustee may sign and countersign temporary Certificates that are printed,
lithographed or typewritten, in authorized denominations for Certificates of
such Class, substantially of the tenor of the definitive Certificates in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers or authorized signatories
executing such Certificates may determine, as evidenced by their execution of
such Certificates. If temporary Certificates are issued, the Depositor will
cause definitive Certificates to be prepared without unreasonable delay. After
the preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office of the Trustee, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall sign and countersign and deliver in exchange therefor a like
aggregate principal amount, in authorized denominations for such Class, of
definitive Certificates of the same Class.
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Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits as definitive Certificates.
(g) Each Class of Book-Entry Certificates will be registered as a single
Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of (i) in the
case of the Senior Certificates (other than the Class I-A-5 Certificates and
Residual Certificates), $1,000 and in each case increments of $1.00 in excess
thereof, (ii) in the case of the Class I-A-5 Certificates, $1,000 and increments
of $1,000 in excess thereof and (iii) in the case of the Offered Subordinate
Certificates, $25,000 and increments of $1.00 in excess thereof, except that one
Certificate of each such Class may be issued in a different amount so that the
sum of the denominations of all outstanding Certificates of such Class shall
equal the Current Principal Amount of such Class on the Closing Date. On the
Closing Date, the Trustee shall execute and countersign Physical Certificates
all in an aggregate principal amount that shall equal the Current Principal
Amount of such Class on the Closing Date. The Private Certificates shall be
issued in certificated fully-registered form in minimum dollar denominations of
$25,000 and integral multiples of $1.00 in excess thereof, except that one
Private Certificate of each Class may be issued in a different amount so that
the sum of the denominations of all outstanding Private Certificates of such
Class shall equal the Current Principal Amount of such Class on the Closing
Date. The Class R-I, Class R-II and Class R-III Certificate shall each be issued
in certificated fully-registered form, each, in the denomination of $50. Each
Class of Global Certificates, if any, shall be issued in fully registered form
in minimum dollar denominations of $50,000 and integral multiples of $1.00 in
excess thereof, except that one Certificate of each Class may be in a different
denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. On the Closing Date, the Trustee shall execute and
countersign (i) in the case of each Class of Offered Certificates, the
Certificate in the entire Current Principal Amount of the respective Class and
(ii) in the case of each Class of Private Certificates, Individual Certificates
all in an aggregate principal amount that shall equal the Current Principal
Amount of each such respective Class on the Closing Date. The Certificates
referred to in clauses (i) or (ii) and if at any time there are to be Global
Certificates, the Global Certificates shall be delivered by the Depositor to the
Depository or pursuant to the Depository's instructions, shall be delivered by
the Depositor on behalf of the Depository to and deposited with the DTC
Custodian. The Trustee shall sign the Certificates by facsimile or manual
signature and countersign them by manual signature on behalf of the Trustee by
one or more authorized signatories, each of whom shall be Responsible Officers
of the Trustee or its agent. A Certificate bearing the manual and facsimile
signatures of individuals who were the authorized signatories of the Trustee or
its agent at the time of issuance shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such positions prior to the
delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate the
manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.
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(i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a tax year that
is a calendar year and shall report income on an accrual basis.
(k) The Trustee on behalf of the Trust shall cause each REMIC to timely
elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of any
Trust established hereby shall be resolved in a manner that preserves the
validity of such elections.
(l) The following legend shall be placed on the Residual Certificates,
whether upon original issuance or upon issuance of any other Certificate of any
such Class in exchange therefor or upon transfer thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR
ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE WITH AN
OPINION OF COUNSEL ADDRESSED TO THE DEPOSITOR, TRUSTEE, MASTER SERVICER
AND SECURITIES ADMINISTRATOR AND ON WHICH THEY MAY RELY THAT IS
SATISFACTORY TO THE TRUSTEE THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF
SUCH PERSON WILL NOT RESULT IN OR CONSTITUTE A NONEXEMPT PROHIBITED
TRANSACTION, IS PERMISSIBLE UNDER APPLICABLE LAW AND WILL NOT GIVE RISE TO
ANY ADDITIONAL OBLIGATIONS ON THE PART OF THE DEPOSITOR, THE MASTER
SERVICER, THE SECURITIES ADMINISTRATOR OR THE TRUSTEE.
The following legend shall be placed upon the Private Certificates, whether upon
original issuance or upon issuance of any other Certificate of any such Class in
exchange therefor or upon transfer thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE TRANSFEREE CERTIFIES OR REPRESENTS THAT THE PROPOSED TRANSFER AND
HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION OF THE
TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION WHICH IS
NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14,
▇▇▇ ▇▇-▇▇, ▇▇▇ ▇▇-▇, ▇▇▇ ▇▇-
-▇▇-
▇▇ ▇▇ ▇▇▇ ▇▇-▇▇ ▇▇▇ (▇▇) WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE
PART OF THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER OR THE
TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY
CERTIFICATE OR A GLOBAL CERTIFICATE OR UNLESS THE OPINION SPECIFIED IN SECTION
5.07 OF THE AGREEMENT IS PROVIDED.
Section 5.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall maintain at its Corporate Trust Office a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee who
has provided the Trustee with a Rule 144A Certificate or comparable
evidence as to its QIB status.
(ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in writing that
the Certificate is being transferred to an Institutional Accredited
Investor; and (y) prior to the transfer the transferee furnishes to the
Trustee an Investment Letter (and the Trustee shall be fully protected in
so doing), provided that, if based upon an Opinion of Counsel addressed to
the Trustee to the effect that the delivery of (x) and (y) above are not
sufficient to confirm that the proposed transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and other applicable laws, the Trustee
shall as a condition of the registration of any such transfer require the
transferor to furnish such other certifications, legal opinions or other
information prior to registering the transfer of an Individual Certificate
as shall be set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global Certificate of such
Class is outstanding and is held by or on behalf of the Depository, transfers of
beneficial interests in such Global Certificate, or transfers by holders of
Individual Certificates of such Class to transferees
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that take delivery in the form of beneficial interests in the Global
Certificate, may be made only in accordance with this Subsection 5.02(d) and in
accordance with the rules of the Depository:
(i) In the case of a beneficial interest in the Global Certificate
being transferred to an Institutional Accredited Investor, such transferee
shall be required to take delivery in the form of an Individual
Certificate or Certificates and the Trustee shall register such transfer
only upon compliance with the provisions of Subsection 5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in the
form of an Individual Certificate or Certificates of such Class, except as
set forth in clause (i) above, the Trustee shall register such transfer
only upon compliance with the provisions of Subsection 5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class being
transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the Trustee
shall register such transfer if the transferee has provided the Trustee
with a Rule 144A Certificate or comparable evidence as to its QIB status.
(iv) No restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in the Global
Certificate of a Class to a transferee that takes delivery in the form of
a beneficial interest in the Global Certificate of such Class; provided
that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate as
are sufficient to establish that it is a QIB.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial interest in
a Global Certificate of a Class for an Individual Certificate or Certificates of
such Class, an exchange of an Individual Certificate or Certificates of a Class
for a beneficial interest in the Global Certificate of such Class and an
exchange of an Individual Certificate or Certificates of a Class for another
Individual Certificate or Certificates of such Class (in each case, whether or
not such exchange is made in anticipation of subsequent transfer, and, in the
case of the Global Certificate of such Class, so long as such Certificate is
outstanding and is held by or on behalf of the Depository) may be made only in
accordance with this Subsection 5.02(e) and in accordance with the rules of the
Depository:
(i) A holder of a beneficial interest in a Global Certificate of a
Class may at any time exchange such beneficial interest for an Individual
Certificate or Certificates of such Class.
(ii) A holder of an Individual Certificate or Certificates of a
Class may exchange such Certificate or Certificates for a beneficial
interest in the Global Certificate of such Class if such holder furnishes
to the Trustee a Rule 144A Certificate or comparable evidence as to its
QIB status.
(iii) A holder of an Individual Certificate of a Class may exchange
such Certificate for an equal aggregate principal amount of Individual
Certificates of such Class in different authorized denominations without
any certification.
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(f)(i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Trustee shall cancel such Individual Certificate
and shall (or shall request the Depository to) endorse on the schedule affixed
to the applicable Global Certificate (or on a continuation of such schedule
affixed to the Global Certificate and made a part thereof) or otherwise make in
its books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the Global
Certificate equal to the certificate balance of such Individual Certificate
exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate
of such Class as provided herein, the Trustee shall (or shall request the
Depository to) endorse on the schedule affixed to such Global Certificate
(or on a continuation of such schedule affixed to such Global Certificate
and made a part thereof) or otherwise make in its books and records an
appropriate notation evidencing the date of such exchange or transfer and
a decrease in the certificate balance of such Global Certificate equal to
the certificate balance of such Individual Certificate issued in exchange
therefor or upon transfer thereof.
(g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in this
Section 5.02, the holder of any Individual Certificate may transfer or exchange
the same in whole or in part (in an initial certificate balance equal to the
minimum authorized denomination set forth in Section 5.01(g) above or any
integral multiple of $1.00 in excess thereof) by surrendering such Certificate
at the Corporate Trust Office, or at the office of any transfer agent, together
with an executed instrument of assignment and transfer satisfactory in form and
substance to the Trustee in the case of transfer and a written request for
exchange in the case of exchange. The holder of a beneficial interest in a
Global Certificate may, subject to the rules and procedures of the Depository,
cause the Depository (or its nominee) to notify the Trustee in writing of a
request for transfer or exchange of such beneficial interest for an Individual
Certificate or Certificates. Following a proper request for transfer or
exchange, the Trustee shall, within five Business Days of such request made at
the Corporate Trust Office, sign, countersign and deliver at the Corporate Trust
Office, to the transferee (in the case of transfer) or holder (in the case of
exchange) or send by first class mail at the risk of the transferee (in the case
of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, an Individual Certificate or
Certificates, as the case may require, for a like aggregate Fractional Undivided
Interest and in such authorized denomination or denominations as may be
requested. The presentation for transfer or exchange of any Individual
Certificate shall not be valid unless made at the Corporate Trust Office by the
registered holder in person, or by a duly authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of a like Class and aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at the Corporate Trust Office; provided, however, that no Certificate
may be exchanged for new Certificates unless the original
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Fractional Undivided Interest represented by each such new Certificate (i) is at
least equal to the minimum authorized denomination or (ii) is acceptable to the
Depositor as indicated to the Trustee in writing. Whenever any Certificates are
so surrendered for exchange, the Trustee shall sign and countersign and the
Trustee shall deliver the Certificates which the Certificateholder making the
exchange is entitled to receive.
(j) If the Trustee so requires, every Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer, with a signature guarantee, in form satisfactory
to the Trustee, duly executed by the holder thereof or his or her attorney duly
authorized in writing.
(k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(l) The Trustee shall cancel all Certificates surrendered for transfer or
exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) 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) there is delivered to the Trustee (and with respect
to any Class I-A-5 Certificates, to Radian) such security or indemnity as it may
require to save it harmless, and (iii) the Trustee has not received notice that
such Certificate has been acquired by a third Person, the Trustee shall sign,
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
Fractional Undivided Interest but in each case bearing a different number. The
mutilated, destroyed, lost or stolen Certificate shall thereupon be canceled of
record by the Trustee and shall be of no further effect and evidence no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any duplicate Certificate issued pursuant to this Section 5.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Depositor, the Trustee or Radian and any agent of the Depositor, the Trustee
or Radian may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 6.01 and for all other purposes whatsoever. None of the
Depositor, the Trustee, Radian or any agent of the Depositor, the Trustee or
Radian shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer
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effective on any Record Date unless the Certificate to be transferred is
presented no later than the close of business on the third Business Day
preceding such Record Date.
Section 5.05 Transfer Restrictions on Residual Certificates.
(a) Residual Certificates, or interests therein, may not be transferred
without the prior express written consent of the Tax Matters Person and the
Depositor. As a prerequisite to such consent, the proposed transferee must
provide the Tax Matters Person, the Depositor and the Trustee with an affidavit
that the proposed transferee is a Permitted Transferee (and an affidavit that it
is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person, the Trustee and the Depositor an affidavit in the form attached
hereto as Exhibit E stating, among other things, that as of the date of such
transfer (i) such transferee is a Permitted Transferee and that (ii) such
transferee is not acquiring such Residual Certificate for the account of any
person who is not a Permitted Transferee. The Tax Matters Person shall not
consent to a transfer of a Residual Certificate if it has actual knowledge that
any statement made in the affidavit issued pursuant to the preceding sentence is
not true. Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to any Person who is not a Permitted Transferee, such transfer, sale
or other disposition shall be deemed to be of no legal force or effect
whatsoever and such Person shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. None of the
Trustee, the Tax Matters Person or the Depositor shall be under any liability to
any Person for any registration or transfer of a Residual Certificate that is
not permitted by this Subsection 5.05(b) or for making payments due on such
Residual Certificate to the purported Holder thereof or taking any other action
with respect to such purported Holder under the provisions of this Agreement so
long as the written affidavit referred to above was received with respect to
such transfer, and the Tax Matters Person, the Trustee and the Depositor, as
applicable, had no knowledge that it was untrue. The prior Holder shall be
entitled to recover from any purported Holder of a Residual Certificate that was
in fact not a permitted transferee under this Subsection 5.05(b) at the time it
became a Holder all payments made on such Residual Certificate. Each Holder of a
Residual Certificate, by acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this Subsection 5.05(b) and to any amendment
of this Agreement deemed necessary (whether as a result of new legislation or
otherwise) by counsel of the Tax Matters Person or the Depositor to ensure that
the Residual Certificates are not transferred to any Person who is not a
Permitted Transferee and that any transfer of such Residual Certificates will
not cause the imposition of a tax upon the Trust or cause any REMIC to fail to
qualify as a REMIC.
(c) The Residual Certificates (including a beneficial interest therein)
may not be purchased by or transferred to any person who is not a United States
Person.
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(d) By accepting a Residual Certificate, the purchaser thereof agrees to
be a Tax Matters Person, and appoints the Securities Administrator to act as its
agent with respect to all matters concerning the tax obligations of the Trust.
Section 5.06 Restrictions on Transferability of Certificates.
(a) No offer, sale, transfer or other disposition (including pledge) of
any Certificate shall be made by any Holder thereof unless registered under the
Securities Act, or an exemption from the registration requirements of the
Securities Act and any applicable state securities or "Blue Sky" laws is
available and the prospective transferee (other than the Depositor) of such
Certificate signs and delivers to the Trustee an Investment Letter, if the
transferee is an Institutional Accredited Investor, in the form set forth as
Exhibit F-l hereto, or a Rule 144A Certificate, if the transferee is a QIB, in
the form set forth as Exhibit F-2 hereto. Notwithstanding the provisions of the
immediately preceding sentence, no restrictions shall apply with respect to the
transfer or registration of transfer of a beneficial interest in any Certificate
that is a Global Certificate of a Class to a transferee that takes delivery in
the form of a beneficial interest in the Global Certificate of such Class
provided that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate as are
sufficient to establish that it is a QIB. In the case of a proposed transfer of
any Certificate to a transferee other than a QIB, the Trustee may require an
Opinion of Counsel addressed to the Trustee that such transaction is exempt from
the registration requirements of the Securities Act. The cost of such opinion
shall not be an expense of the Trustee or the Trust Fund.
(b) The Private Certificates shall each bear a Securities Legend.
Section 5.07 ERISA Restrictions.
(a) Subject to the provisions of subsection (b), no Residual Certificates
or Private Certificates may be acquired directly or indirectly by, or on behalf
of, an employee benefit plan or other retirement arrangement which is subject to
Title I of ERISA or Section 4975 of the Code, unless the proposed transferee
provides either (i) the Trustee, with an Opinion of Counsel addressed to the
Depositor, the Trustee, the Master Servicer and the Securities Administrator
(upon which they may rely) which is satisfactory to the Trustee, which opinion
will not be at the expense of the Depositor, the Trustee, the Master Servicer or
the Securities Administrator, that the purchase of such Certificates by or on
behalf of such Plan is permissible under applicable law, will not constitute or
result in a nonexempt prohibited transaction under ERISA or Section 4975 of the
Code and will not subject the Depositor, the Master Servicer, the Securities
Administrator or the Trustee to any obligation in addition to those undertaken
in the Agreement or (ii) in the case of the Class B-4, Class B-5 and Class B-6
Certificates, a representation or certification to the Trustee (upon which the
Trustee is authorized to rely) to the effect that the proposed transfer and
holding of such a Certificate and the servicing, management and operation of the
Trust: (I) will not result in a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code which is not covered under an individual or
class prohibited transaction exemption including but not limited to Department
of Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for
Plan Asset Transactions Determined by Independent Qualified Professional Asset
Managers); PTE 91-38 (Class Exemption for Certain
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Transactions Involving Bank Collective Investment Funds); PTE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts), PTE 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts), and PTCE 96-23 (Class Exemption for Plan
Asset Transactions Determined by In-House Asset Managers and (II) will not
subject the Depositor, the Securities Administrator, the Master Servicer or the
Trustee to any obligation in addition to those undertaken in the Agreement.
(b) Any Person acquiring an interest in a Global Certificate which is a
Private Certificate, by acquisition of such Certificate, shall be deemed to have
represented to the Trustee that in the case of the Class B-4, Class B-5 and
Class B-6 Certificates, either: (i) it is not acquiring an interest in such
Certificate directly or indirectly by, or on behalf of, an employee benefit plan
or other retirement arrangement which is subject to Title I of ERISA or Section
4975 of the Code, or (ii) the transfer and holding of an interest in such
Certificate to that Person and the subsequent servicing, management and
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under an individual or class prohibited
transaction exemption, including, but not limited to, ▇▇▇ ▇▇-▇▇, ▇▇▇ ▇▇-▇▇, ▇▇▇
▇▇-▇, ▇▇▇ 95-60 or PTE 96-23 and (II) will not subject the Depositor, the
Securities Administrator, the Master Servicer or the Trustee to any obligation
in addition to those undertaken in the Agreement.
(c) Each beneficial owner of a Class B-1, Class B-2 or Class B-3
Certificate or any interest therein shall be deemed to have represented, by
virtue of its acquisition or holding of that certificate or interest therein,
that either (i) it is not a Plan or investing with "Plan Assets", (ii) it has
acquired and is holding such certificate in reliance on Prohibited Transaction
Exemption 90-30, as amended from time to time (the "Exemption"), and that it
understands that there are certain conditions to the availability of the
Exemption, including that the certificate must be rated, at the time of
purchase, not lower than "BBB-" (or its equivalent) by S&P, Fitch Ratings or
▇▇▇▇▇'▇ Investors Service, Inc., and the certificate is so rated or (iii) (1) it
is an insurance company, (2) the source of funds used to acquire or hold the
certificate or interest therein is an "insurance company general account," as
such term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60,
and (3) the conditions in Sections I and III of PTCE 95-60 have been satisfied.
(d) Neither the Trustee, the Master Servicer nor the Securities
Administrator will be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Global Certificates. Any
attempted or purported transfer of any Certificate in violation of the
provisions of Subsections (a) or (b) above shall be void ab initio and such
Certificate shall be considered to have been held continuously by the prior
permitted Certificateholder. Any transferor of any Certificate in violation of
such provisions, shall indemnify and hold harmless the Trustee, the Securities
Administrator and the Master Servicer from and against any and all liabilities,
claims, costs or expenses incurred by the Trustee, the Securities Administrator
or the Master Servicer as a result of such attempted or purported transfer. The
Trustee shall have no liability for transfer of any such Global Certificates in
or through book-entry facilities of any Depository or between or among
Depository Participants or Certificate Owners made in violation of the transfer
restrictions set forth herein.
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Section 5.08 Rule 144A Information.
For so long as any Certificates are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) of the Securities Act, (1) the
Depositor will provide or cause to be provided to any holder of such
Certificates and any prospective purchaser thereof designated by such a holder,
upon the request of such holder or prospective purchaser, the information
required to be provided to such holder or prospective purchaser by Rule
144A(d)(4) under the Securities Act; and (2) the Depositor shall update such
information from time to time in order to prevent such information from becoming
false and misleading and will take such other actions as are necessary to ensure
that the safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A.
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ARTICLE VI
Payments to Certificateholders
Section 6.01 Distributions on the Certificates.
(a) Interest and principal (as applicable) on the Certificates will be
distributed monthly on each Distribution Date, commencing in August 2004, in an
amount equal to the Available Funds on deposit in the Distribution Account for
such Distribution Date. On each Distribution Date, the Available Funds on
deposit in the Distribution Account shall be distributed as follows:
(i) on each Distribution Date, the Group I Available Funds will be
distributed to the Group I Senior Certificates as follows:
FIRST, to the Class I-A-1, Class I-A-2, Class I-A-3, Class I-A-4, Class
I-A-5, Class I-A-6, Class I-A-7, Class I-A-8, Class R-I, Class R-II and R-III
Certificates, on a pro rata basis, the Accrued Certificate Interest on such
classes for such Distribution Date. As described below, Accrued Certificate
Interest on the Class I-A-1, Class I-A-2, Class I-A-3, Class I-A-4, Class I-A-5,
Class I-A-6, Class I-A-7, Class I-A-8, Class R-I, Class R-II and Class R-III
Certificates is subject to reduction in the event of certain Net Interest
Shortfalls allocable thereto;
SECOND, to the Class I-A-1, Class I-A-2, Class I-A-3, Class I-A-4, Class
I-A-5, Class I-A-6, Class I-A-7 and Class I-A-8 Certificates, on a pro rata
basis, any Accrued Certificate Interest thereon remaining undistributed from
previous Distribution Dates, to the extent of remaining Group I Available Funds;
and
THIRD, concurrently as follows:
(I) to the extent of the remaining Group I Available Funds related
to Subgroup I-1, to the Class I-A-1, Class I-A-2, Class I-A-3,
Class I-A-4, Class I-A-5, Class I-A-6, Class R-I, Class R-II
and Class R-III Certificates, as principal, the Subgroup I-1
Principal Distribution Amount as follows: FIRST, to the Class
R-I, Class R-II and Class R-III, in that order, and in each
case in reduction of the Current Principal Amount thereof,
until the Current Principal Amount of each such class has been
reduced to zero; SECOND, to the Class I-A-6 Certificates, in
reduction of the Current Principal Amount thereof, until the
Current Principal Amount thereof has been reduced to zero, in
an amount equal to the Lockout Principal Amount; THIRD, up to
an amount of $10,000, to the Class I-A-5 Certificates,
commencing on the distribution date in August 2007, in
reduction of the Current Principal Amount thereof, until the
Current Principal Amount thereof has been reduced by $10,000;
FOURTH, to the Class I-A-1, Class I-A-2 and Class I-A-3
Certificates, on a pro rata basis based on the Current
Principal Amount of each such class, in reduction of the
Current Principal Amounts thereof, until the Current Principal
Amount of each such class has been
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reduced to zero; FIFTH, to the Class I-A-4 Certificates, in
reduction of the current Principal Amount thereof, until the
Current Principal Amount thereof has been reduced to zero;
SIXTH, to the Class I-A-5 Certificates, in reduction of the
Current Principal Amount thereof, until the Current Principal
Amount thereof has been reduced to zero; and SEVENTH, to the
Class I-A-6 Certificates, in reduction of the Current
Principal Amount thereof, until the Current Principal Amount
thereof has been reduced to zero.
(II) to the extent of the remaining Group I Available Funds related
to Subgroup I-2, to the Class I-A-7 Certificates, as
principal, the Subgroup I-2 Principal Distribution Amount
thereof, in reduction of the Current Principal Amount, until
the Current Principal Amount thereof has been reduced to zero;
FOURTH, to the Class I-PO Certificates, the related Class PO Certificate
Principal Distribution Amount for such Distribution Date to the extent of the
remaining Group I Available Funds, until the Current Principal Amount thereof
has been reduced to zero;
FIFTH, to the Class I-PO Certificates, the Class I-PO Certificate Deferred
Amount, provided, that (i) on any Distribution Date, distributions pursuant to
this priority FIFTH shall not exceed the excess, if any, of (x) Group I
Available Funds remaining after giving effect to distributions pursuant to
priority FIRST through FOURTH above over (y) the sum of the amount of Accrued
Certificate Interest for such Distribution Date and Accrued Certificate Interest
remaining undistributed from previous Distribution Dates on all classes of
Subordinate Certificates then outstanding, (ii) such distributions shall not
reduce the Current Principal Amount of the Class I-PO Certificates and (iii) no
distribution will be made in respect of the Class I-PO Certificate Deferred
Amount on or after the Cross-Over Date; and
SIXTH, to the Insurer, any amounts due and owing to the Insurer under this
Agreement.
(ii) on each Distribution Date, the Group II Available Funds will be
distributed to the Group II Senior Certificates as follows:
FIRST, to the Group II Senior Certificates (other than the Class II-PO
Certificates), on a pro rata basis, the Accrued Certificate Interest on such
classes for such Distribution Date. As described below, Accrued Certificate
Interest on the Class II-A-1, Class II-A-2 and Class II-A-3 Certificates is
subject to reduction in the event of certain Net Interest Shortfalls allocable
thereto;
SECOND, to the Group II Senior Certificates (other than the Class II-PO
Certificates), on a pro rata basis, any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates, to the extent of
remaining Group II Available Funds; and
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THIRD, concurrently as follows:
(I) to the extent of the remaining Group II Available Funds
related to Subgroup II-1, to the Class II-A-1 Certificates, as
principal, the Subgroup II-1 Principal Distribution Amount,
until the Current Principal Amount thereof has been reduced to
zero;
(II) to the extent of the remaining Group II Available Funds
related to Subgroup II-2, to the Class II-A-2 Certificates, as
principal, the Subgroup II-2 Principal Distribution Amount
until the Current Principal Amount thereof has been reduced to
zero;
(III) to the extent of the remaining Group II Available Funds
related to Subgroup II-3, to the Class II-A-3 Certificates, as
principal, the Subgroup II-2 Principal Distribution Amount,
until the Current Principal Amount thereof has been reduced to
zero.
FOURTH, to the Class II-PO Certificates, the related Class PO Certificate
Principal Distribution Amount for such Distribution Date to the extent of the
remaining Group II Available Funds, until the Current Principal Amount thereof
has been reduced to zero; and
FIFTH, to the Class II-PO Certificates, the Class II-PO Certificate
Deferred Amount, provided, that (i) on any Distribution Date, distributions
pursuant to this priority FIFTH shall not exceed the excess, if any, of (x)
Group II Available Funds remaining after giving effect to distributions pursuant
to priority FIRST through FOURTH above over (y) the sum of the amount of Accrued
Certificate Interest for such Distribution Date and Accrued Certificate Interest
remaining undistributed from previous Distribution Dates on all classes of
Subordinate Certificates then outstanding, (ii) such distributions shall not
reduce the Current Principal Amount of the Class II-PO Certificates and (iii) no
distribution will be made in respect of the Class II-PO Certificate Deferred
Amount on or after the Cross-Over Date.
(iii) Except as provided in paragraphs (iv) and (v) below, on each
Distribution Date on or prior to the Cross-Over Date, an amount equal to the sum
of the remaining Group I Available Funds and Group II Available Funds after the
distributions in paragraphs (i) and (ii) above will be distributed sequentially,
in the following order, to the Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates, in each case up to an amount equal to and in the
following order: (a) the Accrued Certificate Interest thereon for such
Distribution Date, (b) any Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates and (c) such class' Allocable
Share for such Distribution Date, in each case, to the extent of the remaining
Group I Available Funds and Group II Available Funds.
(iv) On each Distribution Date prior to the Cross-Over Date but after the
reduction of the Current Principal Amount of any of the Group I Senior
Certificates or Group II Senior Certificates (other than the Interest Only,
Class I-PO and Class II-PO Certificates) to zero, the remaining class or classes
of Senior Certificates (other than the Interest Only, Class I-PO and Class II-PO
Certificates) will be entitled to receive in reduction of their Current
Principal
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Amounts, pro rata based upon their Current Principal Amounts immediately prior
to such Distribution Date, in addition to any Principal Prepayments related to
such remaining Senior Certificates' respective Loan Group allocated to such
Senior Certificates, 100% of the Non-PO Percentage of the Principal Prepayments
on any Mortgage Loan in the Loan Group relating to such fully repaid class or
classes of Senior Certificates; provided, however, that if (A) the weighted
average of the Subordinate Percentages on such Distribution Date equals or
exceeds two times the initial weighted average of the Subordinate Percentages
and (B) the aggregate Scheduled Principal Balance of the Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust), averaged over the last six months, as
a percentage of the sum of the aggregate Current Principal Amount of the
Subordinate Certificates does not exceed 50% and (C) with respect to Loan Group
I, no amounts are due to the Insurer in accordance with priority SIXTH of clause
(i) above, then the additional allocation of Principal Prepayments to such
remaining class or classes of Senior Certificates in accordance with this clause
(iv) will not be made and 100% of the Non-PO Percentage of the Principal
Prepayments on any Mortgage Loan in the Loan Group relating to such fully
prepaid class or classes of Senior Certificates will be allocated to the
Subordinate Certificates. If any amounts are due to the Insurer in accordance
with priority SIXTH of clause (i) above, Principal Prepayments not allocated to
the fully prepaid class or classes Group I Senior Certificates as described
above shall be paid to the Insurer to the extent of amounts due.
(v) If on any Distribution Date on which the aggregate Current Principal
Amount of the Group I Senior Certificates or Group II Senior Certificates (other
than the Interest Only, Class I-PO and Class II-PO Certificates) would be
greater than the aggregate Scheduled Principal Balance of the Mortgage Loans in
its related Loan Group (other than the PO Percentage of the related Discount
Mortgage Loans) or any amounts are due to the Insurer pursuant to priority SIXTH
of clause (i) above and any Subordinate Certificates are still outstanding, in
each case, after giving effect to distributions to be made on such Distribution
Date, (i) 100% of amounts otherwise allocable to the Subordinate Certificates in
respect of principal will be distributed to the Group I Senior Certificates and
Group II Senior Certificates (other than the Interest Only, Class I-PO and Class
II-PO Certificates), as applicable, in reduction of the Current Principal
Amounts thereof, until the aggregate Current Principal Amount of such class or
classes of Senior Certificates, as applicable (other than the Interest Only,
Class I-PO and Class II-PO Certificates), is equal to the aggregate Scheduled
Principal Balance of the Mortgage Loans in its related Loan Group (other than
the PO Percentage of the related Discount Mortgage Loans) and to payment to the
Insurer of all amounts due under this Agreement, and (ii) the Accrued
Certificate Interest otherwise allocable to the Subordinate Certificates on such
Distribution Date will be reduced, if necessary, and distributed to such class
or classes of Senior Certificates in an amount equal to the Accrued Certificate
Interest for such Distribution Date on the excess of (x) the aggregate Current
Principal Amount of such class or classes of Senior Certificates over (y) the
aggregate Scheduled Principal Balance of the Mortgage Loans in the related Loan
Group (other than the PO Percentage of the related Discount Mortgage Loans) and
to payment to the Insurer of all amounts due under this Agreement. Any such
reduction in the Accrued Certificate Interest on the Subordinate Certificates
will be allocated in reverse order of the Subordinate Certificates' numerical
designations, commencing with the Class B-6 Certificates.
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(vi) If, after distributions have been made pursuant to priorities FIRST
and SECOND of clause (i) above on any Distribution Date, the remaining Group I
Available Funds is less than the sum of the Subgroup I-1, Subgroup I-2 and the
related Class PO Certificate Principal Distribution Amounts, such amounts shall
be reduced, and such remaining funds will be distributed to the Group I Senior
Certificates, other than the Class I-A-8 Certificates on the basis of such
reduced amounts. Notwithstanding any reduction in principal distributable to the
Class I-PO Certificates pursuant to this paragraph, the Current Principal Amount
of the Class I-PO Certificates shall be reduced not only by principal so
distributed but also by the difference between (i) principal distributable to
the Class I-PO Certificates in accordance with priority FIFTH of clause (i)
above, and (ii) principal actually distributed to the Class I-PO Certificates
after giving effect to this clause (vi) (such difference for the Class I-PO
Certificates, the "Class I-PO Certificate Cash Shortfall"). The Class I-PO
Certificate Cash Shortfall with respect to any Distribution Date will be added
to the Class I-PO Certificate Deferred Amount.
(vii) If, after distributions have been made pursuant to priorities FIRST
and SECOND of clause (ii) above on any Distribution Date, the remaining Group II
Available Funds is less than the sum of the Subgroup II-1, Subgroup II-2,
Subgroup II-3 and the related Class PO Certificate Principal Distribution
Amounts, such amounts shall be reduced, and such remaining funds will be
distributed to the Group II Senior Certificates, other than the Class II-X-I
Certificates, on the basis of such reduced amounts. Notwithstanding any
reduction in principal distributable to the Class II-PO Certificates pursuant to
this clause (vii), the Current Principal Amount of the Class II-PO Certificates
shall be reduced not only by principal so distributed but also by the difference
between (i) principal distributable to the Class II-PO Certificates in
accordance with priority FIFTH of clause (ii) above, and (ii) principal actually
distributed to the Class II-PO Certificates after giving effect to this
paragraph (such difference for the Class II-PO Certificates, the "Class II-PO
Certificate Cash Shortfall"). The Class II-PO Certificate Cash Shortfall with
respect to any Distribution Date will be added to the Class II-PO Certificate
Deferred Amount.
(viii) On each Distribution Date, any Available Funds remaining after
payment of interest and principal to the Classes of Certificates entitled
thereto and payment of amounts due and owing to the Insurer in each case as
described above, will be distributed to the Class R-III Certificates; provided,
that if on any Distribution Date there are any Group I Available Funds or Group
II Available Funds remaining after payment of interest and principal to a Class
or Classes of Certificates entitled thereto and payment of amounts due and owing
to the Insurer, such amounts will be distributed to the other classes of Senior
Certificates, pro rata, based upon their Current Principal Amounts, and to the
Insurer, until all amounts due to all classes of Senior Certificates and to the
Insurer have been paid in full, before any amounts are distributed to the Class
R-III Certificates.
(ix) Notwithstanding the priorities relating to distributions of principal
among the Insured Certificates described above, on any Distribution Date,
distributions in respect of principal on the Insured Certificates will be
allocated among the Holders of the Insured Certificates as set forth in Section
6.10. On each Distribution Date on which amounts are available for distributions
in reduction of the Current Principal Amount of the Insured Certificates
(including, for purposes of this paragraph, the portion of any Insured Payment
allocable to principal) the aggregate amount available for such distributions
will be rounded
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upward by the Rounding Amount. Such rounding will be accomplished on the first
Distribution Date on which distributions in reduction of the Current Principal
Amount of the Insured Certificates are made by withdrawing from the Rounding
Account the Rounding Amount for deposit into the Distribution Account, and such
Rounding Amount will be added to the amount that is available for distributions
in reduction of the Current Principal Amount of the Insured Certificates. On
each succeeding Distribution Date on which distributions in reduction of the
Current Principal Amount of the Insured Certificates are made, first, the
aggregate amount available for distribution in reduction of the Current
Principal Amount of the Insured Certificates will be applied to repay the
Rounding Amount withdrawn from the Rounding Account on the prior Distribution
Date and then, the remainder of such allocable amount, if any, will be similarly
rounded upward through another withdrawal from the Rounding Account and such
determined Rounding Amount will be added to the amount that is available for
distribution in reduction of the Current Principal Amount of the Insured
Certificates. Any funds remaining in the Rounding Account after the Current
Principal Amount of the Insured Certificates is reduced to zero shall be
distributed to the Class R-III Certificateholders.
Section 6.02 Allocation of Losses.
(a) On or prior to each Determination Date, the Master Servicer shall
determine the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month, based on information
provided by the related Servicer.
(b) Realized Losses with respect to a Mortgage Loan will be allocated on a
pro rata basis between the PO Percentage of the Scheduled Principal Balance of
such Mortgage Loan and the Non-PO Percentage of such Scheduled Principal
Balance.
(c) On each Distribution Date, the PO Percentage of the principal portion
of any Realized Loss on a Discount Mortgage Loan and any Class PO Certificate
Cash Shortfall will be allocated to the Principal Only Certificates until the
Current Principal Amount of the Principal Only Certificates is reduced to zero.
With respect to any Distribution Date through the Cross-Over Date, the aggregate
of all amounts so allocable to a class of Principal Only Certificates on such
date in respect of any Realized Losses and any related Class PO Certificate Cash
Shortfall and all amounts previously allocated in respect of such Realized
Losses or Class PO Certificate Cash Shortfall and not distributed on prior
Distribution Dates will be the "Class PO Certificate Deferred Amount." To the
extent funds are available therefor on any Distribution Date through the
Cross-Over Date, distributions in respect of the Class PO Certificate Deferred
Amount for the Class PO Certificates will be made in accordance with priority
FIFTH of Section 6.01(a)(i) or (a)(ii) as applicable. No interest will accrue on
the Class PO Certificate Deferred Amount. On each Distribution Date through the
Cross-Over Date, the Current Principal Amount of the lowest ranking Class of
Subordinate Certificates then outstanding will be reduced by the amount of any
distributions in respect of any Class PO Certificate Deferred Amount on such
Distribution Date in accordance with the priorities set forth above, through the
operation of the Subordinate Certificate Writedown Amount. After the Cross-Over
Date, no more distributions will be made in respect of, and applicable Realized
Losses and Class PO Certificate Cash Shortfalls allocable to the Principal Only
Certificates will not be added to, the Class PO Certificate Deferred Amount.
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(d) The Non-PO Percentage of the principal portion of Realized Losses on
the Mortgage Loans will be allocated on any Distribution Date as follows: first,
to the Class B-6 Certificates; second, to the Class B-5 Certificates; third, to
the Class B-4 Certificates; fourth, to the Class B-3 Certificates; fifth, to the
Class B-2 Certificates; and sixth, to the Class B-1 Certificates, in each case
until the Current Principal Amount of such class has been reduced to zero. The
applicable Non-PO Percentage of the principal portion of any Excess Loss for any
Distribution Date will be allocated pro rata among all outstanding Classes of
Certificates (other than the Principal Only Certificates and the Interest Only
Certificates) based on their Current Principal Amounts in each until the Current
Principal Amount of such class has been reduced to zero; provided however that
the amount of any Excess Loss otherwise allocable to the Class I-A-2
Certificates will be allocated to the Class I-A-3 Certificate until the Current
Principal Amount of such Class has been reduced to zero and then to the Class
I-A-2 Certificates. Thereafter, the Non-PO Percentage of the principal portion
of Realized Losses on the Mortgage Loans in a Loan Group will be allocated on
any Distribution Date to the Class or Classes of Senior Certificates (other than
the Interest Only Certificates and the Principal Only Certificates) of the
related Senior Certificate Group, pro rata, based upon their respective Current
Principal Amounts; provided however that the amount of any Realized Losses
otherwise allocable to the Class I-A-2 Certificates shall be allocated to the
Class I-A-3 Certificates until the Current Principal Amount thereof has been
reduced to zero and then to the Class I-A-2 Certificates. Once the Subordinate
Certificates have been reduced to zero, the Non-PO Percentage of the principal
portion of Realized Losses on the Mortgage Loans (if any) will be allocated on a
pro rata basis to the remaining Senior Certificates (other than the Interest
Only Certificates).
(e) Notwithstanding the foregoing clause (d), no such allocation of any
Realized Loss shall be made on a Distribution Date to any Class of Certificates
to the extent that such allocation would result in the reduction of the
aggregate Current Principal Amounts of all the Certificates as of such
Distribution Date, after giving effect to all distributions and prior
allocations of Realized Losses or Excess Losses on the Mortgage Loans on such
date, to an amount less than the aggregate Scheduled Principal Balance of all of
the Mortgage Loans as of the first day of the month of such Distribution Date
(such limitation, the "Loss Allocation Limit").
(f) Any Realized Losses or Excess Loss allocated to a Class of
Certificates shall be allocated among the Certificates of such Class (other than
the Interest Only Certificates) in proportion to their respective Current
Principal Amounts. Any allocation of Realized Losses shall be accomplished by
reducing the Current Principal Amount of the related Certificates on the related
Distribution Date.
(g) Realized Losses or an Excess Loss shall be allocated on the
Distribution Date in the month following the month in which such loss was
incurred and, in the case of the principal portion thereof, after giving effect
to distributions made on such Distribution Date.
(h) On each Distribution Date, the Securities Administrator shall
determine and notify the Trustee of the Subordinate Certificate Writedown
Amount. Any Subordinate Certificate Writedown Amount shall effect a
corresponding reduction in the Current Principal Amount of (i) if prior to the
Cross-Over Date, the Current Principal Amounts of the Subordinate Certificates,
in the reverse order of their numerical Class designations and (ii) from and
after the Cross-Over Date, the Senior Certificates, in accordance with
priorities set forth in clause (b)
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above, which reduction shall occur on such Distribution Date after giving effect
to distributions made on such Distribution Date.
(i) Any Net Interest Shortfall will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall for such Distribution Date. The interest portion of any
Realized Losses with respect to the Mortgage Loans occurring on or prior to the
Cross-Over Date will not be allocated among any Certificates, but will reduce
the amount of Available Funds on the related Distribution Date. As a result of
the subordination of the Subordinate Certificates in right of distribution, such
Realized Losses on the Mortgage Loans will be borne by the Subordinate
Certificates, in inverse order of their numerical Class designations. Following
the Cross-Over Date, the interest portion of Realized Losses on the Mortgage
Loans will be allocated to the Senior Certificates to the extent not covered,
with respect to the Class I-A-5 Certificates, by the Reserve Fund.
(j) Any Deficient Valuation will on each Distribution Date be allocated
solely to the Subordinate Certificates until the Bankruptcy Coverage Termination
Date. The Bankruptcy Loss Amount and the related coverage levels may be reduced
or modified upon written confirmation from the related Rating Agencies that such
reduction or modification will not adversely affect the then current ratings of
the Senior Certificates by the related Rating Agencies (determined without
regard to the Policy). Such reduction may adversely affect the coverage provided
by subordination with respect to Bankruptcy Losses. Any Fraud Loss will on each
Distribution Date be allocated solely to the Subordinate Certificates until the
Fraud Coverage Termination Date. Any Special Hazard Loss will on each
Distribution Date be allocated solely to the outstanding Subordinate
Certificates until the Special Hazard Termination Date.
Section 6.03 Payments.
(a) On each Distribution Date, other than the final Distribution Date, the
Trustee shall distribute to each Certificateholder of record as of the
immediately preceding Record Date the Certificateholder's pro rata share of its
Class (based on the aggregate Fractional Undivided Interest represented by such
Holder's Certificates) of all amounts required to be distributed on such
Distribution Date to such Class, based on information provided to the Trustee by
the Securities Administrator. The Securities Administrator shall calculate the
amount to be distributed to each Class and, based on such amounts, the
Securities Administrator shall determine the amount to be distributed to each
Certificateholder. All of the Securities Administrator's calculations of
payments shall be based solely on information provided to the Securities
Administrator by the Master Servicer. Neither the Securities Administrator nor
the Trustee shall be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.
(b) Payment of the above amounts to each Certificateholder shall be made
(i) by check mailed to each Certificateholder entitled thereto at the address
appearing in the Certificate Register or (ii) upon receipt by the Trustee on or
before the fifth Business Day preceding the Record Date of written instructions
from a Certificateholder by wire transfer to a United States dollar account
maintained by the payee at any United States depository institution with
appropriate facilities for receiving such a wire transfer; provided, however,
that the final
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payment in respect of each Class of Certificates will be made only upon
presentation and surrender of such respective Certificates at the office or
agency of the Trustee specified in the notice to Certificateholders of such
final payment.
Section 6.04 Statements to Certificateholders.
(a) Concurrently with each distribution to Certificateholders, the
Securities Administrator shall make available to the parties hereto, Radian and
each Certificateholder via the Securities Administrator's internet website as
set forth below, the following information, expressed with respect to clauses
(i) through (vii) in the aggregate and as a Fractional Undivided Interest
representing an initial Current Principal Amount of $1,000, or in the case of
the Residual Certificates, an initial Current Principal Amount of $50:
(i) the Current Principal Amount (or Notional Amount) of each Class
of Certificates immediately prior to such Distribution Date;
(ii) the amount of the distribution allocable to principal on each
applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the related
Pass-Through Rate with respect to each Class during the related Interest
Accrual Period;
(iv) the Net Interest Shortfall and any other adjustments to
interest at the related Pass-Through Rate necessary to account for any
difference between interest accrued and aggregate interest distributed
with respect to each Class of Certificates;
(v) the amount of the distribution allocable to interest on each
Class of Certificates;
(vi) the Pass-Through Rates for each Class of Certificates with
respect to such Distribution Date;
(vii) the Current Principal Amount (or Notional Amount) of each
Class of Certificates after such Distribution Date;
(viii) the amount of any Monthly Advances, Compensating Interest
Payments and outstanding unreimbursed advances by the Master Servicer or
the Servicers included in such distribution;
(ix) the aggregate amount of any Realized Losses (listed separately
for each category of Realized Loss) during the related Prepayment Period
and cumulatively since the Cut-off Date and the amount and source
(separately identified) of any distribution in respect thereof included in
such distribution;
(x) with respect to each Mortgage Loan which incurred a Realized
Loss during the related Prepayment Period, (i) the loan number, (ii) the
Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
(ii) the Scheduled Principal Balance of such Mortgage Loan as of the
beginning of the related Due Period, (iii) the Net Liquidation
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Proceeds with respect to such Mortgage Loan and (iv) the amount of the
Realized Loss with respect to such Mortgage Loan;
(xi) the amount of Scheduled Principal and Principal Prepayments,
(including but separately identifying the principal amount of Principal
Prepayments, Insurance Proceeds, the purchase price in connection with the
purchase of Mortgage Loans, cash deposits in connection with substitutions
of Mortgage Loans and Net Liquidation Proceeds) and the number and
principal balance of Mortgage Loans purchased or substituted for during
the relevant period and cumulatively since the Cut-off Date;
(xii) the number of Mortgage Loans (excluding REO Property)
remaining in the Trust Fund as of the end of the related Prepayment
Period;
(xiii) information regarding any Mortgage Loan delinquencies as of
the end of the related Prepayment Period, including the aggregate number
and aggregate Outstanding Principal Balance of Mortgage Loans (a)
delinquent 30 to 59 days on a contractual basis, (b) delinquent 60 to 89
days on a contractual basis, and (c) delinquent 90 or more days on a
contractual basis, in each case as of the close of business on the last
Business Day of the immediately preceding month;
(xiv) the number of Mortgage Loans in the foreclosure process as of
the end of the related Due Period and the aggregate Outstanding Principal
Balance of such Mortgage Loans;
(xv) the number and aggregate Outstanding Principal Balance of all
Mortgage Loans as to which the Mortgaged Property was REO Property as of
the end of the related Due Period;
(xvi) the book value (the sum of (A) the Outstanding Principal
Balance of the Mortgage Loan, (B) accrued interest through the date of
foreclosure and (C) foreclosure expenses) of any REO Property; provided
that, in the event that such information is not available to the
Securities Administrator on the Distribution Date, such information shall
be furnished promptly after it becomes available;
(xvii) the amount of Realized Losses allocated to each Class of
Certificates since the prior Distribution Date and in the aggregate for
all prior Distribution Dates; and
(xviii) the Average Loss Severity Percentage;
(xix) the amount of Special Hazard Losses, Fraud Losses, Bankruptcy
Losses and Extraordinary Losses on such Distribution Date and in the
aggregate for all prior Distribution Dates; and
(xx) the then applicable Subgroup Senior Percentage, Subgroup Senior
Prepayment Percentage, Subordinate Percentage and Subordinate Prepayment
Percentage for each Subgroup.
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The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.
The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders via the Securities
Administrator's website initially located at "▇▇▇.▇▇▇▇▇▇▇.▇▇▇." Assistance in
using the website can be obtained by calling the Securities Administrator's
customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇. Parties that are unable to use the
above distribution option are entitled to have a paper copy mailed to them via
first class mail by calling the Securities Administrator's customer service desk
and indicating such. The Securities Administrator shall have the right to change
the way such reports are distributed in order to make such distribution more
convenient and/or more accessible to the parties, and the Securities
Administrator shall provide timely and adequate notification to all parties
regarding any such change.
To the extent timely received from the Securities Administrator, the
Trustee will also make monthly statements available each month to
Certificateholders and Radian via the Trustee's internet website. The Trustee's
internet website will initially be located at
"▇▇▇▇▇://▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇▇.▇▇▇". Assistance in using the Trustee's
website service can be obtained by calling the Trustee's customer service desk
at (▇▇▇) ▇▇▇-▇▇▇▇.
(b) By April 30 of each year beginning in 2005, the Trustee will furnish
such report to each Holder of the Certificates of record at any time during the
prior calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Securities Administrator may determine and advises
the Trustee to be necessary and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
Holders to prepare their tax returns for such calendar year. Such obligations
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Securities Administrator or the
Trustee pursuant to the requirements of the Code.
Section 6.05 Monthly Advances.
If the Scheduled Payment on a Mortgage Loan that was due on a related Due
Date is delinquent other than as a result of application of the Relief Act and
for which the related Servicer was required to make an advance pursuant to the
related Servicing Agreement exceeds the amount deposited in the Master Servicer
Collection Account which will be used for an advance with respect to such
Mortgage Loan, the Master Servicer will deposit in the Master Servicer
Collection Account not later than the Distribution Account Deposit Date
immediately preceding the related Distribution Date an amount equal to such
deficiency, net of the Servicing Fee for such Mortgage Loan except to the extent
the Master Servicer determines any such advance to be a Nonrecoverable Advance.
Subject to the foregoing, the Master Servicer shall continue to make such
advances through the date that the related Servicer is required to do so under
its Servicing Agreement. If the Master Servicer deems an advance to be a
Nonrecoverable
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Advance, on the Distribution Account Deposit Date, the Master Servicer shall
present an Officer's Certificate to the Trustee and Radian (i) stating that the
Master Servicer elects not to make a Monthly Advance in a stated amount and (ii)
detailing the reason it deems the advance to be a Nonrecoverable Advance.
Section 6.06 Compensating Interest Payments.
The Master Servicer shall deposit in the Master Servicer Collection
Account not later than each Distribution Account Deposit Date an amount equal to
the lesser of (i) the sum of the aggregate amounts required to be paid by the
Servicers under the Servicing Agreements with respect to subclauses (a) and (b)
of the definition of Interest Shortfall with respect to the Mortgage Loans for
the related Distribution Date, and not so paid by the related Servicers and (ii)
the Master Servicer Compensation for such Distribution Date (such amount, the
"Compensating Interest Payment"). The Master Servicer shall not be entitled to
any reimbursement of any Compensating Interest Payment.
Section 6.07 Policy Matters.
(a) If, on the third Business Day before any Distribution Date, the
Securities Administrator notifies the Trustee that a Deficiency Amount exists on
such Distribution Date, the Trustee shall give notice to Radian and the Fiscal
Agent (as defined in the Policy), if any, by telephone or telecopy of the amount
of such Deficiency Amount, confirmed in writing by notice substantially in the
form of Exhibit A to the Policy by 12:00 noon, New York City time on such third
Business Day. The Trustee's responsibility for delivering the notice to Radian
as provided in the preceding sentence is contingent upon its receipt of
available, timely and accurate information from the Master Servicer.
(b) In the event the Trustee receives a certified copy of an order of the
appropriate court regarding any Preference Amount (as defined in the Policy),
the Trustee shall (i) promptly notify Radian and the Fiscal Agent, if any, and
(ii) comply with the provisions of the Policy to obtain payment by Radian of
such Preference Amount. In addition, the Trustee shall mail notice to all
Holders of the Class I-A-5 Certificates so affected that, in the event that any
such Holder's scheduled payment is a Preference Amount, such Holder will be
entitled to payment pursuant to the terms of the Policy, a copy of which shall
be made available to such Holders by the Trustee. The Trustee shall furnish to
Radian and the Fiscal Agent, if any, its records listing the payments on the
affected Class I-A-5 Certificates, if any, that have been made by the Trustee
and subsequently recovered from the affected Holders, and the dates on which
such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes hereof, the
Trustee shall establish a separate special purpose trust account in the name of
the Trustee for the benefit of Holders of the Class I-A-5 Certificates (the
"Class I-A-5 Policy Payments Account") over which the Trustee shall have
exclusive control and sole right of withdrawal. The Class I-A-5 Policy Payments
Account shall be an Eligible Account. The Trustee shall deposit any amount paid
under the Policy into the Class I-A-5 Policy Payments Account and distribute
such amount only for the purposes of making the payments to Holders of the Class
I-A-5 Certificates in respect of the Insured Payment for which the related claim
was made under the Policy. Such amounts shall
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be allocated by the Trustee to Holders of Class I-A-5 Certificates affected by
such shortfalls in the same manner as interest and principal payments are to be
allocated with respect to such Certificates pursuant to Section 6.01. 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 make regular payments
hereunder with funds withdrawn from the Distribution Account. However, any
payments made on the Class I-A-5 Certificates from funds in the I-A-5 Policy
Payments Account shall be noted as provided in subsection (e) below. Funds held
in the Class I-A-5 Policy Payments Account shall not be invested by the Trustee.
(d) Any funds received from Radian for deposit into the Class I-A-5 Policy
Payments Account pursuant to the Policy in respect of a Distribution Date or
otherwise as a result of any claim under the Policy shall be applied by the
Trustee directly to the payment in full (i) of the Deficiency Amount due on such
Distribution Date on the Class I-A-5 Certificates, or (ii) of other amounts
payable under the Policy. Funds received by the Trustee as a result of any claim
under the Policy shall be used solely for payment to the Holders of the Class
I-A-5 Certificates and may not be applied for any other purpose, including,
without limitation, satisfaction of any costs, expenses or liabilities of the
Trustee, the Depositor, the Seller, any Servicer, the Securities Administrator,
the Master Servicer or the Trust Fund. Any funds remaining in the Class I-A-5
Policy Payments Account on the first Business Day after each Distribution Date
shall be remitted promptly to Radian pursuant to the written instruction of
Radian.
(e) The Trustee shall keep complete and accurate records in respect of (i)
all funds remitted to it by Radian and deposited into the Class I-A-5 Policy
Payments Account and (ii) the allocation of such funds to (A) payments of
interest on and principal in respect of any Class I-A-5 Certificates and (B) the
amount of funds available to make distributions on the Class I-A-5 Certificates
pursuant to Section 6.01. Radian shall have the right to inspect such records at
reasonable times during normal business hours upon three Business Days' prior
notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class I-A-5 Certificate
by its acceptance of the Class I-A-5 Certificate agrees, that, without the need
for any further action on the part of Radian or the Trustee to the extent Radian
makes payments, directly or indirectly, on account of principal of or interest
on any Class I-A-5 Certificates, Radian will be fully subrogated to the rights
of the Holders of such Class I-A-5 Certificates to receive such principal and
interest from the Trust Fund. The Holders of the Class I-A-5 Certificates, by
acceptance of the Class I-A-5 Certificates, assign their rights as Holders of
the I-Class A-5 Certificates to the extent of Radian's interest with respect to
amounts paid under the Policy. Anything herein to the contrary notwithstanding,
solely for purposes of determining Radian's rights, as applicable, as subrogee
for payments distributable pursuant to Section 6.01, any payment with respect to
distributions to the Class I-A-5 Certificates which is made with funds received
pursuant to the terms of the Policy, shall not be considered payment of the
Class I-A-5 Certificates from the Trust Fund and shall not result in the
distribution or the provision for the distribution in reduction of the Current
Principal Amount of the Class I-A-5 Certificates as described in this Article
VI.
The Trustee, the Seller, the Depositor and the Master Servicer shall
cooperate in all respects with any reasonable request by Radian for action to
preserve or enforce Radian's rights
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or interests under this Agreement without limiting the rights or affecting the
interests of the Holders as otherwise set forth herein.
(g) Upon a Responsible Officer of the Trustee becoming aware of the
occurrence of an Event of Default, the Trustee shall promptly notify Radian of
such Event of Default.
(h) The Trustee shall promptly notify Radian of either of the following as
to which a Responsible Officer has actual knowledge: (A) the commencement of any
proceeding by or against the Seller commenced under the United States bankruptcy
code or any other applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (an "Insolvency Proceeding") and (B) the making of
any claim in connection with any proceeding seeking the avoidance as a
preferential transfer (a "Preference Claim") of any distribution made with
respect to the Class I-A-5 Certificates as to which it has actual knowledge.
Each Holder of a Class I-A-5 Certificate, by its purchase of Class I-A-5
Certificates, and the Trustee hereby agrees that Radian (so long as no Radian
Default (as defined below) 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 any 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, Radian shall be subrogated to the rights of
the Trustee and each Holder of a Class I-A-5 Certificate in the conduct of any
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.
(i) The Master Servicer shall designate a Radian Contact Person who shall
be available to Radian to provide reasonable access to information regarding the
Mortgage Loans. The initial Radian Contact Person is to the attention of
Secondary Marketing.
(j) The Trustee shall promptly surrender the Policy to Radian for
cancellation upon the reduction of the Current Principal Amount of the Class
I-A-5 Certificates to zero.
(k) The Trustee shall send to Radian any statements or communications sent
by the Trustee to Holders of the Class I-A-5 Certificates including, without
limitation, statements prepared pursuant to Section 6.04, 8.03 and 9.12, in each
case at the same time such reports, statements and communications are otherwise
sent.
(l) For so long as there is not a continuing default by Radian under its
obligations under the Policy (a "Radian Default"), each Holder of a Class I-A-5
Certificate agrees that Radian shall be treated by the Seller, the Depositor,
the Master Servicer, the Securities Administrator and the Trustee as if Radian
were the Holder of all Class I-A-5 Certificates for the purpose (and solely for
the purpose) of the giving of any consent, the making of any direction or the
exercise of any voting or other control rights otherwise given the Holders of
the Class I-A-5 Certificates hereunder without any further consent of the
Holders of the Class I-A-5 Certificates and such holders shall not exercise such
rights without the prior written consent of Radian.
With respect to this Section 6.07, (i) the terms "Receipt" and "Received"
shall mean actual delivery to Radian and Radian's Fiscal Agent, if any, received
prior to 12:00 noon, New
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York City time, on a Business Day; delivery either on a day that is not a
Business Day or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate given
under the Policy by the Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received.
Radian or its Fiscal Agent, if any, shall promptly so advise the Trustee and the
Trustee may submit an amended notice and (ii) "Business Day" means any day other
than (A) a Saturday or Sunday, (B) a day on which Radian is closed or (C) a day
on which banking institutions in the City of New York, New York, or in which the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.
Section 6.08 Reserve Fund.
The Reserve Fund will be maintained by the Trustee in a separate account.
The Reserve Fund will be beneficially owned by Bear, ▇▇▇▇▇▇▇ & Co. Inc. and will
not be an asset of the REMICs. The Trustee shall make a withdrawal on each
Distribution Date from amounts on deposit in the Reserve Fund, to the extent
funds are available therein, to cover any Prepayment Interest Shortfalls
allocated to the Class I-A-5 Certificates that were not offset by Compensating
Interest Payments and any Interest Shortfalls relating to the application of the
Relief Act allocated to the Insured Certificates. The Trustee shall distribute
such amounts withdrawn from the Reserve Fund to the Class I-A-5
Certificateholders on such Distribution Date in the same manner as interest
payments are to be allocated with respect to the Class I-A-5 Certificates
pursuant to Section 6.01. The balance of any amount remaining in the Reserve
Fund on the Distribution Date on which the Current Principal Amount of the Class
I-A-5 Certificates has been reduced to zero will be distributed to Bear, ▇▇▇▇▇▇▇
& Co. Inc. Section 6.09 Rounding Account.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself a segregated trust account that is an Eligible Account,
which shall be titled "Rounding Account, U.S. Bank National Association, as
trustee for the registered holders of Prime Mortgage Trust 2004-1, Mortgage
Pass-Through Certificates, Series 2004-1, Class I-A-5." On the Closing Date,
Bear, ▇▇▇▇▇▇▇ & Co. Inc. shall deposit with the Trustee, and the Trustee shall
deposit into the Rounding Account, cash in an amount equal to $999.99.
(b) The Trustee on each Distribution Date shall, based upon information
provided to it by the Master Servicer for the related Distribution Date,
withdraw funds from the Rounding Account to pay the Rounding Amount to the
Certificate Owners of the Insured Certificates pursuant to Section 6.01(ix). In
addition, the Trustee on each Distribution Date shall, based upon information
provided to it by the Master Servicer for the related Distribution Date,
withdraw funds from the Distribution Account to repay to the Rounding Account
the Rounding Amount from the prior Distribution Date as contemplated in Section
6.01(ix).
Section 6.10 Principal Distributions on the Insured Certificates.
Distributions in reduction of the Current Principal Amount of the Insured
Certificates will be made in integral multiples of $1,000 at the request of the
appropriate representatives of Deceased Holders of such Insured Certificates and
at the request of Living Owners of such
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Insured Certificates or by mandatory distributions by Random Lot, pursuant to
clauses (a) and (d) below, or on a pro rata basis pursuant to clause (e) below.
(a) On each Distribution Date on which distributions in reduction of the
Current Principal Amount of the Insured Certificates are made, such
distributions will be made in the following priority among the Certificate
Owners of the Insured Certificates:
(i) any request by the personal representatives of a Deceased Holder
or by a surviving tenant by the entirety, by a surviving joint tenant or
by a surviving tenant in common, but not exceeding an aggregate amount of
$100,000 per request; and
(ii) any request by a Living Owner, but not exceeding an aggregate
amount of $10,000 per request.
Thereafter, distributions will be made, with respect to the Insured
Certificates, as provided in clauses (i) and (ii) above up to a second $100,000
and $10,000, respectively. This sequence of priorities will be repeated for each
request for principal distributions made by the Certificate Owners of the
Insured Certificates until all such requests have been honored.
Requests for distributions in reduction of the Current Principal Amount of
the Insured Certificates presented on behalf of Deceased Holders in accordance
with the provisions of clause (i) above will be accepted in order of their
receipt by the Depository. Requests for distributions in reduction of the
Current Principal Amount of the Insured Certificate presented in accordance with
the provisions of clause (ii) above will be accepted in the order of their
receipt by the Depository after all requests presented in accordance with clause
(i) above have been honored. All requests for distributions in reduction of the
Current Principal Amount of the Insured Certificates will be accepted in
accordance with the provisions set forth in Section 6.10(c). All requests for
distributions in reduction of the Current Principal Amount of the Insured
Certificates with respect to any Distribution Date must be received by the
Depository and on the Depository's "participant terminal system" and received by
the Trustee no later than the close of business on the related Record Date.
Requests for distributions that are on the Depository's participant terminal
system and received by the Trustee after the related Record Date and requests,
in either case, for distributions not accepted with respect to any Distribution
Date, will be treated as requests for distributions in reduction of the Current
Principal Amount of Insured Certificates on the next succeeding Distribution
Date, and each succeeding Distribution Date thereafter, until such request is
accepted or is withdrawn as provided in Section 6.10(c). Such requests as are
not so withdrawn shall retain their order of priority without the need for any
further action on the part of the appropriate Certificate Owner of the related
Insured Certificate, all in accordance with the procedures of the Depository and
the Trustee. Upon the transfer of the beneficial ownership of the Insured
Certificate, any distribution request previously submitted with respect to such
Certificate will be deemed to have been withdrawn only upon the receipt by the
Trustee on or before the Record Date for such Distribution Date of notification
of such withdrawal in the manner set forth in Section 6.10(c) on the
Depository's participant terminal system.
Distributions in reduction of the Current Principal Amount of the Insured
Certificates will be applied in an amount equal to the Subgroup Principal
Distribution Amount allocable to such
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Class pursuant to Section 6.01(a)(i), plus, with respect to the Insured
Certificates, any amounts available for distribution from the Rounding Account
established as provided in Section 6.09, provided that the aggregate
distribution in reduction of the Current Principal Amount of the Insured
Certificates on any Distribution Date shall be made in an integral multiple of
$1,000.
To the extent that the portion of the Subgroup Principal Distribution
Amount allocable to distributions in reduction of the Current Principal Amount
of the Insured Certificates on any Distribution Date exceeds the aggregate
Current Principal Amount of the Insured Certificates with respect to which
distribution requests, as set forth above, have been received (plus any amounts
required to be distributed pursuant to the Rounding Account with respect to the
Insured Certificates), distributions in reduction of the Current Principal
Amount of the Insured Certificates will be made by mandatory distribution
pursuant to Section 6.10(d).
(b) An Insured Certificate shall be deemed to be held by a Deceased Holder
for purposes of this Section 6.10 if the death of the Certificate Owner thereof
is deemed to have occurred. Insured Certificates beneficially owned by tenants
by the entirety, joint tenants or tenants in common will be considered to be
beneficially owned by a single owner. The death of a tenant by the entirety,
joint tenant or tenant in common will be deemed to be the death of the
Certificate Owner, and the Insured Certificates so beneficially owned will be
eligible for priority with respect to distributions in reduction of the Current
Principal Amount thereof, subject to the limitations stated above. Insured
Certificates beneficially owned by a trust will be considered to be beneficially
owned by each beneficiary of the trust to the extent of such beneficiary's
beneficial interest therein, but in no event will a trust's beneficiaries
collectively be deemed to be Certificate Owners of a number of Individual
Insured Certificates of which such trust is the owner. The death of a
beneficiary of a trust will be deemed to be the death of a Certificate Owner of
the Insured Certificates, as applicable, owned by the trust to the extent of
such beneficiary's beneficial interest in such trust. The death of an individual
who was a tenant by the entirety, joint tenant or tenant in common in a tenancy
which is the beneficiary of a trust will be deemed to be the death of the
beneficiary of such trust. The death of a person who, during his or her
lifetime, was entitled to substantially all of the beneficial ownership
interests in Individual Insured Certificates will be deemed to be the death of
the Certificate Owner of the Insured Certificates regardless of the registration
of ownership, if such beneficial interest can be established to the satisfaction
of the Depository Participant. Such beneficial interest will be deemed to exist
in typical cases of street name or nominee ownership, ownership by a trustee,
ownership under the Uniform Gifts to Minors Act and community property or other
joint ownership arrangements between a husband and wife. Certificate beneficial
interests shall include the power to sell, transfer or otherwise dispose of an
Insured Certificate and the right to receive the proceeds therefrom, as well as
interest and distributions in reduction of the Current Principal Amount of the
Insured Certificates, as applicable, payable with respect thereto. The Trustee
shall not be under any duty to determine independently the occurrence of the
death of any deceased Certificate Owner. The Trustee may rely entirely upon
documentation delivered to it pursuant to Section 6.10(c) in establishing the
eligibility of any Certificate Owner to receive the priority accorded Deceased
Holders in Section 6.10(a).
(c) Requests for distributions in reduction of the Current Principal
Amount of Insured Certificates must be made by delivering a written request
therefor to the Depository Participant or Indirect Depository Participant that
maintains the account evidencing such Certificate
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Owner's interest in Insured Certificates. In the case of a request on behalf of
a Deceased Holder, appropriate evidence of death and any tax waivers are
required to be forwarded to the Depository Participant under separate cover. The
Depository Participant shall forward a certification, satisfactory to the
Trustee, certifying the death of the Deceased Holder and the receipt of the
appropriate death and tax waivers. The Depository Participant should in turn
make the request of the Depository (or, in the case of an Indirect Depository
Participant, such Indirect Depository Participant must notify the related
Depository Participant of such request, which Depository Participant should make
the request of the Depository) on the Depository's participant terminal system.
The Depository may establish such procedures as it deems fair and equitable to
establish the order of receipt of requests for such distributions received by it
on the same day. None of the Depositor, the Seller, the Master Servicer, Radian
or the Trustee shall be liable for any delay in delivery of requests for
distributions or withdrawals of such requests by the Depository, a Depository
Participant or any Indirect Depository Participant.
The Depository shall maintain a list of those Depository Participants
representing the appropriate Certificate Owners of Insured Certificates that
have submitted requests for distributions in reduction of the Current Principal
Amount of Insured Certificates, together with the order of receipt and the
amounts of such requests on the Depository's participant terminal system. The
Depository will honor requests for distributions in the order of their receipt
(subject to the priorities described in Section 6.10(a) above). The Trustee
shall notify the Depository as to which requests should be honored on each
Distribution Date at least two Business Days prior to such Distribution Date
based on the report received by the Trustee pursuant to Section 4.05(c) and
shall notify the Depository as to the amount of the Subgroup Principal
Distribution Amount to be distributed to the Insured Certificates by Random Lot
pursuant to Section 6.10(d). Requests shall be honored by the Depository in
accordance with the procedures, and subject to the priorities and limitations,
described in this Section 6.10. The exact procedures to be followed by the
Trustee and the Depository for purposes of determining such priorities and
limitations will be those established from time to time by the Trustee or the
Depository, as the case may be. The decisions of the Trustee and the Depository
concerning such matters will be final and binding on all affected persons.
Individual Insured Certificates that have been accepted for a distribution
shall be due and payable on the applicable Distribution Date. Such Certificates
shall cease to bear interest after the last day of the month preceding the month
in which such Distribution Date occurs.
Any Certificate Owner of an Insured Certificate that has requested a
distribution may withdraw its request by so notifying in writing the Depository
Participant or Indirect Depository Participant that maintains such Certificate
Owner's account. In the event that such account is maintained by an Indirect
Depository Participant, such Indirect Depository Participant must notify the
related Depository Participant which in turn must forward the withdrawal of such
request on the Depository's participant terminal system. If such withdrawal of a
request for distribution has not been received on the Depository's participant
terminal system on or before the Record Date for the next Distribution Date, the
previously made request for distribution will be irrevocable with respect to the
making of distributions in reduction of the Current Principal Amount of the
Insured Certificates on such Distribution Date.
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In the event any requests for distributions in reduction of the Current
Principal Amount of the Insured Certificates are rejected by the Trustee for
failure to comply with the requirements of this Section 6.10, the Trustee shall
return such request to the appropriate Depository Participant with a copy to the
Depository with an explanation as to the reason for such rejection.
(d) To the extent, if any, that distributions in reduction of the Current
Principal Amount of the Insured Certificates on a Distribution Date exceed the
outstanding Current Principal Amount of the Insured Certificates with respect to
which distribution requests have been received by the related Record Date, as
provided in Section 6.10(a) above, the additional distributions in reduction of
the Current Principal Amount of the Insured Certificates will be made by
mandatory distributions in reduction thereof. Such mandatory distributions on
Individual Insured Certificates will be made by Random Lot in accordance with
the then-applicable Random Lot procedures of the Depository, the Depository
Participants and the Indirect Depository Participants representing the
Certificate Owners. The Trustee shall notify the Depository of the aggregate
amount of the mandatory distribution in reduction of the Current Principal
Amount of the Insured Certificates to be made on any such Distribution Date. The
Depository shall then allocate such aggregate amount among its Depository
Participants on a Random Lot basis. Each Depository Participant and, in turn,
each Indirect Depository Participant will then select, in accordance with its
own procedures, Individual Insured Certificates from among those held in its
accounts to receive mandatory distributions in reduction of the Current
Principal Amount of the Insured Certificates, such that the total amount so
selected is equal to the aggregate amount of such mandatory distributions
allocated to such Depository Participant by the Depository and to such Indirect
Depository Participant by its related Depository Participant, as the case may
be. Depository Participants and Indirect Depository Participants that hold
Insured Certificates selected for mandatory distributions in reduction of the
Current Principal Amount thereof are required to provide notice of such
mandatory distributions to the affected Certificate Owners. The Master Servicer
agrees to notify the Trustee of the amount of distributions in reduction of the
Current Principal Amount of the Insured Certificates to be made on each
Distribution Date in a timely manner such that the Trustee may fulfill its
obligations pursuant to the letter of representations dated the Closing Date
among the Company, the Trustee and the Depository.
(e) Notwithstanding any provisions herein to the contrary, on any
Distribution Date on which (i) any Realized Losses are allocated to the Insured
Certificates and (ii) a Radian Default has occurred and/or is continuing,
distributions in reduction of the Current Principal Amount of the Insured
Certificates will be made pro rata on the basis of their respective percentage
interests with the respect to the Insured Certificates among the Certificate
Owners of the Insured Certificates and will not be made in integral multiples of
$1,000 nor pursuant to requests for distribution as permitted by this Section
6.10 or mandatory distributions by Random Lot.
(f) In the event that Definitive Certificates representing the Insured
Certificates are issued pursuant to Section 5.01, an amendment to this
Agreement, which may be approved without the consent of any Certificateholders,
shall establish procedures relating to the manner in which distributions in
reduction of the Current Principal Amount of such Insured Certificates are to be
made; provided that such procedures shall be consistent, to the extent
practicable and
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customary for certificates similar to the Insured Certificates, with the
provisions of this Section 6.10.
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ARTICLE VII
The Master Servicer
Section 7.01 Liabilities of the Master Servicer.
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it herein.
Section 7.02 Merger or Consolidation of the Master Servicer.
(a) The Master Servicer will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the state of its
incorporation, and will obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
the Certificates or any of the Mortgage Loans and to perform its duties under
this Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03 Indemnification of the Trustee, the Master Servicer and the
Securities Administrator.
(a) The Master Servicer agrees to indemnify the Indemnified Persons for,
and to hold them harmless against, any loss, liability or expense (including
reasonable legal fees and disbursements of counsel) incurred on their part that
may be sustained in connection with, arising out of, or relating to, any claim
or legal action (including any pending or threatened claim or legal action)
relating to this Agreement, the Servicing Agreements, the Assignment Agreements
or the Certificates or the powers of attorney delivered by the Trustee hereunder
(i) related to the Master Servicer's failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or (ii) incurred by reason of
the Master Servicer's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder, provided, in each case, that with respect to
any such claim or legal action (or pending or threatened claim or legal action),
the Trustee shall have given the Master Servicer and the Depositor written
notice thereof promptly after the Trustee shall have with respect to such claim
or legal action knowledge thereof. The Master Servicer's failure to receive any
such notice shall not affect the Trustee's right to indemnification hereunder,
except to the extent the Master Servicer is materially prejudiced by such
failure to give notice. This indemnity shall survive the resignation or removal
of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.
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(b) The Depositor will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise covered by the
Master Servicer's indemnification pursuant to Subsection (a) above.
Section 7.04 Limitations on Liability of the Master Servicer and Others.
Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Depositor, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
(c) The Master Servicer, the Custodian and any director, officer, employee
or agent of the Master Servicer or the Custodian shall be indemnified by the
Trust and held harmless thereby against any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or related to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, the Certificates or any Servicing Agreement
(except to the extent that the Master Servicer is indemnified by the Servicer
thereunder), other than (i) any such loss, liability or expense related to the
Master Servicer's failure to perform its duties in compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement), or to the Custodian's failure to
perform its duties under the Custodial Agreement, respectively, or (ii) any such
loss, liability or expense incurred by reason of the Master Servicer's or the
Custodian's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or under the Custodial Agreement, as applicable,
or by reason of reckless disregard of obligations and duties hereunder or under
the Custodial Agreement, as applicable.
(d) The Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion, with
the consent of the Trustee (which consent shall not be unreasonably withheld),
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Master Servicer Collection
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Account as provided by Section 4.03. Nothing in this Subsection 7.04(d) shall
affect the Master Servicer's obligation to supervise, or to take such actions as
are necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
(f) The Master Servicer shall not be liable for any acts or omissions of
any Servicer, except as otherwise expressly provided herein.
Section 7.05 Master Servicer Not to Resign.
Except as provided in Section 7.07, the Master Servicer shall not resign
from the obligations and duties hereby imposed on it except upon a determination
that any such duties hereunder are no longer permissible under applicable law
and such impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel addressed to the Trustee and Radian to such effect delivered
to the Trustee and Radian. No such resignation by the Master Servicer shall
become effective until the Company or the Trustee or a successor to the Master
Servicer reasonably satisfactory to the Trustee shall have assumed the
responsibilities and obligations of the Master Servicer in accordance with
Section 8.02 hereof. The Trustee shall notify the Rating Agencies and Radian of
the resignation of the Master Servicer.
Section 7.06 Successor Master Servicer.
In connection with the appointment of any successor master servicer or the
assumption of the duties of the Master Servicer, the Company or the Trustee may
make such arrangements for the compensation of such successor master servicer
out of payments on the Mortgage Loans as the Company or the Trustee and such
successor master servicer shall agree. If the successor master servicer does not
agree that such market value is a fair price, such successor master servicer
shall obtain two quotations of market value from third parties actively engaged
in the servicing of single-family mortgage loans. Notwithstanding the foregoing,
the compensation payable to a successor master servicer may not exceed the
compensation which the Master Servicer would have been entitled to retain if the
Master Servicer had continued to act as Master Servicer hereunder.
Section 7.07 Sale and Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and delegate its duties
and obligations in its entirety as Master Servicer under this Agreement and the
Company may terminate the Master Servicer without cause and select a new Master
Servicer; provided, however, that: (i) the purchaser or transferee accepting
such assignment and delegation (a) shall be a Person which shall be qualified to
service mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac; (b) shall have a net worth
of not less than $10,000,000 (unless otherwise approved by each Rating Agency
pursuant
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to clause (ii) below); (c) shall be reasonably satisfactory to the Trustee (as
evidenced in a writing signed by the Trustee); and (d) shall execute and deliver
to the Trustee an agreement, in form and substance reasonably satisfactory to
the Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency and
Radian shall be given prior written notice of the identity of the proposed
successor to the Master Servicer and each Rating Agency's rating of the
Certificates (determined without regard to the Policy) in effect immediately
prior to such assignment, sale and delegation will not be downgraded, qualified
or withdrawn as a result of such assignment, sale and delegation, as evidenced
by a letter to such effect delivered to the Master Servicer and the Trustee;
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee and Radian an Officer's Certificate and an Opinion of
Independent Counsel addressed to the Trustee and Radian, each stating that all
conditions precedent to such action under this Agreement have been completed and
such action is permitted by and complies with the terms of this Agreement; and
(iv) in the event the Master Servicer is terminated without cause by the
Company, the Company shall pay the terminated Master Servicer a termination fee
equal to 0.25% of the aggregate Scheduled Principal Balance of the Mortgage
Loans at the time the master servicing of the Mortgage Loans is transferred to
the successor Master Servicer. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.
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ARTICLE VIII
Default
Section 8.01 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default 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) and only with respect to the defaulting
Master Servicer:
(i) The Master Servicer fails to cause to be deposited in the
Distribution Account any amount so required to be deposited pursuant to
this Agreement (other than a Monthly Advance), and such failure continues
unremedied for a period of three Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer; or
(ii) The Master Servicer fails to observe or perform in any material
respect any other material covenants and agreements set forth in this
Agreement to be performed by it, which covenants and agreements materially
affect the rights of Certificateholders, and such failure continues
unremedied for a period of 60 days after the date on which written notice
of such failure, properly requiring the same to be remedied, shall have
been given to the Master Servicer by the Trustee or to the Master Servicer
and the Trustee by the Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust Fund; or
(iii) There is entered against the Master Servicer a decree or order
by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order is unstayed and
in effect for a period of 60 consecutive days, or an involuntary case is
commenced against the Master Servicer under any applicable insolvency or
reorganization statute and the petition is not dismissed within 60 days
after the commencement of the case; or
(iv) The Master Servicer consents to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or substantially all of its property; or
the Master Servicer admits in writing its inability to pay its debts
generally as they become due, files a petition to take advantage of any
applicable insolvency or reorganization statute, makes an assignment for
the benefit of its creditors, or voluntarily suspends payment of its
obligations;
(v) The Master Servicer assigns or delegates its duties or rights
under this Agreement in contravention of the provisions permitting such
assignment or delegation under Sections 7.05 or 7.07; or
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(vi) The Master Servicer fails to deposit, or cause to be deposited,
in the Distribution Account any Monthly Advance (other than a
Nonrecoverable Advance) by 5:00 p.m. New York City time on the
Distribution Account Deposit Date.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies and Radian, and with the consent of the
Company, may terminate all of the rights and obligations (but not the
liabilities) of the Master Servicer under this Agreement and in and to the
Mortgage Loans and/or the REO Property serviced by the Master Servicer and the
proceeds thereof. Upon the receipt by the Master Servicer of the written notice,
all authority and power of the Master Servicer under this Agreement, whether
with respect to the Certificates, the Mortgage Loans, REO Property or under any
other related agreements (but only to the extent that such other agreements
relate to the Mortgage Loans or related REO Property) shall, subject to Section
8.02, automatically and without further action pass to and be vested in the
Trustee pursuant to this Section 8.01; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; and (ii) originals or copies
of all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder. In addition to any
other amounts which are then, or, notwithstanding the termination of its
activities under this Agreement, may become payable to the Master Servicer under
this Agreement, the Master Servicer shall be entitled to receive, out of any
amount received on account of a Mortgage Loan or related REO Property, that
portion of such payments which it would have received as reimbursement under
this Agreement if notice of termination had not been given. The termination of
the rights and obligations of the Master Servicer shall not affect any
obligations incurred by the Master Servicer prior to such termination.
Notwithstanding the foregoing, if an Event of Default described in clause
(vi) of this Section 8.01 shall occur, the Trustee shall, by notice in writing
to the Master Servicer, which may be delivered by telecopy, immediately
terminate all of the rights and obligations of the Master Servicer thereafter
arising under this Agreement, but without prejudice to any rights it may have as
a Certificateholder or to reimbursement of Monthly Advances and other advances
of its own funds, and the Trustee shall act as provided in Section 8.02 to carry
out the duties of the Master Servicer, including the obligation to make any
Monthly Advance the nonpayment of which was an Event of Default described in
clause (vi) of this Section 8.01. Any such action taken by the Trustee must be
prior to the distribution on the relevant Distribution Date.
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Section 8.02 Trustee to Act; Appointment of Successor.
(a) Upon the receipt by the Master Servicer of a notice of termination
pursuant to Section 8.01 or an Opinion of Independent Counsel pursuant to
Section 7.05 to the effect that the Master Servicer is legally unable to act or
to delegate its duties to a Person which is legally able to act, the Trustee
shall automatically become the successor in all respects to the Master Servicer
in its capacity under this Agreement and the transactions set forth or provided
for herein and shall thereafter be subject to all the responsibilities, duties,
liabilities and limitations on liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof (including the requirement to make
Monthly Advances pursuant to Section 6.05); provided, however, that the Company
shall have the right to either (a) immediately assume the duties of the Master
Servicer or (b) select a successor Master Servicer; provided further, however,
that the Trustee shall have no obligation whatsoever with respect to any
liability (other than advances deemed recoverable and not previously made)
incurred by the Master Servicer at or prior to the time of termination. As
compensation therefor, but subject to Section 7.06, the Trustee shall be
entitled to compensation which the Master Servicer would have been entitled to
retain if the Master Servicer had continued to act hereunder, except for those
amounts due the Master Servicer as reimbursement permitted under this Agreement
for advances previously made or expenses previously incurred. Notwithstanding
the above, the Trustee may, if it shall be unwilling so to act, or shall, if it
is legally unable so to act, appoint or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution
which is a ▇▇▇▇▇▇ Mae- or ▇▇▇▇▇▇▇ Mac-approved servicer, and with respect to a
successor to the Master Servicer only, having a net worth of not less than
$10,000,000, as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided, that the Trustee shall obtain a letter from each
Rating Agency that the ratings, if any, on each of the Certificates (determined
without regard to the Policy) will not be lowered as a result of the selection
of the successor to the Master Servicer. Pending appointment of a successor to
the Master Servicer hereunder, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on the Mortgage Loans as it and such successor shall agree; provided,
however, that the provisions of Section 7.06 shall apply, the compensation shall
not be in excess of that which the Master Servicer would have been entitled to
if the Master Servicer had continued to act hereunder, and that such successor
shall undertake and assume the obligations of the Trustee to pay compensation to
any third Person acting as an agent or independent contractor in the performance
of master servicing responsibilities hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.
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Section 8.03 Notification to Certificateholders.
Upon any termination or appointment of a successor to the Master Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register and to the
Rating Agencies and Radian.
Section 8.04 Waiver of Defaults.
The Trustee shall transmit by mail to all Certificateholders, within 60
days after the occurrence of any Event of Default actually known to a
Responsible Officer of the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default. The Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund may, on behalf of all Certificateholders, waive any default by the
Master Servicer in the performance of its obligations hereunder and the
consequences thereof, except a default in the making of or the causing to be
made any required distribution on the Certificates, which default may only be
waived by Holders of Certificates evidencing Fractional Undivided Interests
aggregating 100% of the Trust Fund. Upon any such waiver of a past default, such
default shall be deemed to cease to exist, and any Event of Default arising
therefrom shall be deemed to have been timely remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Trustee shall give notice of any such waiver to the Rating Agencies and
Radian.
Section 8.05 List of Certificateholders.
Upon written request of three or more Certificateholders of record, for
purposes of communicating with other Certificateholders with respect to their
rights under this Agreement, the Trustee will afford such Certificateholders
access during business hours to the most recent list of Certificateholders held
by the Trustee.
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ARTICLE IX
Concerning the Trustee and the Securities Administrator
Section 9.01 Duties of the Trustee and the Securities Administrator.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred, and the
Securities Administrator each undertake to perform such duties and only such
duties as are specifically set forth in this Agreement as duties of the Trustee
and the Securities Administrator, respectively. If an Event of Default has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and subject to Section
8.02(b) use the same degree of care and skill in their exercise, as a prudent
person would exercise under the circumstances in the conduct of his own affairs.
(b) Upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments which are specifically required
to be furnished to the Trustee and the Securities Administrator pursuant to any
provision of this Agreement, the Trustee and the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished hereunder; provided, further, that neither the Trustee nor
the Securities Administrator shall be responsible for the accuracy or
verification of any calculation provided to it pursuant to this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.01 and 10.01 herein based
solely on the report of the Securities Administrator.
(d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred,
the duties and obligations of the Trustee and the Securities Administrator
shall be determined solely by the express provisions of this Agreement,
neither the Trustee nor the Securities Administrator shall be liable
except for the performance of their respective duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee or the
Securities Administrator and, in the absence of bad faith on the part of
the Trustee or the Securities Administrator, respectively, the Trustee or
the Securities Administrator, respectively, may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee or the
Securities Administrator, respectively, and conforming to the requirements
of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity for an error of judgment made in good
faith by a Responsible Officer or
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Responsible Officers of the Trustee or an officer of the Securities
Administrator, respectively, unless it shall be proved that the Trustee or
the Securities Administrator, respectively, was negligent in ascertaining
the pertinent facts;
(iii) Neither the Trustee nor the Securities Administrator shall be
liable with respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the directions of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not
less than 25% of the Trust Fund, if such action or non-action relates to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or the Securities Administrator, respectively, or
exercising any trust or other power conferred upon the Trustee or the
Securities Administrator, respectively, under this Agreement;
(iv) The Trustee shall not be required to take notice or be deemed
to have notice or knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee's Corporate Trust Office shall have
actual knowledge thereof. In the absence of such notice, the Trustee may
conclusively assume there is no such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of any
insufficiency in any Account held by or in the name of Trustee unless it
is determined by a court of competent jurisdiction that the Trustee's
gross negligence or willful misconduct was the primary cause of such
insufficiency (except to the extent that the Trustee is obligor and has
defaulted thereon);
(vi) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Trustee or the Securities Administrator be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee or the
Securities Administrator, respectively, has been advised of the likelihood
of such loss or damage and regardless of the form of action;
(vii) None of the Securities Administrator, the Depositor, the
Company or the Trustee shall be responsible for the acts or omissions of
the other, it being understood that this Agreement shall not be construed
to render them partners, joint venturers or agents of one another and
(viii) Neither the Trustee nor the Securities Administrator shall be
required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require the
Trustee or the Securities Administrator to perform, or be responsible for
the manner of performance of, any of the obligations of the Master
Servicer under the Servicing Agreements, except during such time, if any,
as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Master Servicer in accordance with
the terms of this Agreement.
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(e) All funds received by the Master Servicer and the Trustee and required
to be deposited in the Master Servicer Collection Account or Distribution
Account pursuant to this Agreement will be promptly so deposited by the Master
Servicer and the Trustee.
(f) Except for those actions that the Trustee or the Securities
Administrator is required to take hereunder, neither the Trustee nor the
Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.
Section 9.02 Certain Matters Affecting the Trustee and the Securities
Administrator.
Except as otherwise provided in Section 9.01:
(i) The Trustee and the Securities Administrator may rely and shall
be protected in acting or refraining from acting in reliance on any
resolution, certificate of the Depositor, the Master Servicer or a
Servicer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may consult with
counsel and any advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action
taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(iii) Neither the Trustee nor the Securities Administrator shall be
under any obligation to exercise any of the trusts or powers vested in it
by this Agreement, other than its obligation to give notices pursuant to
this Agreement, or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of any
of the Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default of which a Responsible Officer of the
Trustee has actual knowledge (which has not been cured or waived), to
exercise such of the rights and powers vested in it by this Agreement, and
to use the same degree of care and skill in their exercise, as a prudent
person would exercise under the circumstances in the conduct of his own
affairs;
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have
occurred, neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or
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document, unless requested in writing to do so by Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 25% of
the Trust Fund and provided that the payment within a reasonable time to
the Trustee or the Securities Administrator, as applicable, of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee or the Securities
Administrator, as applicable, reasonably assured to the Trustee or the
Securities Administrator, as applicable, by the security afforded to it by
the terms of this Agreement. The Trustee or the Securities Administrator
may require reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of every such
examination shall be paid by the Certificateholders requesting the
investigation;
(vi) The Trustee and the Securities Administrator may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or through Affiliates, agents or attorneys; provided, however,
that the Trustee may not appoint any agent to perform its custodial
functions with respect to the Mortgage Files or paying agent functions
under this Agreement without the express written consent of the Master
Servicer, which consent will not be unreasonably withheld. Neither the
Trustee nor the Securities Administrator shall be liable or responsible
for the misconduct or negligence of any of the Trustee's or the Securities
Administrator's agents or attorneys or a custodian or paying agent
appointed hereunder by the Trustee or the Securities Administrator with
due care and, when required, with the consent of the Master Servicer;
(vii) Should the Trustee or the Securities Administrator deem the
nature of any action required on its part, other than a payment or
transfer under Subsection 4.01(b) or Section 4.02, to be unclear, the
Trustee or the Securities Administrator, respectively, may require prior
to such action that it be provided by the Depositor with reasonable
further instructions;
(viii) The right of the Trustee or the Securities Administrator to
perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and neither the Trustee nor the Securities
Administrator shall be accountable for other than its negligence or
willful misconduct in the performance of any such act;
(ix) Neither the Trustee nor the Securities Administrator shall be
required to give any bond or surety with respect to the execution of the
trust created hereby or the powers granted hereunder, except as provided
in Subsection 9.07; and
(x) Neither the Trustee nor the Securities Administrator shall have
any duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Mortgage Loan by the Seller
pursuant to this Agreement or the Mortgage Loan Purchase Agreement, as
applicable, or the eligibility of any Mortgage Loan for purposes of this
Agreement.
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Section 9.03 Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Depositor, and neither the Trustee, or the
Custodian on its behalf, nor the Securities Administrator shall have any
responsibility for their correctness. Neither the Trustee nor the Securities
Administrator makes any representation as to the validity or sufficiency of the
Certificates (other than the signature and countersignature of the Trustee on
the Certificates) or of any Mortgage Loan except as expressly provided in
Sections 2.02 and 2.05 hereof; provided, however, that the foregoing shall not
relieve the Trustee, or the Custodian on its behalf, of the obligation to review
the Mortgage Files pursuant to Sections 2.02 and 2.04. The Trustee's signature
and countersignature (or countersignature of its agent) on the Certificates
shall be solely in its capacity as Trustee and shall not constitute the
Certificates an obligation of the Trustee in any other capacity. Neither the
Trustee or the Securities Administrator shall be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor with respect to the Mortgage Loans. Neither the Trustee nor the
Securities Administrator shall be responsible for the legality or validity of
this Agreement or any document or instrument relating to this Agreement, the
validity of the execution of this Agreement or of any supplement hereto or
instrument of further assurance, or the validity, priority, perfection or
sufficiency of the security for the Certificates issued hereunder or intended to
be issued hereunder. Neither the Trustee nor the Securities Administrator shall
at any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing statement
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to record this Agreement.
Section 9.04 Trustee and Securities Administrator May Own Certificates.
The Trustee and the Securities Administrator in its individual capacity or
in any capacity other than as Trustee hereunder may become the owner or pledgee
of any Certificates with the same rights it would have if it were not Trustee or
the Securities Administrator, as applicable, and may otherwise deal with the
parties hereto.
Section 9.05 Trustee's and Securities Administrator's Fees and Expenses.
The fees and expenses of the Trustee and the Securities Administrator
shall be paid in accordance with a side letter agreement between the Trustee and
the Master Servicer. In addition, the Trustee and the Securities Administrator
will be entitled to recover from the Master Servicer Collection Account pursuant
to Section 4.03(b) all reasonable out-of-pocket expenses, disbursements and
advances and the expenses of the Trustee and the Securities Administrator,
respectively, in connection with any Event of Default, any breach of this
Agreement or any claim or legal action (including any pending or threatened
claim or legal action) incurred or made by
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the Trustee or the Securities Administrator, respectively, in the administration
of the trusts hereunder (including the reasonable compensation, expenses and
disbursements of its counsel) except any such expense, disbursement or advance
as may arise from its negligence or intentional misconduct or which is the
responsibility of the Certificateholders. If funds in the Master Servicer
Collection Account are insufficient therefor, the Trustee and the Securities
Administrator shall recover such expenses from the Depositor and the Depositor
hereby agrees to pay such expenses, disbursements or advances upon demand. Such
compensation and reimbursement obligation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust.
Section 9.06 Eligibility Requirements for Trustee and Securities
Administrator.
The Trustee and any successor Trustee and the Securities Administrator and
any successor Securities Administrator shall during the entire duration of this
Agreement be a state bank or trust company or a national banking association
organized and doing business under the laws of such state or the United States
of America, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "BBB" or higher by S&P or Fitch Ratings with respect to their
long-term rating and rated "BBB" or higher by S&P or Fitch Ratings and "Baa2" or
higher by Moody's with respect to any outstanding long-term unsecured
unsubordinated debt, and, in the case of a successor Trustee or successor
Securities Administrator other than pursuant to Section 9.10, rated in one of
the two highest long-term debt categories of, or otherwise acceptable to, each
of the Rating Agencies. If the 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 9.06 the combined
capital and surplus of such corporation shall be deemed to be its total equity
capital (combined capital and surplus) as set forth in its most recent report of
condition so published. In case at any time the Trustee or the Securities
Administrator shall cease to be eligible in accordance with the provisions of
this Section 9.06, the Trustee or the Securities Administrator shall resign
immediately in the manner and with the effect specified in Section 9.08.
Section 9.07 Insurance.
The Trustee and the Securities Administrator, at their own expense, shall
at all times maintain and keep in full force and effect: (i) fidelity insurance,
(ii) theft of documents insurance and (iii) forgery insurance (which may be
collectively satisfied by a "Financial Institution Bond" and/or a "Bankers'
Blanket Bond"). All such insurance shall be in amounts, with standard coverage
and subject to deductibles, as are customary for insurance typically maintained
by banks or their affiliates which act as custodians for investor-owned mortgage
pools. A certificate of an officer of the Trustee or the Securities
Administrator as to the Trustee's or the Securities Administrator's,
respectively, compliance with this Section 9.07 shall be furnished to any
Certificateholder upon reasonable written request.
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Section 9.08 Resignation and Removal of the Trustee and Securities
Administrator.
(a) The Trustee and the Securities Administrator may at any time resign
and be discharged from the Trust hereby created by giving written notice thereof
to the Depositor and the Master Servicer, with a copy to the Rating Agencies.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor Trustee or successor Securities Administrator, as applicable, by
written instrument, in triplicate, one copy of which instrument shall be
delivered to each of the resigning Trustee or Securities Administrator, as
applicable, the successor Trustee or Securities Administrator, as applicable. If
no successor Trustee or Securities Administrator shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
Securities Administrator.
(b) If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 9.06 and shall fail
to resign after written request therefor by the Depositor or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator, as applicable, or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator, as applicable, or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Depositor shall
promptly remove the Trustee, or shall be entitled to remove the Securities
Administrator, as applicable, and appoint a successor Trustee or Securities
Administrator, as applicable, by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the Trustee or Securities
Administrator, as applicable, so removed, the successor Trustee or Securities
Administrator, as applicable.
(c) The Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund may at any time remove the
Trustee or the Securities Administrator and appoint a successor Trustee or
Securities Administrator by written instrument or instruments, in quadruplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Depositor, the Master
Servicer, the Securities Administrator (if the Trustee is removed), the Trustee
(if the Securities Administrator is removed), and the Trustee or Securities
Administrator so removed and the successor so appointed. In the event that the
Trustee or Securities Administrator is removed by the Holders of Certificates in
accordance with this Section 9.08(c), the Holders of such Certificates shall be
responsible for paying any compensation payable to a successor Trustee or
successor Securities Administrator, in excess of the amount paid to the
predecessor Trustee or predecessor Securities Administrator, as applicable.
(d) No resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor Trustee or Securities Administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
except upon appointment of and acceptance of such appointment by the successor
Trustee or Securities Administrator as provided in Section 9.09.
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Section 9.09 Successor Trustee and Successor Securities Administrator.
(a) Any successor Trustee or Securities Administrator appointed as
provided in Section 9.08 shall execute, acknowledge and deliver to the Depositor
and to its predecessor Trustee or Securities Administrator an instrument
accepting such appointment hereunder. The resignation or removal of the
predecessor Trustee or Securities Administrator shall then become effective and
such successor Trustee or Securities Administrator, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee or Securities Administrator herein. The predecessor
Trustee or Securities Administrator shall after payment of its outstanding fees
and expenses promptly deliver to the successor Trustee or Securities
Administrator, as applicable, all assets and records of the Trust held by it
hereunder, and the Depositor and the predecessor Trustee or Securities
Administrator, as applicable, shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor Trustee or Securities Administrator, as
applicable, all such rights, powers, duties and obligations.
(b) No successor Trustee or Securities Administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor Trustee or Securities Administrator shall be eligible
under the provisions of Section 9.06.
(c) Upon acceptance of appointment by a successor Trustee or Securities
Administrator as provided in this Section 9.09, the successor Trustee or
Securities Administrator shall mail notice of the succession of such Trustee or
Securities Administrator hereunder to all Certificateholders at their addresses
as shown in the Certificate Register and to the Rating Agencies and Radian. The
Company shall pay the cost of any mailing by the successor Trustee or Securities
Administrator.
Section 9.10 Merger or Consolidation of Trustee or Securities
Administrator.
Any state bank or trust company or national banking association into which
the Trustee or the Securities Administrator may be merged or converted or with
which it may be consolidated or any state bank or trust company or national
banking association resulting from any merger, conversion or consolidation to
which the Trustee or the Securities Administrator, respectively, shall be a
party, or any state bank or trust company or national banking association
succeeding to all or substantially all of the corporate trust business of the
Trustee or the Securities Administrator, respectively, shall be the successor of
the Trustee or the Securities Administrator, respectively, hereunder, provided
such state bank or trust company or national banking association shall be
eligible under the provisions of Section 9.06. Such succession shall be valid
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Section 9.11 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or property constituting the same may at the time be located, the
Depositor and the Trustee acting jointly
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shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee and the Depositor to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 9.11, such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider
necessary or desirable.
(b) If the Depositor shall not have joined in such appointment within 15
days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment without the Depositor.
(c) No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor Trustee under Section 9.06 hereunder and
no notice to Certificateholders of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 9.08 hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
(e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
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.
(g) No trustee under this Agreement shall be personally liable by reason
of any act or omission of another trustee under this Agreement. The Depositor
and the Trustee acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
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Section 9.12 Federal Information Returns and Reports to
Certificateholders; REMIC Administration.
(a) For federal income tax purposes, the taxable year of each REMIC shall
be a calendar year and the Securities Administrator shall maintain or cause the
maintenance of the books of each such REMIC on the accrual method of accounting.
(b) The Securities Administrator shall prepare and file or cause to be
filed with the Internal Revenue Service, and the Trustee shall sign, Federal tax
information returns or elections required to be made hereunder with respect to
each REMIC, the Trust Fund, if applicable, and the Certificates containing such
information and at the times and in the manner as may be required by the Code or
applicable Treasury regulations, and shall furnish to each Holder of
Certificates at any time during the calendar year for which such returns or
reports are made such statements or information at the times and in the manner
as may be required thereby, including, without limitation, reports relating to
interest, original issue discount and market discount or premium (using a
constant prepayment assumption of 250% PSA). The Securities Administrator will
apply for an Employee Identification Number from the IRS under Form SS-4 or any
other acceptable method for all tax entities. In connection with the foregoing,
the Securities Administrator shall timely prepare and file, and the Trustee
shall sign, IRS Form 8811, which shall provide the name and address of the
person who can be contacted to obtain information required to be reported to the
holders of regular interests in each REMIC (the "REMIC Reporting Agent"). The
Trustee shall make elections to treat each REMIC as a REMIC (which elections
shall apply to the taxable period ending December 31, 2004 and each calendar
year thereafter) in such manner as the Code or applicable Treasury regulations
may prescribe, and as described by the Securities Administrator. The Trustee
shall sign all tax information returns filed pursuant to this Section and any
other returns as may be required by the Code. The Holder of the Class R-I
Certificate is hereby designated as the "Tax Matters Person" (within the meaning
of Treas. Reg. ss.ss.1.860F-4(d)) for REMIC I, the Holder of the Class R-II
Certificate is hereby designated as the "Tax Matters Person" for REMIC II and
the Holder of the Class R-III Certificate is hereby designated as the "Tax
Matters Person" for REMIC III. The Securities Administrator is hereby designated
and appointed as the agent of each such Tax Matters Person. Any Holder of a
Residual Certificate will by acceptance thereof appoint the Securities
Administrator as agent and attorney-in-fact for the purpose of acting as Tax
Matters Person for each REMIC during such time as the Securities Administrator
does not own any such Residual Certificate. In the event that the Code or
applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Securities Administrator from
acting as agent for the Tax Matters Person, the Trustee and the Securities
Administrator shall take whatever action that in its sole good faith judgment is
necessary for the proper filing of such information returns or for the provision
of a tax matters person, including designation of the Holder of a Residual
Certificate to sign such returns or act as tax matters person. Each Holder of a
Residual Certificate shall be bound by this Section.
(c) The Securities Administrator shall provide upon request and receipt of
reasonable compensation, such information as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
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Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).
(d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, any state income tax returns required under
Applicable State Law with respect to each REMIC or the Trust Fund.
(e) Notwithstanding any other provision of this Agreement, the Trustee and
the Securities Administrator shall comply with all federal withholding
requirements respecting payments to Certificateholders of interest or original
issue discount on the Mortgage Loans, that the Trustee or the Securities
Administrator reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee or the Securities Administrator withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee or the Securities
Administrator shall, together with its monthly report to such
Certificateholders, indicate such amount withheld.
(f) The Trustee and the Securities Administrator agree to indemnify the
Trust Fund and the Depositor for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants and the Securities Administrator's covenants, respectively,
set forth in this Section 9.12; provided, however, such liability and obligation
to indemnify in this paragraph shall not be joint and several and neither the
Trustee nor the Securities Administrator shall be liable or be obligated to
indemnify the Trust Fund for the failure by the other to perform any duty under
this Agreement or the breach by the other of any covenant in this Agreement.
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ARTICLE X
Termination
Section 10.01 Termination Upon Repurchase by the Depositor or its Designee
or Liquidation of the Mortgage Loans.
(a) Subject to Section 10.02, the respective obligations and
responsibilities of the Depositor, the Trustee, the Master Servicer and the
Securities Administrator created hereby, other than the obligation of the
Trustee to make payments to Certificateholders as hereinafter set forth shall
terminate upon:
(i) the repurchase by or at the direction of the Depositor or its
designee of all of the Mortgage Loans and all related REO Property
remaining in the Trust at a price (in each case, the "Termination Purchase
Price") equal to the sum of (a) 100% of the Outstanding Principal Balance
of each Mortgage Loan (other than a Mortgage Loan related to REO Property)
as of the date of repurchase, net of the principal portion of any
unreimbursed Monthly Advances made by the purchaser, together with
interest at the applicable Mortgage Interest Rate accrued but unpaid to,
but not including, the first day of the month of repurchase, (b) the
appraised value of any related REO Property, less the good faith estimate
of the Depositor of liquidation expenses to be incurred in connection with
its disposal thereof (but not more than the Outstanding Principal Balance
of the related Mortgage Loan, together with interest at the applicable
Mortgage Interest Rate accrued on that balance but unpaid to, but not
including, the first day of the month of repurchase), such appraisal to be
calculated by an appraiser mutually agreed upon by the Depositor and the
Trustee at the expense of the Depositor plus payment due Radian of all
Radian Reimbursement Amounts, (c) unreimbursed out-of pocket costs of the
Master Servicer, including unreimbursed servicing advances and the
principal portion of any unreimbursed Monthly Advances, made on the
Mortgage Loans prior to the exercise of such repurchase right and (d) any
unreimbursed costs and expenses of the Trustee and the Securities
Administrator payable pursuant to Section 9.05; or
(ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired with respect to any Mortgage Loan; provided, however, that in the
event that an advance has been made, but not yet recovered, at the time of
such termination, the Person having made such advance shall be entitled to
receive, notwithstanding such termination, any payments received
subsequent thereto with respect to which such advance was made; or
(iii) the payment to the Certificateholders and Radian of all
amounts required to be paid to them pursuant to this Agreement.
(b) In no event, however, shall the Trust created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.
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(c) The right of the Depositor or its designee to repurchase all the
assets of the Trust Fund as described in Subsection 10.01(a)(i) above shall be
exercisable only if (i) the aggregate Scheduled Principal Balance of the
Mortgage Loans at the time of any such repurchase is less than 10% of the
Cut-Off Date Balance, or (ii) the Depositor, based upon an Opinion of Counsel
addressed to the Depositor, the Trustee and the Securities Administrator, has
determined that the REMIC status of REMIC I, REMIC II or REMIC III has been lost
or that a substantial risk exists that such REMIC status will be lost for the
then-current taxable year. At any time thereafter, in the case of (i) or (ii)
above, the Depositor may elect to terminate REMIC I, REMIC II and REMIC III at
any time, and upon such election, the Depositor or its designee, shall
repurchase all the assets of the Trust Fund described in Subsection 10.01(a)(i)
above.
(d) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Master Servicer, the Securities
Administrator, Radian and the Rating Agencies, upon which the Certificateholders
shall surrender their Certificates to the Trustee for payment of the final
distribution and cancellation. Such notice shall be given by letter, mailed not
earlier than the l5th day and not later than the 25th day of the month next
preceding the month of such final distribution, and shall specify (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified.
(e) If the option of the Depositor to repurchase or cause the repurchase
of all the assets in the Trust Fund as described in Subsection 10.01(a)(i)
above, is exercised, the Depositor and/or its designee shall deliver to the
Trustee for deposit in the Distribution Account, by the Business Day prior to
the applicable Distribution Date, an amount equal to the Termination Purchase
Price. Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to such Certificateholders as
directed by the Securities Administrator in writing an amount determined as
follows: with respect to each Certificate (other than the Interest Only
Certificates and the Class R Certificates), the outstanding Current Principal
Amount, plus with respect to each Certificate (other than the Class R
Certificates), one month's interest thereon at the applicable Pass-Through Rate;
and with respect to the Class R Certificates, the percentage interest evidenced
thereby multiplied by the difference, if any, between the above described
repurchase price and the aggregate amount to be distributed to the Holders of
the Certificates (other than the Class R Certificates). If the proceeds with
respect to the Mortgage Loans are not sufficient to pay all of the Senior
Certificates in full, any such deficiency shall be allocated first, to the
Subordinate Certificates, in inverse order of their numerical designations and
then to the Senior Certificates on a pro rata basis. Upon deposit of the
Termination Purchase Price and following such final Distribution Date, the
Trustee shall release promptly to the Depositor and/or its designee the Mortgage
Files for the remaining Mortgage Loans, and the Accounts with respect thereto
shall terminate, subject to the Trustee's obligation to hold any amounts payable
to the Certificateholders in trust without interest pending final distributions
pursuant to Subsection 10.01(g). Any other amounts remaining in the Accounts
will belong to the Depositor.
(f) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the
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Trustee for deposit in the Distribution Account all distributable amounts
remaining in the Master Servicer Collection Account. Upon the presentation and
surrender of the Certificates, the Trustee shall distribute to the remaining
Certificateholders, pursuant to the written direction of the Securities
Administrator and in accordance with their respective interests, all
distributable amounts remaining in the Distribution Account. Upon deposit by the
Master Servicer of such distributable amounts, and following such final
Distribution Date, the Trustee shall release promptly to the Depositor or its
designee the Mortgage Files for the remaining Mortgage Loans, and the Master
Servicer Collection Account and the Distribution Account shall terminate,
subject to the Trustee's obligation to hold any amounts payable to the
Certificateholders in trust without interest pending final distributions
pursuant to this Subsection 10.01(f).
(g) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.
Section 10.02 Additional Termination Requirements.
(a) If the option of the Depositor to repurchase all of the Mortgage Loans
under Subsection 10.01(a)(i) above is exercised, the Trust Fund and each REMIC
shall be terminated in accordance with the following additional requirements,
unless the Trustee and Radian have been furnished with an Opinion of Counsel
addressed to the Trustee and Radian to the effect that the failure of the Trust
to comply with the requirements of this Section 10.02 will not (i) result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code on any REMIC or (ii) cause any REMIC to fail to qualify as a REMIC at
any time that any Regular Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date, at the
written direction of the Depositor, the Trustee, as agent for the
respective Tax Matters Persons, shall adopt a plan of complete liquidation
of each REMIC in the case of a termination under Subsection 10.01(a)(i),
provided to it by the Depositor, which meets the requirements of a
"qualified liquidation" under Section 860F of the Code and any regulations
thereunder;
(ii) the Depositor shall notify the Trustee at the commencement of
such 90-day liquidation period and, at or prior to the time of making of
the final payment on the Certificates, the Trustee shall sell or otherwise
dispose of all of the remaining assets of the Trust Fund in accordance
with the terms hereof; and
(iii) at or after the time of adoption of such a plan of complete
liquidation of each REMIC, and at or prior to the final Distribution Date
relating thereto, the Trustee shall sell for cash all of the assets of the
Trust to or at the direction of the Depositor, and each REMIC shall
terminate at such time.
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(b) By their acceptance of the Residual Certificates, the Holders thereof
hereby (i) agree to adopt such a plan of complete liquidation of the related
REMIC upon the written request of the Depositor, and to take such action in
connection therewith as may be reasonably requested by the Depositor and (ii)
appoint the Depositor as their attorney-in-fact, with full power of
substitution, for purposes of adopting such a plan of complete liquidation. The
Trustee shall adopt such plan of liquidation by filing the appropriate statement
on the final tax return of each REMIC. Upon complete liquidation or final
distribution of all of the assets of the Trust Fund, the Trust Fund and each
REMIC shall terminate.
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ARTICLE XI
Miscellaneous Provisions
Section 11.01 Intent of Parties.
The parties intend that each of REMIC I, REMIC II and REMIC III shall be
treated as a REMIC for federal income tax purposes and that the provisions of
this Agreement should be construed in furtherance of this intent.
Section 11.02 Amendment.
(a) This Agreement may be amended from time to time by the Company, the
Depositor, the Master Servicer, the Securities Administrator and the Trustee,
with the consent of Radian but without notice to or the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein that may be defective or inconsistent with any
other provisions herein or therein, 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 Independent Counsel, addressed to the Trustee and Radian, adversely
affect in any material respect the interests of any Certificateholder
(determined without regard to the Policy).
(b) This Agreement may also be amended from time to time by the Company,
the Master Servicer, the Depositor, the Securities Administrator and the
Trustee, with the consent of Radian and the Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 51% of the Trust Fund
or of the applicable Class or Classes, if such amendment affects only such Class
or Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding, or (iii) cause any REMIC to fail to qualify as a
REMIC for federal income tax purposes, as evidenced by an Opinion of Independent
Counsel addressed to the Trustee and Radian which shall be provided to the
Trustee and Radian other than at the Trustee's expense or Radian's expense.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 11.02(b),
Certificates registered in the name of or held for the benefit of the Depositor,
the Securities Administrator, the Master Servicer, or the Trustee or any
Affiliate thereof shall be entitled to vote their Fractional Undivided Interests
with respect to matters affecting such Certificates.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish a copy of such amendment or written notification of the substance of
such amendment to each Certificateholder, with a copy to the Rating Agencies and
Radian.
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(d) In the case of an amendment under Subsection 11.02(b) above, it shall
not be necessary for the Certificateholders to approve the particular form of
such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. The manner of obtaining such consents
and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel addressed to
the Trustee stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee and the Securities Administrator may,
but shall not be obligated to, enter into any such amendment which affects the
Trustee's or the Securities Administrator's own respective rights, duties or
immunities under this Agreement.
Section 11.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere. The Depositor shall effect such recordation, at the expense
of the Trust upon the request in writing of a Certificateholder, but only if
such direction is accompanied by an Opinion of Counsel (provided at the expense
of the Certificateholder requesting recordation) to the effect that such
recordation would materially and beneficially affect the interests of the
Certificateholders or is required by law.
Section 11.04 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(b) Except as expressly provided in this Agreement, no Certificateholders
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to establish the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholders be under
any liability to any third Person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon, under or with respect to this Agreement against the Depositor, the
Securities Administrator, the Master Servicer or any successor to any such
parties unless (i) such Certificateholder previously shall have given to the
Trustee a written notice of a continuing default, as herein provided, (ii) the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51%
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of the Trust Fund shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs and expenses and liabilities to be incurred therein or thereby, and
(iii) the Trustee, for 60 days after its receipt of such notice, request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding.
(d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing. 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 expressly required, to the
Depositor. 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 Depositor, if made in the manner
provided in this Section 11.05.
(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 a certificate of a 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. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Securities Administrator, the Depositor, the Master Servicer nor
any successor to any such parties shall be affected by any notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action of the holder of any Certificate shall bind every future holder
of the same Certificate and the holder of every Certificate issued upon the
registration of transfer or exchange thereof, if applicable, or in lieu thereof
with respect to anything done, omitted or suffered to be done by the
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Trustee, the Securities Administrator, the Depositor, the Master Servicer or any
successor to any such party in reliance thereon, whether or not notation of such
action is made upon such Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Securities Administrator, the Depositor,
the Master Servicer or any Affiliate thereof shall be disregarded, except as
otherwise provided in Section 11.02(b) and except that, in determining whether
the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Certificates which have been pledged in good faith to the Trustee,
the Securities Administrator, the Depositor, the Master Servicer or any
Affiliate thereof may be regarded as outstanding if the pledgor establishes to
the satisfaction of the Trustee the pledgor's right to act with respect to such
Certificates and that the pledgor is not an Affiliate of the Trustee, the
Securities Administrator, the Depositor, or the Master Servicer, as the case may
be.
Section 11.06 Governing Law.
THIS AGREEMENT AND THE CERTIFICATES SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
RULES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW,
WHICH THE PARTIES HERETO EXPRESSLY RELY UPON IN THE CHOICE OF SUCH LAW AS THE
GOVERNING LAW HEREUNDER) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.07 Notices.
All demands and notices hereunder shall be in writing and shall be deemed
given when delivered at (including delivery by facsimile) or mailed by
registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, to (i) in the case of the Depositor, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Vice President-Servicing, telecopier number:
(▇▇▇) ▇▇▇-▇▇▇▇, or to such other address as may hereafter be furnished to the
other parties hereto in writing; (ii) in the case of the Trustee, at its
Corporate Trust Office, or such other address as may hereafter be furnished to
the other parties hereto in writing; (iii) in the case of the Company, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Vice President-Servicing,
telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇, or to such other address as may hereafter be
furnished to the other parties hereto in writing; (iv) in the case of the Master
Servicer or Securities Administrator, ▇▇▇▇▇ Fargo Bank, National Association,
▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or, in the case of overnight deliveries,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 21045) (Attention: Corporate Trust
Services - Prime 2004-1), facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, or such other address
as may hereafter be furnished to the other parties hereto in writing; (v) in the
case of the Rating Agencies, Fitch, Inc. [address] and Standard & Poor's, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or (vi) in the case of Radian, Radian Asset Assurance Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, New
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York 10017, ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇, Attention: Chief Risk Officer and Chief Legal
Officer (Prime Mortgage Trust 2004-1) or such other address as hereafter may be
furnished to the other parties in writing. Any notice delivered to the
Depositor, the Master Servicer, the Securities Administrator or the Trustee
under this Agreement shall be effective only upon receipt. Any notice required
or permitted to be mailed to a Certificateholder, unless otherwise provided
herein, shall be given by first-class mail, postage prepaid, at the address of
such Certificateholder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice.
Section 11.08 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severed from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the holders thereof.
Section 11.09 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto.
Section 11.10 Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
Section 11.11 Counterparts.
This Agreement may be executed in two or more counterparts each of which
when so executed and delivered shall be an original but all of which together
shall constitute one and the same instrument.
Section 11.12 Notice to Rating Agencies.
The article and section headings herein are for convenience of reference
only, and shall not limited or otherwise affect the meaning hereof. The Trustee
shall promptly provide notice to each Rating Agency and Radian with respect to
each of the following of which a Responsible Officer of the Trustee has actual
knowledge:
1. Any material change or amendment to this Agreement or the Servicing
Agreements;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer, the Trustee or
the Securities Administrator;
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4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Master Servicer Collection Account or
the Distribution Account.
Section 11.13 Radian Rights.
(a) All notices, statements, reports, certificates, lists or opinions
required by this Agreement to be sent to the parties hereto, the Rating Agencies
or the Class I-A-5 Certificateholders shall also be sent at such time to Radian
at the notice address set forth in Section 11.07.
(b) Radian shall be an express third party beneficiary of this Agreement
for the purpose of enforcing the provisions hereof to the extent of Radian's
rights explicitly specified herein as if a party hereto.
(c) All references herein to the ratings assigned to the Certificates and
to the interests of any Certificateholders shall be without regard to the
Policy.
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IN WITNESS WHEREOF, the Depositor, the Trustee, the Master Servicer and
the Securities Administrator have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first
above written.
STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC., as Depositor
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By: /S/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: Venata ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, as Master Servicer
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Securities Administrator
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
EMC MORTGAGE CORPORATION
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
-129-
Accepted and Agreed as to
Sections 2.01, 2.02, 2.03, 2.04 and 9.09(c)
in its capacity as Seller
EMC MORTGAGE CORPORATION
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
-130-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of July, 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, known to me to be a(n) Vice
President of Structured Asset Mortgage Investments II Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
-131-
STATE OF MASSACHUSETTS )
) ss.:
COUNTY OF SUFFOLK )
On the 30th day of July, 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, known to me to be a Vice President
of U.S. Bank National Association, the entity that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said entity, and acknowledged to me that such entity executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
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STATE OF MARYLAND )
) ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the 30th day of December, 2004 before me, a notary public in and for
said State, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇, known to me to be an Assistant
Vice President of ▇▇▇▇▇ Fargo Bank, National Association, the entity that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such entity
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
-133-
STATE OF MARYLAND )
) ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the 30th day of July, 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇, known to me to be a(n) Assistant Vice
President of ▇▇▇▇▇ Fargo Bank, National Association, the entity that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said entity, and acknowledged to me that such entity executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
-134-
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 30th day of July, 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, known to me to be Executive Vice
President of EMC Mortgage Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
-135-
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 30th day of July, 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, known to me to be Executive Vice
President of EMC Mortgage Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
-136-
EXHIBIT A-1
FORM OF CLASS [_]-A-[_] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
[THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT
OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY
OF THE TRUSTEE NAMED HEREIN.]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED WILL BE REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT WILL BE MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
A-1-1
Certificate No.1 [Adjustable][Fixed] Pass-Through Rate
Class [_-[A]-[_] Senior
Date of Pooling and Servicing Agreement Aggregate Initial [Current Principal][Notional] Amount
and Cut-off Date:
July 1, 2004 of this Senior Certificate as of the Cut-off Date:
$[_____________]
First Distribution Date: Initial [Current Principal][Notional] Amount of this
August 25, 2004 Senior Certificate as of the Cut-off Date:
$[_____________]
Master Servicer: CUSIP: [____________]
▇▇▇▇▇ Fargo Bank, National Association
Assumed Final Distribution Date:
August 25, 2034
PRIME MORTGAGE TRUST 2004-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-1
evidencing a fractional undivided interest in the distributions allocable
to the Class [_-[A]-[_] Certificates with respect to a Trust Fund
consisting primarily of a pool of fixed rate mortgage loans secured by
first liens on one-to-four family residential properties sold by
STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer or the Trustee referred to below or any
of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments II Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments II Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the Fractional
Undivided Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
primarily consisting of fixed rate mortgage loans secured by first liens on one-
to four- family residential properties (collectively, the "Mortgage
A-1-2
Loans") sold by Structured Asset Mortgage Investments II Inc. ("▇▇▇▇ ▇▇"). The
Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to ▇▇▇▇ ▇▇. ▇▇▇▇▇
Fargo Bank, National Association ("▇▇▇▇▇ Fargo") will act as master servicer of
the Mortgage Loans (the "Master Servicer", which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), among EMC Mortgage Corporation, as seller and
company (the "Seller"), ▇▇▇▇ ▇▇, as depositor (the "Depositor"), ▇▇▇▇▇ Fargo
Bank, National Association as master servicer and securities administrator (in
such capacity, the "Securities Administrator") and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
[[Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above and as further described in the Agreement.] The Trustee
will distribute on the 25th day of each month, or, if such 25th day is not a
Business Day, the immediately following Business Day (each, a "Distribution
Date"), commencing on the First Distribution Date specified above, to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount [(of interest and] principal[, if
any)] required to be distributed to the Holders of Certificates of the same
Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Current Principal Amount of this Class of Certificates will be reduced
to zero.]
[Interest on this Certificate will accrue from and including the 25th day
of the calendar month preceding the month in which a Distribution Date (as
hereinafter defined) occurs (or, with respect to the first accrual period, the
Closing Date) to and including the 24th day of the calendar month in which that
Distribution Date occurs on the [Current Principal][Notional] Amount hereof at a
per annum rate equal to the Pass-Through Rate set forth above and as further
described in the Agreement. The Trustee will distribute on the 25th day of each
month, or, if such 25th day is not a Business Day, the immediately following
Business Day (each, a "Distribution Date"), commencing on the First Distribution
Date specified above, to the Person in whose name this Certificate is registered
at the close of business on the Business Day immediately preceding such
Distribution Date, an amount equal to the product of the Fractional Undivided
Interest evidenced by this Certificate and the amount (of interest and
principal, if any) required to be distributed to the Holders of Certificates of
the same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month immediately following the month of the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the [Current Principal][Notional] Amount of this Class of Certificates
will be reduced to zero.]
A-1-3
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial [Current Principal][Notional] Amount of this Certificate is set forth
above. [The Current Principal Amount hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.]
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-three Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the Trust Fund for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the parties thereto
with the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will
be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and
A-1-4
subject to certain limitations therein set forth, this Certificate is
exchangeable for one or more new Certificates evidencing the same Class and in
the same aggregate Fractional Undivided Interest, as requested by the Holder
surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
Unless this Certificate has been countersigned by an authorized signatory
of the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement, or be valid for any purpose.
A-1-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 20__ U.S. BANK NATIONAL ASSOCIATION
Not in its individual capacity
but solely as Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [_-[A]-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
Authorized signatory of U.S. Bank
National Association, not in its
individual capacity but solely
as Trustee
By:
-------------------------------
Authorized Signatory
A-1-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:
-------------------------------------------
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________ for the account of
_________________________ account number _____________, or, if mailed by check,
to ______________________________. Applicable statements should be mailed to
_______________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS [B-_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES, [AND THE CLASS B-[_] CERTIFICATES] , AS DESCRIBED IN THE AGREEMENT
(AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND ANY REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT
OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY
OF THE TRUSTEE NAMED HEREIN.
[FOR CLASS B-1, CLASS B-2 AND CLASS B-3] [UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, ANY
CERTIFICATE ISSUED WILL BE REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT WILL BE MADE TO CEDE & CO. ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[FOR CLASS B-1, CLASS B-2 AND CLASS B-3] [EACH BENEFICIAL OWNER OF THIS
CERTIFICATE OR ANY INTEREST HEREIN SHALL BE DEEMED TO HAVE REPRESENTED, BY
VIRTUE OF ITS ACQUISITION OR HOLDING OF THIS CERTIFICATE OR INTEREST HEREIN,
THAT EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED ("PLAN"), OR INVESTING WITH ASSETS OF
A PLAN OR (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE IN RELIANCE ON
PROHIBITED TRANSACTION EXEMPTION 90-30, AS AMENDED FROM TIME TO TIME
("EXEMPTION"), AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE
AVAILABILITY OF THE EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT
THE TIME OF PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY STANDARD &
POOR'S, FITCH, INC. OR ▇▇▇▇▇'▇ INVESTORS SERVICE, INC., AND THE CERTIFICATE IS
SO RATED OR (III) (1) IT
A-2-1
IS AN INSURANCE COMPANY, (2) THE SOURCE OF FUNDS USED TO ACQUIRE OR HOLD THE
CERTIFICATE OR INTEREST HEREIN IS AN "INSURANCE COMPANY GENERAL ACCOUNT", AS
SUCH TERM IS DEFINED IN PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60,
AND (3) THE CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED.]
[FOR CLASS B-4, CLASS B-5 AND CLASS B-6][THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE ACT OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM
PROVIDED IN THE AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
ANY OTHER APPLICABLE JURISDICTION.]
[FOR CLASS B-4, CLASS B-5 AND CLASS B-6] [THIS CERTIFICATE MAY NOT BE
ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE TRANSFEREE CERTIFIES OR
REPRESENTS THAT THE PROPOSED TRANSFER AND HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, ▇▇▇ ▇▇-▇▇, ▇▇▇ ▇▇-▇, ▇▇▇ 95-60
OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE
PART OF THE DEPOSITOR, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER
A-2-2
OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY
CERTIFICATE OR A GLOBAL CERTIFICATE OR UNLESS THE OPINION SPECIFIED IN SECTION
5.07 OF THE AGREEMENT IS PROVIDED.]
A-2-3
Certificate No.1 Pass-Through Rate: ____%
Class [B-_] Subordinate
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount of this
Cut-off Date: July 1, 2004 Subordinate Certificate as of the Cut-off Date:
$[___________]
First Distribution Date: Initial Current Principal Amount of this Subordinate
August 25, 2004 Certificate as of the Cut-off Date: $[_________]
Master Servicer: CUSIP: [____________]
▇▇▇▇▇ Fargo Bank, National Association
Assumed Final Distribution Date:
August 25, 2034
PRIME MORTGAGE TRUST 2004-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-1
evidencing a fractional undivided interest in the distributions allocable
to the Class [B-_] Certificates with respect to a Trust Fund consisting
primarily of a pool of fixed rate mortgage loans secured by first liens on
one-to-four family residential properties sold by STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer or the Trustee referred to below or any
of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments II Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments II Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.
This certifies that [_______] is the registered owner of the Fractional
Undivided Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
primarily consisting of fixed rate mortgage loans secured by first liens on one-
to four- family residential properties (collectively, the "Mortgage Loans") sold
by Structured Asset Mortgage Investments II Inc. ("▇▇▇▇ ▇▇"). The Mortgage
A-2-4
Loans were sold by EMC Mortgage Corporation ("EMC") to ▇▇▇▇ ▇▇. ▇▇▇▇▇ Fargo
Bank, National Association ("▇▇▇▇▇ Fargo") will act as master servicer of the
Mortgage Loans (the "Master Servicer", which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), among EMC as seller and company (the
"Seller"), ▇▇▇▇ ▇▇, as depositor (the "Depositor"), ▇▇▇▇▇ Fargo Bank, National
Association as master servicer and securities administrator (in such capacity,
the "Securities Administrator"), and U.S. Bank National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above and as further described in the Agreement. The Trustee will
distribute on the 25th day of each month, or, if such 25th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month immediately following the month of the latest scheduled maturity
date of any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.
[For Class B-4, Class B-5 and Class B-6][No transfer of this Class [B-_]
Certificate will be made unless such transfer is (i) exempt from the
registration requirements of the Securities act of 1933, as amended, and any
applicable state securities laws or is made in accordance with said Act and laws
and (ii) made in accordance with Section 5.02 of the Agreement. In the event
that such transfer is to be made the Trustee shall register such transfer if,
(i) made to a transferee who has provided the Trustee with evidence as to its
QIB status; or (ii) (A) the transferor has advised the Trustee in writing that
the Certificate is being transferred to an Institutional Accredited Investor and
(B) prior to such transfer the transferee furnishes to the
A-2-5
Trustee an Investment Letter; provided that if based upon an Opinion of Counsel
to the effect that (A) and (B) above are met sufficient to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and other
applicable laws.]
[For Class B-1, Class B-2 and Class B-3] [Each beneficial owner of this
Certificate or any interest herein shall be deemed to have represented, by
virtue of its acquisition or holding of this certificate or interest herein,
that either (i) it is not an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended or section 4975 of the
Internal Revenue Code of 1986, as amended ("Plan"), or investing with assets of
a Plan or (ii) it has acquired and is holding such certificate in reliance on
Prohibited Transaction Exemption 90-30, as amended from time to time
("Exemption"), and that it understands that there are certain conditions to the
availability of the Exemption, including that the certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by Standard &
Poor's, Fitch, Inc. or ▇▇▇▇▇'▇ Investors Service, Inc., and the certificate is
so rated or (iii) (1) it is an insurance company, (2) the source of funds used
to acquire or hold the certificate or interest therein is an "insurance company
general account", as such term is defined in Prohibited Transaction Class
Exemption ("PTCE") 95-60, and (3) the conditions in Sections I and III of PTCE
95-60 have been satisfied.]
[For Class B-4, Class B-5 and Class B-6] [This Certificate may not be
acquired directly or indirectly by, or on behalf of, an employee benefit plan or
other retirement arrangement which is subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended, or Section 4975 of the
Internal Revenue Code of 1986, as amended, unless the transferee certifies or
represents that the proposed transfer and holding of a Certificate and the
servicing, management and operation of the trust and its assets: (i) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to,
Prohibited Transaction Exemption ("PTE") 84-14, ▇▇▇ ▇▇-▇▇, ▇▇▇ ▇▇-▇, ▇▇▇ ▇▇-▇▇
or PTE 96-23 and (ii) will not give rise to any additional obligations on the
part of the Depositor, the Securities Administrator, the Master Servicer or the
Trustee, which will be deemed represented by an owner of a Book-Entry
Certificate or a Global Certificate or unless the opinion specified in section
5.07 of the Agreement is provided.]
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-three Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the Trust Fund for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
A-2-6
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the parties thereto
with the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will
be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
A-2-7
Unless this Certificate has been countersigned by an authorized signatory
of the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement, or be valid for any purpose.
A-2-8
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 20__ U.S. BANK NATIONAL ASSOCIATION
Not in its individual capacity
but solely as Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [B-_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
Authorized signatory of U.S. Bank
National Association, not in its
individual capacity but solely
as Trustee
By:
-------------------------------
Authorized Signatory
A-2-9
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:
-------------------------------------------
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________ for the account of
_________________________ account number _____________, or, if mailed by check,
to ______________________________. Applicable statements should be mailed to
_______________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS [__]- PO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT
OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY
OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED WILL BE REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT WILL BE MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
A-3-1
Certificate No.1 Fixed Pass-Through Rate
Class [_]- PO Senior
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount of this
Cut-off Date: July 1, 2004 Senior Certificate as of the Cut-off Date:
$[_____________]
First Distribution Date: Initial Current Principal Amount of this Senior
August 25, 2004 Certificate as of the Cut-off Date: $[_____________]
Master Servicer: CUSIP: [____________]
▇▇▇▇▇ Fargo Bank, National Association
Assumed Final Distribution Date:
August 25, 2034
PRIME MORTGAGE TRUST 2004-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-1
evidencing a fractional undivided interest in the distributions allocable
to the Class [_]-PO Certificates with respect to a Trust Fund consisting
primarily of a pool of fixed rate mortgage loans secured by first liens on
one-to-four family residential properties sold by STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer or the Trustee referred to below or any
of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments II Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments II Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the Fractional
Undivided Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
primarily consisting of fixed rate mortgage loans secured by first liens on one-
to four- family residential properties (collectively, the "Mortgage Loans") sold
by Structured Asset Mortgage Investments II Inc. ("▇▇▇▇ ▇▇"). The Mortgage
A-3-2
Loans were sold by EMC Mortgage Corporation ("EMC") to ▇▇▇▇ ▇▇. ▇▇▇▇▇ Fargo
Bank, National Association ("▇▇▇▇▇ Fargo") will act as master servicer of the
Mortgage Loans (the "Master Servicer", which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), among EMC Mortgage Corporation, as seller and
company (the "Seller"), ▇▇▇▇ ▇▇, as depositor (the "Depositor"), ▇▇▇▇▇ Fargo
Bank, National Association as master servicer and securities administrator (in
such capacity, the "Securities Administrator") and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount principal
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month immediately following the month of the latest scheduled maturity
date of any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-three Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the Trust Fund for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
A-3-3
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the parties thereto
with the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will
be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
A-3-4
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
Unless this Certificate has been countersigned by an authorized signatory
of the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement, or be valid for any purpose.
A-3-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 20__ U.S. BANK NATIONAL ASSOCIATION
Not in its individual capacity
but solely as Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [_]-PO Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
Authorized signatory of U.S. Bank
National Association, not in its
individual capacity but solely
as Trustee
By:
-------------------------------
Authorized Signatory
A-3-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:
-------------------------------------------
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________ for the account of
_________________________ account number _____________, or, if mailed by check,
to ______________________________. Applicable statements should be mailed to
_______________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS II-X-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED WILL BE REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT WILL BE MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
A-4-1
Certificate No.1 [Fixed] Pass-Through Rate
Class I-X-1 Senior
Date of Pooling and Servicing Agreement and Aggregate Initial Notional Amount of this Senior
Cut-off Date: July 1, 2004 Certificate as of the Cut-off Date:
$[_____________]
First Distribution Date: Initial Notional Amount of this Senior Certificate as
August 25, 2004 of the Cut-off Date: $[__________]
Master Servicer:
▇▇▇▇▇ Fargo Bank, National Association CUSIP: [____________]
Final Scheduled Distribution Date:
August 25, 2034
PRIME MORTGAGE TRUST 2004-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-1
evidencing a fractional undivided interest in the distributions allocable
to the Class II-X-1 Certificates with respect to a Trust Fund consisting
primarily of a pool of fixed rate mortgage loans secured by first liens on
one-to-four family residential properties sold by STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer or the Trustee referred to below or any
of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments II Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments II Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the Fractional
Undivided Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
primarily consisting of fixed rate mortgage loans secured by first liens on one-
to four- family residential properties (collectively, the "Mortgage Loans") sold
by Structured Asset Mortgage Investments II Inc. ("▇▇▇▇ ▇▇"). The Mortgage
A-4-2
Loans were sold by EMC Mortgage Corporation ("EMC") to ▇▇▇▇ ▇▇. ▇▇▇▇▇ Fargo
Bank, National Association ("▇▇▇▇▇ Fargo") will act as master servicer of the
Mortgage Loans (the "Master Servicer", which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), among ▇▇▇▇ ▇▇, as depositor (the
"Depositor"), ▇▇▇▇▇ Fargo Bank, National Association as Master Servicer and
securities administrator (in such capacity, the "Securities Administrator"), EMC
Mortgage Corporation, as seller and company, and U.S. Bank National Association,
as trustee (the "Trustee") , a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Notional Amount hereof at a per annum rate equal to the Pass-Through Rate set
forth above and as further described in the Agreement. The Trustee will
distribute on the 25th day of each month, or, if such 25th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount (of interest, if any) required to
be distributed to the Holders of Certificates of the same Class as this
Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Notional Amount of this Certificate is set forth above.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-three Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the Trust Fund for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
A-4-3
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the parties thereto
with the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Fractional Undivided Interest will
be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid
A-4-4
principal balance of the Mortgage Loans is less than the percentage of the
aggregate Outstanding Principal Balance specified in the Agreement of the
Mortgage Loans at the Cut-off Date. The exercise of such right will effect the
early retirement of the Certificates. In no event, however, will the Trust Fund
created by the Agreement continue beyond the expiration of 21 years after the
death of certain persons identified in the Agreement.
Unless this Certificate has been countersigned by an authorized signatory
of the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement, or be valid for any purpose.
A-4-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 20__ U.S. BANK NATIONAL ASSOCIATION
Not in its individual capacity
but solely as Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class II-X-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
Authorized signatory of U.S. Bank
National Association, not in its
individual capacity but solely
as Trustee
By:
-------------------------------
Authorized Signatory
A-4-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:
-------------------------------------------
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________ for the account of
_________________________ account number _____________, or, if mailed by check,
to ______________________________. Applicable statements should be mailed to
_______________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS R-[_] CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON, A PUBLICLY TRADED PARTNERSHIP OR A DISQUALIFIED ORGANIZATION (AS DEFINED
BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE PROVIDES THE TRUSTEE WITH AN OPINION OF COUNSEL
ADDRESSED TO THE TRUSTEE, DEPOSITOR, MASTER SERVICER AND SECURITIES
ADMINISTRATOR AND ON WHICH THEY MAY RELY THAT IS SATISFACTORY TO THE TRUSTEE
THAT THE PURCHASE OF CERTIFICATES ON BEHALF OF SUCH PERSON WILL NOT RESULT IN OR
CONSTITUTE A NONEXEMPT PROHIBITED TRANSACTION, IS PERMISSIBLE UNDER APPLICABLE
LAW AND WILL NOT GIVE RISE TO ANY ADDITIONAL OBLIGATIONS ON THE PART OF THE
DEPOSITOR, THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR OR THE TRUSTEE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE
ONLY IF THE PROPOSED TRANSFEREE OBTAINS THE PRIOR WRITTEN CONSENT OF STRUCTURED
ASSET MORTGAGE INVESTMENTS II INC. AND THE SECURITIES ADMINISTRATOR AND PROVIDES
A TRANSFER AFFIDAVIT TO STRUCTURED ASSET MORTGAGE INVESTMENTS II INC., THE
SECURITIES ADMINISTRATOR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED
IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF
THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE
CODE, (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING
HEREIN REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A
DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF SUCH
A-5-1
TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
A-5-2
Certificate No.1 Pass-Through Rate: _____%
Class R-[_]
Date of Pooling and Servicing Agreement and Aggregate Initial Current Principal Amount of this
Cut-off Date: July 1, 2004 Certificate as of the Cut-off Date:
$____________
First Distribution Date: Initial Current Principal Amount of this Certificate as
August 25, 2004 of the Cut-off Date: $_________
Master Servicer: CUSIP: [_____________]
▇▇▇▇▇ Fargo Bank, National Association
Assumed Final Distribution Date:
August 25, 2034
PRIME MORTGAGE TRUST 2004-1
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 2004-1
evidencing a fractional undivided interest in the distributions allocable
to the Class R-[_] Certificates with respect to a Trust Fund consisting
primarily of a pool of fixed rate mortgage loans secured by first liens on
one-to-four family residential properties sold by STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.
This Certificate is payable solely from the assets of the Trust Fund, and
does not represent an obligation of or interest in Structured Asset Mortgage
Investments II Inc., the Master Servicer or the Trustee referred to below or any
of their affiliates or any other person. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental entity
or by Structured Asset Mortgage Investments II Inc., the Master Servicer or the
Trustee or any of their affiliates or any other person. None of Structured Asset
Mortgage Investments II Inc., the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation
secured by or payable from payments on the Certificates.
This certifies that Bear, ▇▇▇▇▇▇▇ Securities Corp. is the registered owner
of the Fractional Undivided Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust Fund") primarily consisting of fixed rate mortgages loans
secured by first liens on one- to four- family residential properties
(collectively, the "Mortgage Loans") sold by Structured Asset Mortgage
Investments II Inc. ("▇▇▇▇ ▇▇"). The Mortgage Loans were sold by EMC Mortgage
Corporation ("EMC") to SAMI
A-5-3
II. ▇▇▇▇▇ Fargo Bank, National Association ("▇▇▇▇▇ Fargo") will act as master
servicer of the Mortgage Loans (the "Master Servicer", which term includes any
successors thereto under the Agreement referred to below). The Trust Fund was
created pursuant to the Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement'), among EMC Mortgage Corporation as seller
and company (the "Seller"), ▇▇▇▇ ▇▇, as depositor(the "Depositor"), ▇▇▇▇▇ Fargo
Bank, National Association as master servicer and securities administrator (in
such capacity, the "Securities Administrator"), and U.S. Bank National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate set forth above and as further described in the Agreement The Trustee will
distribute on the 25th day of each month, or, if such 25th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of the Fractional Undivided Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month immediately following the month of the latest scheduled maturity
date of any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register, or if such Person so requests by
notifying the Trustee in writing as specified in the Agreement by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice. The
Initial Current Principal Amount of this Certificate is set forth above. The
Current Principal Amount hereof will be reduced to the extent of distributions
allocable to principal hereon and any Realized Losses allocable hereto.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
▇▇▇▇ ▇▇, the Trustee and the Securities Administrator of, among other things, an
affidavit to the effect that it is a United States Person and Permitted
Transferee, (iii) any attempted or purported transfer of any Ownership Interest
in this Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee, and (iv) if any
person other than a United States Person and a Permitted Transferee acquires any
A-5-4
Ownership Interest in this Certificate in violation of such restrictions, then
the Depositor will have the right, in its sole discretion and without notice to
the Holder of this Certificate, to sell this Certificate to a purchaser selected
by the Depositor, which purchaser may be the Depositor, or any affiliate of the
Depositor, on such terms and conditions as the Depositor may choose.
This certificate may not be acquired directly or indirectly by, or on
behalf of, an employee benefit plan or other retirement arrangement which is
subject to title I of the Employee Retirement Income Security Act of 1974, as
amended, and/or section 4975 of the Internal Revenue Code of 1986, as amended,
unless the proposed transferee provides the Trustee with an opinion of counsel
addressed to the Trustee, Master Servicer and the Securities Administrator and
on which they may rely (which shall not be at the expense of the Trustee, Master
Servicer or the Securities Administrator) which is acceptable to the Trustee,
that the purchase of this Certificate will not result in or constitute a
nonexempt prohibited transaction, is permissible under applicable law and will
not give rise to any additional fiduciary obligations on the part of the
Depositor, the Master Servicer or the Trustee.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-three Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust Fund formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the Trust Fund for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement from time to time by the parties thereto
with the consent of the Holders of Certificates, evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund (or in certain cases,
Holders of Certificates of affected Classes evidencing such percentage of the
Fractional Undivided Interests thereof). Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made upon
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing,
A-5-5
and thereupon one or more new Certificates in authorized denominations
representing a like aggregate Fractional Undivided Interest will be issued to
the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Depositor, the Master Servicer,
the Trustee or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of the (A) final payment or other liquidation (or Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust Fund in accordance with
the terms of the Agreement. Such optional repurchase may be made only on or
after the Distribution Date on which the aggregate unpaid principal balance of
the Mortgage Loans is less than the percentage of the aggregate Outstanding
Principal Balance specified in the Agreement of the Mortgage Loans at the
Cut-off Date. The exercise of such right will effect the early retirement of the
Certificates. In no event, however, will the Trust Fund created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
Unless this Certificate has been countersigned by an authorized signatory
of the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement, or be valid for any purpose.
A-5-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 20__ U.S. BANK NATIONAL ASSOCIATION
Not in its individual capacity
but solely as Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-[_] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION
Authorized signatory of U.S. Bank
National Association, not in its
individual capacity but solely
as Trustee
By:
-------------------------------
Authorized Signatory
A-5-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Fractional Undivided
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:
-------------------------------------------
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _________________________________ for the account of
_________________________ account number _____________, or, if mailed by check,
to ______________________________. Applicable statements should be mailed to
_______________________________.
This information is provided by __________________, the assignee named
above, or ________________________, as its agent.
A-5-8
EXHIBIT B
MORTGAGE LOAN SCHEDULE
The Preliminary and Final Mortgage Loan Schedules shall set forth the
following information with respect to each Mortgage Loan:
(a) the loan number;
(b) the Mortgagor's name;
(c) the street address (including city, state and zip code) of the Mortgaged
Property;
(d) the property type;
(e) the Mortgage Rate;
(f) the Servicer;
(g) the Servicing Rate;
(h) the Net Rate;
(i) the original term;
(j) the maturity date;
(k) the stated remaining term to maturity;
(l) the original principal balance;
(m) the first payment date;
(n) the principal and interest payment in effect as of the Cut-off Date;
(o) the unpaid principal balance as of the Cut-off Date;
(p) the Loan-to-Value Ratio at origination;
(q) paid-through date;
(r) the insurer of any Primary Mortgage Insurance Policy;
(s) the Gross Margin, if applicable;
(t) the Maximum Lifetime Mortgage Rate, if applicable;
(u) the Minimum Lifetime Mortgage Rate, if applicable;
B-1
(v) the Periodic Rate Cap, if applicable;
(w) the number of days delinquent, if any;
(x) which Mortgage Loans adjust after an initial fixed-rate period of three,
five, seven or ten years;
(y) The Loan Group; and
(z) The Prepayment Charge Loans.
Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (k)
and (n) above, the weighted average by principal balance as of the Cut-off Date
of each of the rates described under (e), (f) and (g) above, and the weighted
average remaining term to maturity by unpaid principal balance as of the Cut-off
Date.
B-2
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: U.S. Bank National Association
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Pooling and Servicing Agreement dated as of
July 1, 2004, among ▇▇▇▇ ▇▇,
▇▇▇▇▇ Fargo Bank,
National Association, as Master Servicer
and Securities Administrator,
EMC Mortgage Corporation, as Seller
and company and U.S. Bank National Association, as Trustee
In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned Pooling and Servicing Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_____ 1. Mortgage Paid in Full and proceeds have been deposited into
the Custodial Account
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation
_____ 5. Nonliquidation Reason:_______________________
_____ 6. California Mortgage Loan paid in full
By:________________________________
(authorized signer)
Issuer:____________________________
Address:___________________________
Date:______________________________
D-1
EXHIBIT E
FORM OF AFFIDAVIT
Affidavit pursuant to Section
860E(e)(4) of the Internal Revenue
Code of 1986, as amended, and for
other purposes
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of ] [the United States], on behalf of which he makes this
affidavit.
2. That (i) the Investor is not a "disqualified organization" as defined
in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the
"Code"), and will not be a disqualified organization as of [Closing Date] [date
of purchase]; (ii) it is not acquiring the Structured Asset Mortgage Investments
II Inc., Prime Mortgage Trust, Mortgage Pass-Through Certificates, Series 2004-1
Class R-I, Class R-II, and R-III Certificates (the "Residual Certificates") for
the account of a disqualified organization; (iii) it consents to any amendment
of the Pooling and Servicing Agreement that shall be deemed necessary by
Structured Asset Mortgage Investments II Inc. (upon advice of counsel) to
constitute a reasonable arrangement to ensure that the Residual Certificates
will not be owned directly or indirectly by a disqualified organization; and
(iv) it will not transfer such Residual Certificates unless (a) it has received
from the transferee an affidavit in substantially the same form as this
affidavit containing these same four representations and (b) as of the time of
the transfer, it does not have actual knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or resident of
the United States, (ii) a corporation or partnership (including an entity
treated as a corporation or partnership for federal income tax purposes) created
or organized in, or under the laws of, the United States or any state thereof or
the District of Columbia (except, in the case of a partnership, to the extent
provided in regulations), provided that no partnership or other entity treated
as a partnership for United States federal income tax purposes shall be treated
as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for
United States federal income tax purposes are United States Persons, (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust other than a "foreign trust," as defined in Section
7701 (a)(31) of the Code.
4. That the Investor's taxpayer identification number is ________________.
E-1
5. That no purpose of the acquisition of the Residual Certificates is to
avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] this ____ day of _________, 20__.
[NAME OF INVESTOR]
By:
-------------------------------
[Name of Officer]
[Title of Officer]
[Address of Investor for receipt
of distributions]
Address of Investor for receipt
of tax information:
E-2
Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this ___ day of _________, 20___.
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the ___ day of ___________________, 20___.
E-3
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
U.S. Bank National Association
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Structured Asset Mortgage Investments II Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Structured Asset Mortgage Investments II Inc., Prime Mortgage Trust,
Series 2004-1 Mortgage Pass-Through Certificates (the
"Certificates"), including the Class B-4, Class B-5 and Class B-6
Certificates (the "Privately Offered Certificates")
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates are not
being registered under the Securities Act of 1933, as amended
(the "Act") or any applicable state securities or "Blue Sky"
laws, and are being sold to us in a transaction that is exempt
from the registration requirements of such laws;
(ii) any information we desired concerning the Certificates,
including the Privately Offered Certificates, the trust in
which the Certificates represent the entire beneficial
ownership interest (the "Trust") or any other matter we deemed
relevant to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment in
Privately Offered Certificates; we are an institutional
"accredited investor" as defined in Section 501(a) of
Regulation D promulgated under the Act and a sophisticated
institutional investor;
(iv) we are acquiring Privately Offered Certificates for our own
account, not as nominee for any other person, and not with a
present view to any distribution or other disposition of the
Privately Offered Certificates;
(v) we agree the Privately Offered Certificates must be held
indefinitely by us (and may not be sold, pledged, hypothecated
or in any way disposed of)
F-1-1
unless subsequently registered under the Act and any
applicable state securities or "Blue Sky" laws or an exemption
from the registration requirements of the Act and any
applicable state securities or "Blue Sky" laws is available;
(vi) we agree that in the event that at some future time we wish to
dispose of or exchange any of the Privately Offered
Certificates (such disposition or exchange not being currently
foreseen or contemplated), we will not transfer or exchange
any of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser (as defined
below), (2) if required by the Pooling and Servicing Agreement
(as defined below) a letter to substantially the same effect
as either this letter or, if the Eligible Purchaser is a
Qualified Institutional Buyer as defined under Rule 144A of
the Act, the Rule 144A and Related Matters Certificate in the
form attached to the Pooling and Servicing Agreement (as
defined below) (or such other documentation as may be
acceptable to the Trustee) is executed promptly by the
purchaser and delivered to the addressees hereof and (3) all
offers or solicitations in connection with the sale, whether
directly or through any agent acting on our behalf, are
limited only to Eligible Purchasers and are not made by means
of any form of general solicitation or general advertising
whatsoever; and
(B) if the Privately Offered Certificate is not
registered under the Act (as to which we acknowledge you have
no obligation), the Privately Offered Certificate is sold in a
transaction that does not require registration under the Act
and any applicable state securities or "blue sky" laws and, if
U.S. Bank National Association (the "Trustee") so requests, a
satisfactory Opinion of Counsel is furnished to such effect,
which Opinion of Counsel shall be an expense of the transferor
or the transferee;
(vii) we agree to be bound by all of the terms (including those
relating to restrictions on transfer) of the Pooling and
Servicing, pursuant to which the Trust was formed; we have
reviewed carefully and understand the terms of the Pooling and
Servicing Agreement;
(viii)we either: (i) are not acquiring the Privately Offered
Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is
subject to Title I of the Employee Retirement Income Security
Act of 1974, as amended, or section 4975 of the Internal
Revenue Code of 1986, as amended, or (ii) are providing a
representation to the effect that the proposed transfer and
holding of a Privately Offered Certificate and the servicing,
management and operation of the Trust and its assets: (I) will
not result in any prohibited transaction which is not covered
under an individual or class prohibited transaction exemption,
including, but not limited to, Prohibited Transaction
Exemption ("PTE") 84-14, ▇▇▇ ▇▇-▇▇, ▇▇▇ ▇▇-▇, ▇▇▇ 95-60, or
PTE 96-23 and (II) will not
F-1-2
give rise to any additional obligations on the part of the
Depositor, the Master Servicer, the Securities Administrator
or the Trustee or (iii) have attached hereto the opinion
specified in Section 5.07 of the Agreement.
(ix) We understand that each of the Privately Offered Certificates
bears, and will continue to bear, a legend to substantiate the
following effect: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS.
THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING
FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT OR
ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER
APPLICABLE JURISDICTION. THIS CERTIFICATE MAY NOT BE ACQUIRED
DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, UNLESS THE PROPOSED TRANSFER AND HOLDING
OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND OPERATION
OF THE TRUST
F-1-3
AND ITS ASSETS: (1) WILL NOT RESULT IN ANY PROHIBITED
TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED
TO, PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, ▇▇▇ ▇▇-▇▇,
▇▇▇ ▇▇-▇, ▇▇▇ 95-60 OR PTE 96-23 AND (II) WILL NOT GIVE RISE
TO ANY ADDITIONAL OBLIGATIONS ON THE PART OF THE DEPOSITOR,
THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR OR THE
TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A
BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE OR UNLESS THE
OPINION PROVIDED IN SECTION 5.07 OF THE AGREEMENT IS
PROVIDED."
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of July 1, 2004, among
Structured Asset Mortgage Investments II Inc., ▇▇▇▇▇ Fargo Bank, National
Association as master servicer and securities administrator, EMC Mortgage
Corporation, as seller and company and U.S. Bank National Association, as
Trustee (the "Pooling and Servicing Agreement').
If the Purchaser proposes that its Certificates be registered in the name
of a nominee on its behalf, the Purchaser has identified such nominee below, and
has caused such nominee to complete the Nominee Acknowledgment at the end of
this letter.
Name of Nominee (if any):________________________
F-1-4
IN WITNESS WHEREOF, this document has been executed by the undersigned who
is duly authorized to do so on behalf of the undersigned Eligible Purchaser on
the ___ day of ________, 20___.
Very truly yours,
[PURCHASER]
By:
-----------------------------------
(Authorized Officer)
[By:
------------------------------------
Attorney-in-fact]
F-1-5
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the Certificates
being registered in its name, the sole beneficial owner thereof is and shall be
the Purchaser identified above, for whom the undersigned is acting as nominee.
[NAME OF NOMINEE]
By:
-----------------------------------
(Authorized Officer)
[By:
------------------------------------
Attorney-in-fact]
F-1-6
EXHIBIT G
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time,
the "Agreement'), dated as of July 30, 2004, by and among U.S. BANK NATIONAL
ASSOCIATION, not individually but solely as trustee under the Pooling and
Servicing Agreement defined below (including its successors under the Pooling
and Servicing Agreement defined below, the "Trustee"), STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC., as depositor (together with any successor in interest, the
"Depositor"), ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as master servicer and
securities administrator (together with any successor in interest or successor
under the Pooling and Servicing Agreement referred to below, the "Master
Servicer") and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as custodian (together
with any successor in interest or any successor appointed hereunder, the
"Custodian").
WITNESSETH THAT:
WHEREAS, the Depositor, the Master Servicer, the Trustee and EMC Mortgage
Corporation (the "Seller") have entered into a Pooling and Servicing Agreement,
dated as of July 1, 2004, relating to the issuance of Prime Mortgage Trust
2004-1, Mortgage Pass-Through Certificates, Series 2004-1 (as in effect on the
date of this agreement, the "Original Pooling and Servicing Agreement," and as
amended and supplemented from time to time, the "Pooling and Servicing
Agreement'); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by the Depositor or the Master Servicer under the Pooling and
Servicing Agreement and the Servicers under their respective Servicing
Agreements, all upon the terms and conditions and subject to the limitations
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the Trustee, the Depositor, the Master
Servicer and the Custodian hereby agree as follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used in this Agreement and not defined herein shall have
the meanings assigned in the Original Pooling and Servicing Agreement, unless
otherwise required by the context herein.
G-1
ARTICLE II.
CUSTODY OF MORTGAGE DOCUMENTS
Section 2.1 Custodian to Act as Agent: Acceptance of Mortgage Files. The
Custodian, as the duly appointed custodial agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.3(a)), receipt of the Mortgage Files
relating to the Mortgage Loans identified on the schedule attached hereto (the
"Mortgage Files") and declares that it holds and will hold such Mortgage Files
as agent for the Trustee, in trust, for the use and benefit of all present and
future Certificateholders and MBIA Insurance Corporation.
Section 2.2 Recordation of Assignments. If any Mortgage File includes one
or more assignments of Mortgage to the Trustee in a state which is specifically
excluded from the Opinion of Counsel delivered by the Seller to the Trustee and
the Custodian pursuant to the provisions of Section 2.01 of the Pooling and
Servicing Agreement, each such assignment shall be delivered by the Custodian to
the Depositor for the purpose of recording it in the appropriate public office
for real property records, and the Depositor, at no expense to the Custodian,
shall promptly cause to be recorded in the appropriate public office for real
property records each such assignment of Mortgage and, upon receipt thereof from
such public office, shall return each such assignment of Mortgage to the
Custodian.
Section 2.3 Review of Mortgage Files.
(a) On or prior to the Closing Date, in accordance with Section 2.02 of
the Pooling and Servicing Agreement, the Custodian shall deliver to the Trustee
an Initial Certification in the form annexed hereto as Exhibit One evidencing
receipt (subject to any exceptions noted therein) of a Mortgage File for each of
the Mortgage Loans listed on the Schedule attached hereto (the "Mortgage Loan
Schedule").
(b) Within 90 days of the Closing Date, the Custodian agrees, for the
benefit of Certificateholders and Radian Asset Assurance Inc., to review, in
accordance with the provisions of Section 2.02 of the Pooling and Servicing
Agreement, each such document, and shall deliver to the Depositor and the
Trustee an Interim Certification in the form annexed hereto as Exhibit Two to
the effect that all such documents have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule,
except for any exceptions listed on Schedule A attached to such Interim
Certification. The Custodian shall be under no duty or obligation to inspect,
review or examine said documents, instruments, certificates or other papers to
determine that the same are genuine, enforceable, or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face.
(c) Not later than 180 days after the Closing Date, the Custodian shall
review the Mortgage Files as provided in Section 2.02 of the Pooling and
Servicing Agreement and deliver to the Depositor and the Trustee a Final
Certification in the form annexed hereto as Exhibit Three evidencing the
completeness of the Mortgage Files.
G-2
(d) In reviewing the Mortgage Files as provided herein and in the Pooling
and Servicing Agreement, the Custodian shall make no representation as to and
shall not be responsible to verify (i) the validity, legality, enforceability,
due authorization, recordability, sufficiency or genuineness of any of the
documents included in any Mortgage File or (ii) the collectibility,
insurability, effectiveness or suitability of any of the documents in any
Mortgage File.
Upon receipt of written request from the Trustee, the Custodian shall as
soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans missing from the Mortgage Files.
Section 2.4 Notification of Breaches of Representations and Warranties.
Upon discovery by the Custodian of a breach of any representation or warranty
made by the Depositor as set forth in the Pooling and Servicing Agreement with
respect to a Mortgage Loan relating to a Mortgage File, the Custodian shall give
prompt written notice to the Depositor, the related Servicer and the Trustee.
Section 2.5 Custodian to Cooperate: Release of Mortgage Files. Upon
receipt of written notice from the Trustee that the Seller has repurchased a
Mortgage Loan pursuant to Article II of the Pooling and Servicing Agreement, and
that the purchase price therefore has been deposited in the Master Servicer
Collection Account or the Distribution Account, then the Custodian agrees to
promptly release to the Seller the related Mortgage File.
Upon the Custodian's receipt of a request for release (a "Request for
Release") substantially in the form of Exhibit D to the Pooling and Servicing
Agreement signed by a Servicing Officer of the related Servicer stating that it
has received payment in full of a Mortgage Loan or that payment in full will be
escrowed in a manner customary for such purposes, the Custodian agrees promptly
to release to the related Servicer the related Mortgage File. The Depositor
shall deliver to the Custodian and the Custodian agrees to accept the Mortgage
Note and other documents constituting the Mortgage File with respect to any
Substitute Mortgage Loan.
From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy, the related Servicer (or if the Servicer does not, the Master
Servicer) shall deliver to the Custodian a Request for Release signed by a
Servicing Officer requesting that possession of all of the Mortgage File be
released to the related Servicer and certifying as to the reason for such
release and that such release will not invalidate any insurance coverage
provided in respect of the Mortgage Loan under any of the Insurance Policies.
Upon receipt of the foregoing, the Custodian shall deliver the Mortgage File to
the related Servicer. The related Servicer shall cause each Mortgage File or any
document therein so released to be returned to the Custodian when the need
therefore by the related Servicer no longer exists, unless (i) the Mortgage Loan
has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Master Servicer Collection Account or the
Distribution Account or (ii) the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the related Servicer
G-3
has delivered to the Custodian a certificate of a Servicing Officer certifying
as to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery.
At any time that a Servicer is required to deliver to the Custodian a
Request for Release, the Servicer shall deliver two copies of the Request for
Release if delivered in hard copy or the Servicer may furnish such Request for
Release electronically to the Custodian, in which event the Servicing Officer
transmitting the same shall be deemed to have signed the Request for Release. In
connection with any Request for Release of a Mortgage File because of a
repurchase of a Mortgage Loan, such Request for Release shall be followed by an
assignment of mortgage, without recourse, representation or warranty from the
Trustee to the Seller and the related Mortgage Note shall be endorsed without
recourse by the Trustee and be returned to the Seller. In connection with any
Request for Release of a Mortgage File because of the payment in full of a
Mortgage Loan, such Request for Release shall be accompanied by a certificate of
satisfaction or other similar instrument to be executed by or on behalf of the
Trustee and returned to the related Servicer.
G-4
Section 2.6 Assumption Agreements. In the event that any assumption
agreement, substitution of liability agreement or sale of servicing agreement is
entered into with respect to any Mortgage Loan subject to this Agreement in
accordance with the terms and provisions of the Pooling and Servicing Agreement,
the Master Servicer, to the extent provided in the related Servicing Agreement,
shall cause the related Servicer to notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which shall be added to
the related Mortgage File and, for all purposes, shall be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting parts thereof.
ARTICLE III.
CONCERNING THE CUSTODIAN
Section 3.1 Custodian as Bailee and Agent of the Trustee. With respect to
each Mortgage Note, Mortgage and other documents constituting each Mortgage File
which are delivered to the Custodian, the Custodian is exclusively the bailee
and custodial agent of the Trustee and has no instructions to hold any Mortgage
Note or Mortgage for the benefit of any person other than the Trustee, Radian
Asset Assurance Inc. and the Certificateholders and undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement and
in the Pooling and Servicing Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or
Mortgage File shall be delivered by the Custodian to the Depositor, the
Servicers or the Master Servicer or otherwise released from the possession of
the Custodian.
Section 3.2 Reserved.
Section 3.3 Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.
Section 3.4 Master Servicer to Pay Custodian's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith or to the extent that such cost or expense is
indemnified by the Depositor pursuant to the Pooling and Servicing Agreement.
Section 3.5 Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such written notice of resignation, the Trustee shall
either take custody of the Mortgage Files itself and give prompt written notice
thereof to the Depositor, the Master Servicer, Radian Asset Assurance Inc.
G-5
and the Custodian, or promptly appoint a successor Custodian by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Custodian and one copy to the successor Custodian. If the Trustee
shall not have taken custody of the Mortgage Files and no successor Custodian
shall have been so appointed and have accepted appointment within 30 days after
the giving of such written notice of resignation, the resigning Custodian may
petition any court of competent jurisdiction for the appointment of a successor
Custodian.
The Trustee may remove the Custodian at any time with the consent of the
Master Servicer. In such event, the Trustee shall appoint, or petition a court
of competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian shall be a depository institution subject to supervision or
examination by federal or state authority, shall be able to satisfy the other
requirements contained in Section 3.7 and shall be unaffiliated with the
Servicer or the Depositor.
Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 3.5 shall become
effective upon acceptance of appointment by the successor Custodian. The Trustee
shall give prompt notice to the Depositor, MBIA Insurance Corporation and the
Master Servicer of the appointment of any successor Custodian. No successor
Custodian shall be appointed by the Trustee without the prior approval of the
Depositor and the Master Servicer.
Section 3.6 Merger or Consolidation of Custodian. Any Person into which
the Custodian may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 3.7 Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV.
MISCELLANEOUS PROVISIONS
Section 4.1 Notices. All notices, requests, consents and demands and other
communications required under this Agreement or pursuant to any other instrument
or document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified on the signature page hereof (unless changed by the
particular party whose address is stated herein by similar notice in writing),
or in the case of Radian Asset Assurance Inc., to ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or by email at ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇, in which case the notice will be
deemed delivered when received.
Section 4.2 Amendments. No modification or amendment of or supplement to
this Agreement shall be valid or effective unless the same is in writing and
signed by all parties
G-6
hereto, and neither the Depositor, the Master Servicer nor the Trustee shall
enter into any amendment hereof except as permitted by the Pooling and Servicing
Agreement. The Trustee shall give prompt notice to the Custodian of any
amendment or supplement to the Pooling and Servicing Agreement and furnish the
Custodian with written copies thereof.
Section 4.3 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 4.4 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Depositor and at the Trust's expense, but
only upon direction accompanied by an Opinion of Counsel reasonably satisfactory
to the Depositor to the effect that the failure to effect such recordation is
likely to materially and adversely affect the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4.5 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
G-7
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
Address: U.S. BANK NATIONAL ASSOCIATION, not
individually but solely as Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By:__________________________________
Attention: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: Title: Vice President
Confirmation:
Address: STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ By:__________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, as Master Servicer
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By:__________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
Address: ▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION, as Custodian
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By:__________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
▇-▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ )
)ss.:
COUNTY OF BOSTON )
On the 30th day of July 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, known to me to be a Vice President
of U.S. Bank National Association, a national banking association that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation and acknowledged to me that such corporation executed
the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[SEAL]
▇-▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
) ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the 30th day of July 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇, known to me to be an Assistant Vice
President of ▇▇▇▇▇ Fargo Bank, National Association, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said national banking association, and
acknowledged to me that such national banking association executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[SEAL]
▇-▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
)ss.:
COUNTY OF NEW YORK )
On the 30th day of July 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, known to me to be a Vice President
of Structured Asset Mortgage Investments II Inc., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
▇-▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
)ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the 30th day of July 2004 before me, a notary public in and for said
State, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇, known to me to be an Assistant Vice
President of ▇▇▇▇▇ Fargo Bank, National Association, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
G-12
EXHIBIT ONE
FORM OF CUSTODIAN INITIAL CERTIFICATION
July __, 2004
U.S. Bank National Association Structured Asset Mortgage
One Federal Street, 3rd Floor Investments II Inc.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Radian Asset Assurance Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Asset Mortgage Investments II Inc.
Prime Mortgage Trust 2004-1, Mortgage Pass-Through Certificates, Series 2004-1
Re: Custodial Agreement, dated as of July 30, 2004, by and among
U.S. Bank National Association, Structured Asset Mortgage
Investments II Inc. and ▇▇▇▇▇ Fargo Bank, National Association
relating to Prime Mortgage Trust 2004-1, Mortgage Pass-Through
Certificates, Series 2004-1
Ladies and Gentlemen:
In accordance with Section 2.3(a) of the above-captioned Custodial
Agreement, and subject to Section 2.02(a) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File (which contains an original Mortgage Note or lost note
affidavit) to the extent required in Section 2.01 of the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION
By:
----------------------------------
Name:
Title:
G-13
EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
___________, 20__
U.S. Bank National Association Structured Asset Mortgage
One Federal Street, 3rd Floor Investments II Inc.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Radian Asset Assurance Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Asset Mortgage Investments II Inc.
Prime Mortgage Trust 2004-1, Mortgage Pass-Through Certificates, Series 2004-1
Re: Custodial Agreement, dated as of July 30, 2004, by and among
U.S. Bank National Association, Structured Asset Mortgage
Investments II Inc. and ▇▇▇▇▇ Fargo Bank, National Association
relating to Prime Mortgage Trust 2004-1, Mortgage Pass-Through
Certificates, Series 2004-1
Ladies and Gentlemen:
In accordance with Section 2.3(b) of the above-captioned Custodial
Agreement, and subject to Section 2.02(a) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to Section 2.01 of the Pooling
and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION
By:
----------------------------------
Name:
Title:
G-14
EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
_______, 20__
U.S. Bank National Association Structured Asset Mortgage
One Federal Street, 3rd Floor Investments II Inc.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Radian Asset Assurance Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Asset Mortgage Investments II Inc.
Prime Mortgage Trust 2004-1, Mortgage Pass-Through Certificates, Series 2004-1
Re: Custodial Agreement, dated as of July 30, 2004, by and among
U.S. Bank National Association, Structured Asset Mortgage
Investments II Inc. and ▇▇▇▇▇ Fargo Bank, National Association
relating to Prime Mortgage Trust 2004-1, Mortgage Pass-Through
Certificates, Series 2004-1
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial Agreement
and subject to Section 2.02(b) of the Pooling and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage File
to the extent required pursuant to Section 2.01 of the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, and it has reviewed the Mortgage File and the Mortgage Loan Schedule
and has determined that all required documents have been executed and received
and that such documents relate to the Mortgage Loans identified in the Mortgage
Loan Schedule, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement or in the
Pooling and Servicing Agreement, as applicable.
W ▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
By:
----------------------------------
Name:
Title:
G-15
EXHIBIT H-1
SERVICING AGREEMENT
COUNTRYWIDE
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
EMC
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
NEXSTAR FINANCIAl
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
Bank of America
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
national city
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
CENDANT
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
GMAC
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICING AGREEMENT
CITIMORTGAGE
[provided upon request]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇▇
SERVICING AGREEMENT
WFHM
[provided upon request]
H-10-1
EXHIBIT I
ASSIGNMENT AGREEMENTS
[provided upon request]
I-1
EXHIBIT J
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
MORTGAGE LOAN PURCHASE AGREEMENT, dated as of July 30, 2004, as amended
and supplemented by any and all amendments hereto (collectively, the
"Agreement"), by and between EMC MORTGAGE CORPORATION, a Delaware corporation
(the "Mortgage Loan Seller"), and STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.,
a Delaware corporation (the "Purchaser").
Upon the terms and subject to the conditions of this Agreement, the
Mortgage Loan Seller agrees to sell, and the Purchaser agrees to purchase,
certain conventional, first lien mortgage loans secured primarily by one- to
four-family residential properties, an interest in shares issued by a
cooperative apartment corporation and the related proprietary lease and
individual condominium units (collectively, the "Mortgage Loans") as described
herein. The Purchaser intends to deposit the Mortgage Loans into a trust fund
(the "Trust Fund") and create Prime Mortgage Trust 2004-1, Mortgage Pass-Through
Certificates, Series 2004-1 (the "Certificates"), under a pooling and servicing
agreement, to be dated as of July 1, 2004 (the "Pooling and Servicing
Agreement"), among the Purchaser, as depositor, ▇▇▇▇▇ Fargo Bank, National
Association, as master servicer and securities administrator, U.S. Bank National
Association, as trustee (the "Trustee") and EMC Mortgage Corporation, as seller
and company.
The Purchaser has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Number 333-115122) relating
to its Mortgage Pass-Through Certificates and the offering of certain series
thereof (including certain classes of the Certificates) from time to time in
accordance with Rule 415 under the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder (the "Securities
Act"). Such registration statement, when it became effective under the
Securities Act, and the prospectus relating to the public offering of certain
classes of the Certificates by the Purchaser (the "Public Offering"), as each
may be amended or supplemented from time to time pursuant to the Securities Act
or otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively. The "Prospectus Supplement" shall mean that
supplement, dated July 29, 2004 to the Prospectus, dated May 14, 2004, relating
to certain classes of the Certificates. With respect to the Public Offering of
certain classes of the Certificates, the Purchaser and Bear, ▇▇▇▇▇▇▇ & Co. Inc.
("Bear ▇▇▇▇▇▇▇") have entered into a terms agreement dated as of July 29, 2004
to an underwriting agreement dated July 29, 2003, between the Purchaser and Bear
▇▇▇▇▇▇▇ (collectively, the "Underwriting Agreement").
Now, therefore, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto agree as follows:
SECTION 1. Definitions. Certain terms are defined herein. Capitalized
terms used herein but not defined herein shall have the meanings specified in
the Pooling and Servicing Agreement. The following other terms are defined as
follows:
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Acquisition Price: Cash in an amount equal to $______ (plus $______ in
accrued interest)(1).
Bear ▇▇▇▇▇▇▇: Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Closing Date: July 30, 2004.
Cut-off Date: July 1, 2004.
Cut-off Date Balance: approximately $294,347,747.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Substitute Mortgage Loan.
Due Date: With respect to each Mortgage Loan, the date in each month on
which its scheduled payment is due if such due date is the first day of a month
and otherwise is deemed to be the first day of the following month or such other
date specified in the related Servicing Agreement.
Fitch: Fitch, Inc. or its successor in interest.
Master Servicer: ▇▇▇▇▇ Fargo Bank, National Association.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
Mortgage: The mortgage or deed of trust creating a first lien on an
interest in real property securing a Mortgage Note.
Mortgage File: The items referred to in Exhibit 1 pertaining to a
particular Mortgage Loan and any additional documents required to be added to
such documents pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne by a Mortgage
Note as stated therein.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Rate: For each Mortgage Loan, the Mortgage Interest Rate for such
Mortgage Loan less the Servicing Fee Rate and the Lender-Paid PMI Rate (if
applicable).
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Mortgage Loan Seller or the Purchaser, reasonably acceptable to the Trustee.
----------
(1) Please contact Bear, ▇▇▇▇▇▇▇ & Co. Inc. for Purchase Price.
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Person: Any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Purchase Price: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased by the Mortgage Loan
Seller pursuant to this Agreement or Article II of the Pooling and Servicing
Agreement, an amount equal to the sum of (i)(a) 100% of the Outstanding
Principal Balance of such Mortgage Loan as of the date of repurchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition), plus (b) accrued
but unpaid interest on the Outstanding Principal Balance at the related Mortgage
Interest Rate, through and including the last day of the month of repurchase,
plus (c) any unreimbursed Monthly Advances and servicing advances payable to the
Servicer of the Mortgage Loan and (ii) any costs and damages (if any) incurred
by the Trust in connection with any violation of such Mortgage Loan of any
predatory lending laws.
Rating Agencies: Standard & Poor's and Fitch, each a "Rating Agency."
Securities Act: The Securities Act of 1933, as amended.
Security Instrument: A written instrument creating a valid first lien on a
Mortgaged Property securing a Mortgage Note, which may be any applicable form of
mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.
Servicing Agreements: Shall have the meaning assigned to such term in the
Pooling and Servicing Agreement.
Standard & Poor's: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or its successors in interest.
Substitute Mortgage Loan: A mortgage loan substituted for a Deleted
Mortgage Loan which must meet on the date of such substitution the requirements
stated herein and in the Pooling and Servicing Agreement; upon such
substitution, such mortgage loan shall be a "Mortgage Loan" hereunder.
Value: The value of the Mortgaged Property at the time of origination of
the related Mortgage Loan, such value being the lesser of (i) the value of such
property set forth in an appraisal accepted by the applicable originator of the
Mortgage Loan or (ii) the sales price of such property at the time of
origination.
SECTION 2. Purchase and Sale of the Mortgage Loans and Related Rights. (a)
Upon satisfaction of the conditions set forth in Section 10 hereof, the Mortgage
Loan Seller agrees to sell, and the Purchaser agrees to purchase Mortgage Loans
having an aggregate outstanding principal balance as of the Cut-off Date equal
to the Cut-off Date Balance.
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(b) The closing for the purchase and sale of the Mortgage Loans and the
closing for the issuance of the Certificates will take place on the Closing Date
at the office of the Purchaser's counsel in New York, New York or such other
place as the parties shall agree.
(c) Upon the satisfaction of the conditions set forth in Section 10
hereof, on the Closing Date, the Purchaser shall pay to the Mortgage Loan Seller
the Acquisition Price for the Mortgage Loans in immediately available funds by
wire transfer to such account or accounts as shall be designated by the Mortgage
Loan Seller.
(d) In addition to the foregoing, on the Closing Date the Mortgage Loan
Seller assigns to the Purchaser all of its right, title and interest in the
Servicing Agreements (other than its right to enforce the representations and
warranties set forth therein).
SECTION 3. Mortgage Loan Schedules. The Mortgage Loan Seller agrees to
provide to the Purchaser as of the date hereof a preliminary listing of the
Mortgage Loans (the "Preliminary Mortgage Loan Schedule") setting forth the
information listed on Exhibit 2 to this Agreement with respect to each of the
Mortgage Loans being sold by the Mortgage Loan Seller. If there are changes to
the Preliminary Mortgage Loan Schedule, the Mortgage Loan Seller shall provide
to the Purchaser as of the Closing Date a final schedule (the "Final Mortgage
Loan Schedule") setting forth the information listed on Exhibit 2 to this
Agreement with respect to each of the Mortgage Loans being sold by the Mortgage
Loan Seller to the Purchaser. The Final Mortgage Loan Schedule shall be
delivered to the Purchaser on the Closing Date, shall be attached to an
amendment to this Agreement to be executed on the Closing Date by the parties
hereto and shall be in form and substance mutually agreed to by the Mortgage
Loan Seller and the Purchaser (the "Amendment"). If there are no changes to the
Preliminary Mortgage Loan Schedule, the Preliminary Mortgage Loan Schedule shall
be the Final Mortgage Loan Schedule for all purposes hereof.
SECTION 4. Mortgage Loan Transfer.
(a) The Purchaser will be entitled to all scheduled payments of principal
and interest on the Mortgage Loans due after the Cut-off Date (regardless of
when actually collected) and all payments thereon, other than scheduled
principal and interest due on or before the Cut-off Date but received after the
Cut-off Date. The Mortgage Loan Seller will be entitled to all scheduled
payments of principal and interest on the Mortgage Loans due on or before the
Cut-off Date (including payments collected after the Cut-off Date) and all
payments thereon, other than scheduled principal and interest due after the
Cut-off Date but received on or before the Cut-off Date. Such principal amounts
and any interest thereon belonging to the Mortgage Loan Seller as described
above will not be included in the aggregate outstanding principal balance of the
Mortgage Loans as of the Cut-off Date as set forth on the Final Mortgage Loan
Schedule.
(b) Pursuant to various conveyancing documents to be executed on the
Closing Date and pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign on the Closing Date all of its right, title and interest in and to
the Mortgage Loans to the Trustee for the benefit of the Certificateholders and
Radian Asset Assurance Inc.. In connection with the transfer and assignment of
the Mortgage Loans, the Mortgage Loan Seller has delivered or will
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deliver or cause to be delivered to the Trustee by the Closing Date or such
later date as is agreed to by the Purchaser and the Mortgage Loan Seller (each
of the Closing Date and such later date is referred to as a "Mortgage File
Delivery Date"), the items of each Mortgage File, provided, however, that in
lieu of the foregoing, the Mortgage Loan Seller may deliver the following
documents, under the circumstances set forth below: (w) in lieu of the original
Security Instrument, assignments to the Trustee or intervening assignments
thereof which have been delivered, are being delivered or will, upon receipt of
recording information relating to the Security Instrument required to be
included thereon, be delivered to recording offices for recording and have not
been returned to the Mortgage Loan Seller in time to permit their delivery as
specified above, the Mortgage Loan Seller may deliver a true copy thereof with a
certification by the Mortgage Loan Seller, on the face of such copy,
substantially as follows: "Certified to be a true and correct copy of the
original, which has been transmitted for recording"; (x) in lieu of the Security
Instrument, assignments to the Trustee or intervening assignments thereof, if
the applicable jurisdiction retains the originals of such documents (as
evidenced by a certification from the Mortgage Loan Seller to such effect) the
Mortgage Loan Seller may deliver photocopies of such documents containing an
original certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; (y) in lieu of the Mortgage
Notes relating to the Mortgage Loans, each identified in the list delivered by
the Purchaser to the Trustee on the Closing Date and attached hereto as Exhibit
5, the Mortgage Loan Seller may deliver lost note affidavits and indemnities of
the Mortgage Loan Seller; and (z) the Mortgage Loan Seller shall not be required
to deliver intervening assignments or Mortgage Note endorsements between the
related Underlying Seller and the Mortgage Loan Seller, between the Mortgage
Loan Seller and the Depositor, and between the Depositor and the Trustee; and
provided further, however, that in the case of Mortgage Loans which have been
prepaid in full after the Cut-off Date and prior to the Closing Date, the
Mortgage Loan Seller, in lieu of delivering the above documents, may deliver to
the Trustee a certification by the Mortgage Loan Seller or the Master Servicer
to such effect and shall deposit all amounts paid in respect of such Mortgage
Loans in the Master Servicer Collection Account on the Closing Date. The
Mortgage Loan Seller shall deliver such original documents (including any
original documents as to which certified copies had previously been delivered)
or such certified copies to the Trustee promptly after they are received. The
Mortgage Loan Seller shall cause the Mortgage and intervening assignments, if
any, and the assignment of the Security Instrument to be recorded not later than
180 days after the Closing Date, unless such assignment is not required to be
recorded under the terms set forth in Section 6(a) hereof.
(c) In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Mortgage Loan Seller further agrees that it will cause,
at the Mortgage Loan Seller's own expense, within 30 days after the Closing
Date, the MERS(R) System to indicate that such Mortgage Loans have been assigned
by the Mortgage Loan Seller to the Purchaser and by the Purchaser to the Trustee
in accordance with this Agreement for the benefit of the Certificateholders by
including (or deleting, in the case of Mortgage Loans which are repurchased in
accordance with this Agreement) in such computer files (a) the code in the field
which identifies the specific Trustee and (b) the code in the field "Pool Field"
which identifies the series of the Certificates issued in connection with such
Mortgage Loans. The Mortgage Loan Seller further agrees that it will not, and
will not permit any Servicer or the Master Servicer to, and the Master Servicer
agrees that it will not, alter the codes referenced in this paragraph
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with respect to any Mortgage Loan during the term of the Pooling and Servicing
Agreement unless and until such Mortgage Loan is repurchased in accordance with
the terms of the Pooling and Servicing Agreement.
(d) The Mortgage Loan Seller and the Purchaser acknowledge hereunder that
all of the Mortgage Loans and the related servicing will ultimately be assigned
to U.S. Bank National Association, as Trustee for the Certificateholders, on the
date hereof.
SECTION 5. Examination of Mortgage Files.
(a) On or before the Mortgage File Delivery Date, the Mortgage Loan Seller
will have made the Mortgage Files available to the Purchaser or its agent for
examination which may be at the offices of the Trustee or the Mortgage Loan
Seller and/or the Mortgage Loan Seller's custodian. The fact that the Purchaser
or its agent has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the Purchaser's rights to
demand cure, repurchase, substitution or other relief as provided in this
Agreement. In furtherance of the foregoing, the Mortgage Loan Seller shall make
the Mortgage Files available to the Purchaser or its agent from time to time so
as to permit the Purchaser to confirm the Mortgage Loan Seller's compliance with
the delivery and recordation requirements of this Agreement and the Pooling and
Servicing Agreement. In addition, upon request of the Purchaser, the Mortgage
Loan Seller agrees to provide to the Purchaser, Bear ▇▇▇▇▇▇▇ and to any
investors or prospective investors in the Certificates information regarding the
Mortgage Loans and their servicing, to make the Mortgage Files available to the
Purchaser, Bear ▇▇▇▇▇▇▇ and to such investors or prospective investors (which
may be at the offices of the Mortgage Loan Seller and/or the Mortgage Loan
Seller's custodian) and to make available personnel knowledgeable about the
Mortgage Loans for discussions with the Purchaser, Bear ▇▇▇▇▇▇▇ and such
investors or prospective investors, upon reasonable request during regular
business hours, sufficient to permit the Purchaser, Bear ▇▇▇▇▇▇▇ and such
investors or potential investors to conduct such due diligence as any such party
reasonably believes is appropriate.
(b) Pursuant to the Pooling and Servicing Agreement, on the Closing Date
the Custodian, on behalf of the Trustee, for the benefit of the
Certificateholders and Radian Asset Assurance Inc., will acknowledge receipt of
each Mortgage Loan, by delivery to the Mortgage Loan Seller, the Purchaser and
the Trustee of an initial certification in the form attached as Exhibit One to
the Custodial Agreement.
(c) Pursuant to the Pooling and Servicing Agreement, within 90 days of the
Closing Date (or, with respect to any Substitute Mortgage Loan, within five
Business Days after the receipt by the Trustee or Custodian thereof), the
Trustee will review or shall cause the Custodian to review items of the Mortgage
Files as set forth on Exhibit 1 and will deliver to the Mortgage Loan Seller,
the Purchaser and the Trustee an interim certification substantially in the form
of Exhibit Two to the Custodial Agreement. If the Trustee or Custodian, as its
agent, finds any document listed on Exhibit 1 not to have been executed or
received, or to be unrelated, determined on the basis of the Mortgagor name,
original principal balance and loan number, to the Mortgage Loans identified in
the Final Mortgage Loan Schedule or to appear defective on its face (a "Material
Defect"), the Trustee or the Custodian, as its agent, shall promptly notify the
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Mortgage Loan Seller of such Material Defect. The Mortgage Loan Seller shall
correct or cure any such Material Defect within 90 days from the date of notice
from the Trustee or the Custodian, as its agent, of the Material Defect and if
the Mortgage Loan Seller fails to correct or cure such Material Defect within
such period and such defect materially and adversely affects the interests of
the Certificateholders in the related Mortgage Loan, the Mortgage Loan Seller
will, in accordance with the terms of the Pooling and Servicing Agreement,
within 90 days of the date of notice, provide the Trustee with a Substitute
Mortgage Loan (if within two years of the Closing Date) or purchase the related
Mortgage Loan at the applicable Purchase Price; provided that, if such defect
would cause the Mortgage Loan to be other than a "qualified mortgage" as defined
in Section 860G(a)(3) of the Code, any such cure, repurchase or substitution
must occur within 90 days from the date such breach was discovered; provided,
however, that if such defect relates solely to the inability of the Mortgage
Loan Seller to deliver the original Security Instrument or intervening
assignments thereof, or a certified copy because the originals of such
documents, or a certified copy, have not been returned by the applicable
jurisdiction, the Mortgage Loan Seller shall not be required to purchase such
Mortgage Loan if the Mortgage Loan Seller delivers such original documents or
certified copy promptly upon receipt, but in no event later than 360 days after
the Closing Date. The foregoing repurchase obligation shall not apply in the
event that the Mortgage Loan Seller cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
applicable jurisdiction because such document has not been returned by such
office; provided that the Mortgage Loan Seller shall instead deliver a recording
receipt of such recording office or, if such receipt is not available, a
certificate confirming that such documents have been accepted for recording, and
delivery to the Trustee or the Custodian, as its agent, shall be effected by the
Mortgage Loan Seller within thirty days of its receipt of the original recorded
document.
(d) Pursuant to the Pooling and Servicing Agreement, within 180 days of
the Closing Date (or, with respect to any Substitute Mortgage Loan, within five
Business Days after the receipt by the Trustee or Custodian thereof) the Trustee
will review or cause the Custodian to review items of the Mortgage Files as set
forth on Exhibit 1 and will deliver to the Mortgage Loan Seller, the Purchaser
and the Trustee a final certification substantially in the form of Exhibit Three
to the Custodial Agreement. If the Trustee or Custodian, as its agent, finds a
Material Defect, the Trustee or the Custodian, as its agent, shall promptly
notify the Mortgage Loan Seller of such Material Defect. The Mortgage Loan
Seller shall correct or cure any such Material Defect within 90 days from the
date of notice from the Trustee or the Custodian, as its agent, of the Material
Defect and if the Mortgage Loan Seller fails to correct or cure such Material
Defect within such period and such defect materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan, the Mortgage
Loan Seller will, in accordance with the terms of the Pooling and Servicing
Agreement, within 90 days of the date of notice, provide the Trustee with a
Substitute Mortgage Loan (if within two years of the Closing Date) or purchase
the related Mortgage Loan at the applicable Purchase Price; provided that, if
such defect would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such cure,
repurchase or substitution must occur within 90 days from the date such breach
was discovered; provided, however, that if such defect relates solely to the
inability of the Mortgage Loan Seller to deliver the original Security
Instrument or intervening assignments thereof, or a certified copy because the
originals of such documents, or a certified copy, have not been returned by the
applicable jurisdiction, the Mortgage Loan Seller
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shall not be required to purchase such Mortgage Loan if the Mortgage Loan Seller
delivers such original documents or certified copy promptly upon receipt, but in
no event later than 360 days after the Closing Date. The foregoing repurchase
obligation shall not apply in the event that the Mortgage Loan Seller cannot
deliver such original or copy of any document submitted for recording to the
appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Mortgage Loan
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, a certificate confirming that such documents have
been accepted for recording, and delivery to the Trustee or the Custodian, as
its agent, shall be effected by the Mortgage Loan Seller within thirty days of
its receipt of the original recorded document.
(e) At the time of any substitution, the Mortgage Loan Seller shall
deliver or cause to be delivered the Substitute Mortgage Loan, the related
Mortgage File and any other documents and payments required to be delivered in
connection with a substitution pursuant to the Pooling and Servicing Agreement.
At the time of any purchase or substitution, the Trustee in accordance with the
terms of the Pooling and Servicing Agreement shall (i) assign to the Mortgage
Loan Seller and cause the Custodian to release the documents (including, but not
limited to, the Mortgage, Mortgage Note and other contents of the Mortgage File)
in the possession of the Custodian relating to the Deleted Mortgage Loan and
(ii) execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in the Mortgage Loan Seller
title to such Deleted Mortgage Loan.
SECTION 6. Recordation of Assignments of Mortgage.
(a) The Mortgage Loan Seller shall cause each assignment of the Security
Instrument from the Mortgage Loan Seller to the Trustee to be recorded not later
than 180 days after the Closing Date, unless (a) such recordation is not
required by the Rating Agencies or an Opinion of Counsel has been provided to
the Trustee (with a copy to the Custodian) which states that the recordation of
such assignments is not necessary to protect the interests of the
Certificateholders in the related Mortgage Loans or (b) MERS is identified on
the Mortgage or a properly recorded assignment of the Mortgage, as the Mortgagee
of record solely as nominee for the Mortgage Loan Seller and its successors and
assigns; provided, however, notwithstanding the foregoing, each assignment shall
be submitted for recording by the Mortgage Loan Seller in the manner described
above, at no expense to the Trust or Trustee, upon the earliest to occur of (i)
reasonable direction by the Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust, (ii) the
occurrence of a Event of Default, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgage Loan Seller and (iv) the
occurrence of a servicing transfer as described in Section 8.02 of the Pooling
and Servicing Agreement.
While each such Mortgage or assignment is being recorded, if necessary,
the Mortgage Loan Seller shall leave or cause to be left with the Trustee a
certified copy of such Mortgage or assignment. All customary recording fees and
reasonable expenses relating to the recordation of the assignments of mortgage
to the Trustee or the Opinion of Counsel, as the case may be, shall be borne by
the Mortgage Loan Seller.
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(b) It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Mortgage Loan Seller to the Purchaser, as contemplated
by this Agreement be, and be treated as, a sale. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Mortgage Loan Seller to the Purchaser to secure a debt or other
obligation of the Mortgage Loan Seller. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans are held by a
court to continue to be property of the Mortgage Loan Seller, then (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the applicable Uniform Commercial Code; (b) the transfer of
the Mortgage Loans provided for herein shall be deemed to be a grant by the
Mortgage Loan Seller to the Purchaser of a security interest in all of the
Mortgage Loan Seller's right, title and interest in and to the Mortgage Loans
and all amounts payable to the holders of 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, to the
extent the Purchaser would otherwise be entitled to own such Mortgage Loans and
proceeds pursuant to Section 4 hereof, including all amounts, other than
investment earnings, from time to time held or invested in any accounts created
pursuant to the Pooling and Servicing Agreement, whether in the form of cash,
instruments, securities or other property; (c) the possession by the Purchaser
or the Trustee of Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-313 (or comparable provision) of the applicable
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 or pursuant to the Pooling and Servicing Agreement shall also
be deemed to be an assignment of any security interest created hereby. The
Mortgage Loan Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be reasonably necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Pooling and Servicing Agreement.
SECTION 7. Representations and Warranties of Mortgage Loan Seller
Concerning the Mortgage Loans. The Mortgage Loan Seller hereby represents and
warrants to the Purchaser as of the Closing Date or such other date as may be
specified below with respect to each Mortgage Loan being sold by it:
(i) the information set forth in the Mortgage Loan Schedule hereto
is true and correct in all material respects and the information provided
to the Rating Agencies, including the Mortgage Loan level detail, is true
and correct according to the Rating Agency requirements;
(ii) immediately prior to the transfer to the Purchaser, the
Mortgage Loan Seller was the sole owner of beneficial title and holder of
each Mortgage and Mortgage Note relating to the Mortgage Loans and is
conveying the same free and clear
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of any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature and the
Mortgage Loan Seller has full right and authority to sell or assign the
same pursuant to this Agreement;
(iii) Each Mortgage Loan at the time it was made complied in all
material respects with all applicable laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and
recording laws and all predatory lending laws; and each Mortgage Loan has
been serviced in all material respects in accordance with all applicable
laws and regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws and all predatory lending laws
and the terms of the related Mortgage Note, the Mortgage and other loan
documents;
(iv) there is no monetary default existing under any Mortgage or the
related Mortgage Note and there is no material event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach or event of acceleration; and
neither the Mortgage Loan Seller, any of its affiliates nor any servicer
of any related Mortgage Loan has taken any action to waive any default,
breach or event of acceleration; no foreclosure action is threatened or
has been commenced with respect to the Mortgage Loan;
(v) the terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, (i) if required by law in the jurisdiction where the
Mortgaged Property is located, or (ii) to protect the interests of the
Trustee on behalf of the Certificateholders;
(vi) no selection procedure reasonably believed by the Mortgage Loan
Seller to be adverse to the interests of the Certificateholders was
utilized in selecting the Mortgage Loans;
(vii) each Mortgage is a valid and enforceable first lien on the
property securing the related Mortgage Note and each Mortgaged Property is
owned by the Mortgagor in fee simple (except with respect to common areas
in the case of condominiums, PUDs and de minimis PUDs) or by leasehold for
a term longer than the term of the related Mortgage, subject only to (i)
the lien of current real property taxes and assessments, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such
exceptions being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal obtained in connection with the
origination of the related Mortgage Loan or referred to in the lender's
title insurance policy delivered to the originator of the related Mortgage
Loan and (iii) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage;
(viii) there is no mechanics' lien or claim for work, labor or
material affecting the premises subject to any Mortgage which is or may be
a lien prior to, or
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equal with, the lien of such Mortgage except those which are insured
against by the title insurance policy referred to in (xiiii) below;
(ix) as of the Cut-off Date, to the best of the Mortgage Loan
Seller's knowledge, there was no delinquent tax or assessment lien against
the property subject to any Mortgage, except where such lien was being
contested in good faith and a stay had been granted against levying on the
property;
(x) there is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to
pay the unpaid principal and interest on such Mortgage Note;
(xi) to the best of the Mortgage Loan Seller's knowledge, except to
the extent insurance is in place which will cover such damage, the
physical property subject to any Mortgage is free of material damage and
is in good repair and there is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property;
(xii) to the best of the Mortgage Loan Seller's knowledge, the
Mortgaged Property and all improvements thereon comply with all
requirements of any applicable zoning and subdivision laws and ordinances;
(xiii) a lender's title insurance policy (on an ALTA or CLTA form)
or binder, or other assurance of title customary in the relevant
jurisdiction therefor in a form acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac,
was issued on the date that each Mortgage Loan was created by a title
insurance company which, to the best of the Mortgage Loan Seller's
knowledge, was qualified to do business in the jurisdiction where the
related Mortgaged Property is located, insuring the Mortgage Loan Seller
and its successors and assigns that the Mortgage is a first priority lien
on the related Mortgaged Property in the original principal amount of the
Mortgage Loan. The Mortgage Loan Seller is the sole insured under such
lender's title insurance policy, and such policy, binder or assurance is
valid and remains in full force and effect, and each such policy, binder
or assurance shall contain all applicable endorsements including a
negative amortization endorsement, if applicable;
(xiv) at the time of origination, each Mortgaged Property was the
subject of an appraisal which conformed to the underwriting requirements
of the originator of the Mortgage Loan and, the appraisal is in a form
acceptable to ▇▇▇▇▇▇ ▇▇▇ or FHLMC;
(xv) as of the Closing Date, the improvements on each Mortgaged
Property securing a Mortgage Loan is insured (by an insurer which is
acceptable to the Mortgage Loan Seller) against loss by fire and such
hazards as are covered under a standard extended coverage endorsement in
the locale in which the Mortgaged Property is located, in an amount which
is not less than the lesser of the maximum insurable value of the
improvements securing such Mortgage Loan or the outstanding principal
balance of the Mortgage Loan, but in no event in an amount less than an
amount that is required
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to prevent the Mortgagor from being deemed to be a co-insurer thereunder;
if the improvement on the Mortgaged Property is a condominium unit, it is
included under the coverage afforded by a blanket policy for the
condominium project; if upon origination of the related Mortgage Loan, the
improvements on the Mortgaged Property were in an area identified as a
federally designated flood area, a flood insurance policy is in effect in
an amount representing coverage not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the restorable
cost of improvements located on such Mortgaged Property or (iii) the
maximum coverage available under federal law; and each Mortgage obligates
the Mortgagor thereunder to maintain the insurance referred to above at
the Mortgagor's cost and expense;
(xvi) each Mortgage Loan constitutes a "qualified mortgage" under
Section 860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860G-2(a)(1);
(xvii) each Mortgage Loan was originated or funded by (a) a savings
and loan association, savings bank, commercial bank, credit union,
insurance company or similar institution which is supervised and examined
by a federal or state authority (or originated by (i) a subsidiary of any
of the foregoing institutions which subsidiary is actually supervised and
examined by applicable regulatory authorities or (ii) a mortgage loan
correspondent of any of the foregoing and that was originated pursuant to
the criteria established by any of the foregoing) or (b) a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act, as amended;
(xviii) none of the Mortgage Loans are (a) loans subject to 12 CFR
Part 226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of Regulation Z, the
regulation implementing TILA, which implements the Home Ownership and
Equity Protection Act of 1994, as amended or (b) classified and/or defined
as a "high cost home loan" under any federal, state or local law,
including, but not limited to, the States of Georgia or North Carolina;
(xix) no loan is a High-Cost Home Loan under the New Jersey Home
Ownership Security Act of 2002;
(xx) no loan in the transaction originated in New Mexico is a
High-Cost Home Loan under the New Mexico Home Loan Protection Act;
(xxi) the information set forth in Schedule A of the Prospectus
Supplement with respect to the Mortgage Loans is true and correct in all
material respects;
(xxii) no Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in Standard & Poor's LEVELS(R)
Glossary, Version 5.6 Revised, Appendix E, attached hereto as Exhibit 6)
and no Mortgage Loan originated on or after October 1, 2002 through March
6, 2003 is governed by the "Georgia Fair Lending Act";
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(xxiii) each Mortgage Loan was originated in accordance with the
underwriting guidelines of the related originator;
(xxiv) each original Mortgage has been recorded or is in the process
of being recorded in accordance with the requirements of Section 2.01 of
the Pooling and Servicing Agreement in the appropriate jurisdictions
wherein such recordation is required to perfect the lien thereof for the
benefit of the Trust Fund;
(xxv) the related Mortgage File contains each of the documents and
instruments listed in Section 2.01 of the Pooling and Servicing Agreement,
subject to any exceptions, substitutions and qualifications as are set
forth in such Section;
(xxvi) the Mortgage Loans are currently being serviced in accordance
with accepted servicing practices; and
(xxvii) at the time of origination, each Mortgaged Property was the
subject of an appraisal which conformed to the underwriting requirements
of the originator of the Mortgage Loan, and the appraisal is in a form
which was acceptable to ▇▇▇▇▇▇ Mae or FHLMC at the time of origination.
It is understood and agreed that the representations and warranties set
forth in this Section 7 will inure to the benefit of the Purchaser, its
successors and assigns, notwithstanding any restrictive or qualified endorsement
on any Mortgage Note or assignment of Mortgage or the examination of any
Mortgage File. Upon any substitution for a Mortgage Loan, the representations
and warranties set forth above shall be deemed to be made by the Mortgage Loan
Seller as to any Substitute Mortgage Loan as of the date of substitution.
Upon discovery or receipt of notice by the Mortgage Loan Seller, the
Purchaser or the Trustee of a breach of any representation or warranty of the
Mortgage Loan Seller set forth in this Section 7 which materially and adversely
affects the value of the interests of the Purchaser, the Certificateholders or
the Trustee in any of the Mortgage Loans delivered to the Purchaser pursuant to
this Agreement, the party discovering or receiving notice of such breach shall
give prompt written notice to the others. In the case of any such breach of a
representation or warranty set forth in this Section 7, within 90 days from the
date of discovery by the Mortgage Loan Seller, or the date the Mortgage Loan
Seller is notified by the party discovering or receiving notice of such breach
(whichever occurs earlier), the Mortgage Loan Seller will (i) cure such breach
in all material respects, (ii) purchase the affected Mortgage Loan at the
applicable Purchase Price or (iii) if within two years of the Closing Date,
substitute a qualifying Substitute Mortgage Loan in exchange for such Mortgage
Loan. The obligations of the Mortgage Loan Seller to cure, purchase or
substitute a qualifying Substitute Mortgage Loan shall constitute the
Purchaser's, the Trustee's and the Certificateholder's sole and exclusive remedy
under this Agreement or otherwise respecting a breach of representations or
warranties hereunder with respect to the Mortgage Loans, except for the
obligation of the Mortgage Loan Seller to indemnify the Purchaser for such
breach as set forth in and limited by Section 13 hereof.
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Any cause of action against the Mortgage Loan Seller or relating to or
arising out of a breach by the Mortgage Loan Seller of any representations and
warranties made in this Section 7 shall accrue as to any Mortgage Loan upon (i)
discovery of such breach by the Mortgage Loan Seller or notice thereof by the
party discovering such breach and (ii) failure by the Mortgage Loan Seller to
cure such breach, purchase such Mortgage Loan or substitute a qualifying
Substitute Mortgage Loan pursuant to the terms hereof.
SECTION 8. Representations and Warranties Concerning the Mortgage Loan
Seller. As of the date hereof and as of the Closing Date, the Mortgage Loan
Seller represents and warrants to the Purchaser as to itself in the capacity
indicated as follows:
(a) the Mortgage Loan Seller (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (ii)
is qualified and in good standing to do business in each jurisdiction where such
qualification is necessary, except where the failure so to qualify would not
reasonably be expected to have a material adverse effect on the Mortgage Loan
Seller's business as presently conducted or on the Mortgage Loan Sellers ability
to enter into this Agreement and to consummate the transactions contemplated
hereby;
(b) the Mortgage Loan Seller has full power to own its property, to carry
on its business as presently conducted and to enter into and perform its
obligations under this Agreement;
(c) the execution and delivery by the Mortgage Loan Seller of this
Agreement have been duly authorized by all necessary action on the part of the
Mortgage Loan Seller; and neither the execution and delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Mortgage Loan Seller or its
properties or the charter or by-laws of the Mortgage Loan Seller, except those
conflicts, breaches or defaults which would not reasonably be expected to have a
material adverse effect on the Mortgage Loan Seller's ability to enter into this
Agreement and to consummate the transactions contemplated hereby;
(d) the execution, delivery and performance by the Mortgage Loan Seller of
this Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except those consents,
approvals, notices, registrations or other actions as have already been
obtained, given or made and, in connection with the recordation of the
Mortgages, powers of attorney or assignments of Mortgages not yet completed;
(e) this Agreement has been duly executed and delivered by the Mortgage
Loan Seller and, assuming due authorization, execution and delivery by the
Purchaser, constitutes a valid and binding obligation of the Mortgage Loan
Seller enforceable against it in
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accordance with its terms (subject to applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of creditors
generally);
(f) there are no actions, suits or proceedings pending or, to the
knowledge of the Mortgage Loan Seller, threatened against the Mortgage Loan
Seller, before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions contemplated by
this Agreement or (ii) with respect to any other matter which in the judgment of
the Mortgage Loan Seller will be determined adversely to the Mortgage Loan
Seller and will if determined adversely to the Mortgage Loan Seller materially
and adversely affect the Mortgage Loan Seller's ability to perform its
obligations under this Agreement; and the Mortgage Loan Seller is not in default
with respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the transactions
contemplated by this Agreement; and
(g) the Mortgage Loan Seller's Information (as defined in Section 13(a)
hereof) does not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
SECTION 9. Representations and Warranties Concerning the Purchaser. As of
the date hereof and as of the Closing Date, the Purchaser represents and
warrants to the Mortgage Loan Seller as follows:
(a) the Purchaser (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and (ii) is
qualified and in good standing as a foreign corporation to do business in each
jurisdiction where such qualification is necessary, except where the failure so
to qualify would not reasonably be expected to have a material adverse effect on
the Purchaser's business as presently conducted or on the Purchaser's ability to
enter into this Agreement and to consummate the transactions contemplated
hereby;
(b) the Purchaser has full corporate power to own its property, to carry
on its business as presently conducted and to enter into and perform its
obligations under this Agreement;
(c) the execution and delivery by the Purchaser of this Agreement have
been duly authorized by all necessary corporate action on the part of the
Purchaser; and neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or constitute a
default under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Purchaser or its properties or the
articles of incorporation or by-laws of the Purchaser, except those conflicts,
breaches or defaults which would not reasonably be expected to have a material
adverse effect on the Purchaser's ability to enter into this Agreement and to
consummate the transactions contemplated hereby;
(d) the execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated hereby do not
require the
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consent or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any state, federal or other
governmental authority or agency, except those consents, approvals, notices,
registrations or other actions as have already been obtained, given or made;
(e) this Agreement has been duly executed and delivered by the Purchaser
and, assuming due authorization, execution and delivery by the Mortgage Loan
Seller, constitutes a valid and binding obligation of the Purchaser enforceable
against it in accordance with its terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of the rights
of creditors generally);
(f) there are no actions, suits or proceedings pending or, to the
knowledge of the Purchaser, threatened against the Purchaser, before or by any
court, administrative agency, arbitrator or governmental body (i) with respect
to any of the transactions contemplated by this Agreement or (ii) with respect
to any other matter which in the judgment of the Purchaser will be determined
adversely to the Purchaser and will if determined adversely to the Purchaser
materially and adversely affect the Purchaser's ability to perform its
obligations under this Agreement; and the Purchaser is not in default with
respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the transactions
contemplated by this Agreement; and
(g) the Purchaser's Information (as defined in Section 13(b) hereof) does
not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
SECTION 10. Conditions to Closing.
(a) The obligations of the Purchaser under this Agreement will be subject
to the satisfaction, on or prior to the Closing Date, of the following
conditions:
(i) Each of the obligations of the Mortgage Loan Seller required to
be performed at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects; all of the representations and warranties of the Mortgage Loan
Seller under this Agreement shall be true and correct as of the date or
dates specified in all material respects; and no event shall have occurred
which, with notice or the passage of time, would constitute a default
under this Agreement, or the Pooling and Servicing Agreement; and the
Purchaser shall have received certificates to that effect signed by
authorized officers of the Mortgage Loan Seller.
(ii) The Purchaser shall have received all of the following closing
documents, in such forms as are agreed upon and reasonably acceptable to
the Purchaser, duly executed by all signatories (other than the Purchaser)
as required pursuant to the respective terms thereof:
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(1) If required pursuant to Section 3 hereof, the Amendment
dated as of the Closing Date and any documents referred to therein;
(2) If required pursuant to Section 3 hereof, the Final
Mortgage Loan Schedule containing the information set forth on
Exhibit 2 hereto, one copy to be attached to each counterpart of the
Amendment;
(3) The Pooling and Servicing Agreement, in form and substance
reasonably satisfactory to the Trustee and the Purchaser, and all
documents required thereby duly executed by all signatories;
(4) A certificate of an officer of the Mortgage Loan Seller
dated as of the Closing Date, in a form reasonably acceptable to the
Purchaser, and attached thereto the resolutions of the Mortgage Loan
Seller authorizing the transactions contemplated by this Agreement,
together with copies of the charter and by-laws of the Mortgage Loan
Seller;
(5) One or more opinions of counsel from the Mortgage Loan
Seller's counsel otherwise in form and substance reasonably
satisfactory to the Purchaser, the Trustee and each Rating Agency;
(6) A letter from each of the Rating Agencies giving each
Class of Certificates set forth on Schedule A the rating set forth
on Schedule A; and
(7) Such other documents, certificates (including additional
representations and warranties) and opinions as may be reasonably
necessary to secure the intended ratings from each Rating Agency for
the Certificates.
(iii) The Certificates to be sold to Bear ▇▇▇▇▇▇▇ pursuant to the
Underwriting Agreement and the Purchase Agreement shall have been issued
and sold to Bear ▇▇▇▇▇▇▇.
(iv) The Mortgage Loan Seller shall have furnished to the Purchaser
such other certificates of its officers or others and such other documents
and opinions of counsel to evidence fulfillment of the conditions set
forth in this Agreement and the transactions contemplated hereby as the
Purchaser and its counsel may reasonably request.
(b) The obligations of the Mortgage Loan Seller under this Agreement shall
be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
(i) The obligations of the Purchaser required to be performed by it
on or prior to the Closing Date pursuant to the terms of this Agreement
shall have been duly performed and complied with in all material respects,
and all of the representations and warranties of the Purchaser under this
Agreement shall be true and correct in all material respects as of the
date hereof and as of the Closing Date, and no event shall have
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occurred which would constitute a breach by it of the terms of this
Agreement, and the Mortgage Loan Seller shall have received a certificate
to that effect signed by an authorized officer of the Purchaser.
(ii) The Mortgage Loan Seller shall have received copies of all of
the following closing documents, in such forms as are agreed upon and
reasonably acceptable to the Mortgage Loan Seller, duly executed by all
signatories other than the Mortgage Loan Seller as required pursuant to
the respective terms thereof:
(1) If required pursuant to Section 3 hereof, the Amendment
dated as of the Closing Date and any documents referred to therein;
(2) The Pooling and Servicing Agreement, in form and substance
reasonably satisfactory to the Mortgage Loan Seller, and all
documents required thereby duly executed by all signatories;
(3) A certificate of an officer of the Purchaser dated as of
the Closing Date, in a form reasonably acceptable to the Mortgage
Loan Seller, and attached thereto the resolutions of the Purchaser
authorizing the transactions contemplated by this Agreement and the
Pooling and Servicing Agreement, together with copies of the
Purchaser's articles of incorporation, and evidence as to the good
standing of the Purchaser dated as of a recent date;
(4) One or more opinions of counsel from the Purchaser's
counsel in form and substance reasonably satisfactory to the
Mortgage Loan Seller;
(5) Such other documents, certificates (including additional
representations and warranties) and opinions as may be reasonably
necessary to secure the intended rating from each Rating Agency for
the Certificates;
SECTION 11. Fees and Expenses. Subject to Section 16 hereof, the Mortgage
Loan Seller shall pay on the Closing Date or such later date as may be agreed to
by the Purchaser (i) the fees and expenses of the Mortgage Loan Seller's
attorneys and the reasonable fees and expenses of the Purchaser's attorneys,
(ii) the fees and expenses of Deloitte & Touche LLP, (iii) the fee for the use
of Purchaser's Registration Statement based on the aggregate original principal
amount of the Certificates and the filing fee of the Commission as in effect on
the date on which the Registration Statement was declared effective, (iv) the
fees and expenses including counsel's fees and expenses in connection with any
"blue sky" and legal investment matters, (v) the fees and expenses of the
Trustee which shall include without limitation the fees and expenses of the
Trustee (and the fees and disbursements of its counsel) with respect to (A)
legal and document review of this Agreement, the Pooling and Servicing
Agreement, the Certificates and related agreements, (B) attendance at the
Closing and (C) review of the Mortgage Loans to be performed by the Custodian,
(vi) the expenses for printing or otherwise reproducing the Certificates, the
Prospectus and the Prospectus Supplement, (vii) the fees and expenses of each
Rating Agency (both initial and ongoing), (viii) the fees and expenses relating
to the preparation
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and recordation of mortgage assignments (including intervening assignments, if
any and if available, to evidence a complete chain of title from the originator
to the Trustee) from the Mortgage Loan Seller to the Trustee or the expenses
relating to the Opinion of Counsel referred to in Section 6(a) hereof, as the
case may be, and (ix) Mortgage File due diligence expenses and other
out-of-pocket expenses incurred by the Purchaser in connection with the purchase
of the Mortgage Loans and by Bear ▇▇▇▇▇▇▇ in connection with the sale of the
Certificates. The Mortgage Loan Seller additionally agrees to pay directly to
any third party on a timely basis the fees provided for above which are charged
by such third party and which are billed periodically.
SECTION 12. Accountants' Letters.
(a) Deloitte & Touche LLP will review the characteristics of a sample of
the Mortgage Loans described in the Final Mortgage Loan Schedule and will
compare those characteristics to the description of the Mortgage Loans contained
in the Prospectus Supplement under the captions "Summary of Prospectus
Supplement - The Mortgage Loans", "The Mortgage Pool" and "Certain
Characteristics of the Mortgage Loans" in Schedule A thereto. The Mortgage Loan
Seller will cooperate with the Purchaser in making available all information and
taking all steps reasonably necessary to permit such accountants to complete the
review and to deliver the letters required of them under the Underwriting
Agreement. Deloitte & Touche LLP will also confirm certain calculations as set
forth under the caption "Yield On The Certificates" in the Prospectus
Supplement.
(b) To the extent statistical information with respect to the Master
Servicer's or a Servicer's servicing portfolio is included in the Prospectus
Supplement under the caption "The Master Servicer and the Servicers," a letter
from the certified public accountant for the Master Servicer and such Servicer
or Servicers will be delivered to the Purchaser dated the date of the Prospectus
Supplement, in the form previously agreed to by the Mortgage Loan Seller and the
Purchaser, with respect to such statistical information.
SECTION 13. Indemnification.
(a) The Mortgage Loan Seller shall indemnify and hold harmless the
Purchaser and its directors, officers and controlling persons (as defined in
Section 15 of the Securities Act) from and against any loss, claim, damage or
liability or action in respect thereof, to which they or any of them may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon (i) any untrue
statement of a material fact contained in the Mortgage Loan Seller's Information
as identified in Exhibit 3, the omission to state in the Prospectus Supplement
or Prospectus (or any amendment thereof or supplement thereto approved by the
Mortgage Loan Seller and in which additional Mortgage Loan Seller's Information
is identified), in reliance upon and in conformity with Mortgage Loan Seller's
Information a material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances in which they were made,
not misleading, (ii) any representation or warranty assigned or made by the
Mortgage Loan Seller in Section 7 or Section 8 hereof being, or alleged to be,
untrue or incorrect, or (iii) any failure by the Mortgage Loan Seller to perform
its obligations under this Agreement; and the Mortgage Loan Seller shall
reimburse the Purchaser and each other indemnified party for any legal and
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other expenses reasonably incurred by them in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action.
The foregoing indemnity agreement is in addition to any liability which
the Mortgage Loan Seller otherwise may have to the Purchaser or any other such
indemnified party.
(b) The Purchaser shall indemnify and hold harmless the Mortgage Loan
Seller and its respective directors, officers and controlling persons (as
defined in Section 15 of the Securities Act) from and against any loss, claim,
damage or liability or action in respect thereof, to which they or any of them
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon (i) any
untrue statement of a material fact contained in the Purchaser's Information as
identified in Exhibit 4, the omission to state in the Prospectus Supplement or
Prospectus (or any amendment thereof or supplement thereto approved by the
Purchaser and in which additional Purchaser's Information is identified), in
reliance upon and in conformity with the Purchaser's Information, a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances in which they were made, not misleading, (ii) any
representation or warranty made by the Purchaser in Section 9 hereof being, or
alleged to be, untrue or incorrect, or (iii) any failure by the Purchaser to
perform its obligations under this Agreement; and the Purchaser shall reimburse
the Mortgage Loan Seller, and each other indemnified party for any legal and
other expenses reasonably incurred by them in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability or
action. The foregoing indemnity agreement is in addition to any liability which
the Purchaser otherwise may have to the Mortgage Loan Seller, or any other such
indemnified party,
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 13 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent it
may elect by written notice delivered to the indemnified party promptly (but, in
any event, within 30 days) after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there is a conflict of interest between itself or themselves and the
indemnifying party in the conduct of the defense of any claim or that the
interests of the indemnified party or parties are not
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substantially co-extensive with those of the indemnifying party (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties (provided,
however, that the indemnifying party shall be liable only for the fees and
expenses of one counsel in addition to one local counsel in the jurisdiction
involved. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement or any claim or action
effected without its written consent; provided, however, that such consent was
not unreasonably withheld.
(d) If the indemnification provided for in paragraphs (a) and (b) of this
Section 13 shall for any reason be unavailable to an indemnified party in
respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to in Section 13, then the indemnifying party shall in lieu of
indemnifying the indemnified party contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to reflect
the relative benefits received by the Mortgage Loan Seller on the one hand and
the Purchaser on the other from the purchase and sale of the Mortgage Loans, the
offering of the Certificates and the other transactions contemplated hereunder.
No person found liable for a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who is not also found liable for such fraudulent misrepresentation.
(e) The parties hereto agree that reliance by an indemnified party on any
publicly available information or any information or directions furnished by an
indemnifying party shall not constitute negligence, bad faith or willful
misconduct by such indemnified party.
SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing but may be delivered by facsimile transmission subsequently
confirmed in writing. Notices to the Mortgage Loan Seller shall be directed to
EMC Mortgage Corporation, Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Telecopy: (972-444-2880)), and notices to the
Purchaser shall be directed to Structured Asset Mortgage Investments II Inc.,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Telecopy: (212-272-7206)),
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇; or to any other address as may hereafter be
furnished by one party to the other party by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been received on the
date received at the premises of the addressee (as evidenced, in the case of
registered or certified mail, by the date noted on the return receipt) provided
that it is received on a business day during normal business hours and, if
received after normal business hours, then it shall be deemed to be received on
the next business day.
SECTION 15. Transfer of Mortgage Loans. The Purchaser retains the right to
assign the Mortgage Loans and any or all of its interest under this Agreement to
the Trustee without the consent of the Mortgage Loan Seller, and, upon such
assignment, the Trustee shall succeed to the applicable rights and obligations
of the Purchaser hereunder; provided, however, the Purchaser shall remain
entitled to the benefits set forth in Sections 11, 13 and 17 hereto and as
provided in Section 2(a). Notwithstanding the foregoing, the sole and exclusive
right and remedy of the Trustee with respect to a breach of representation or
warranty of the Mortgage
J-21
Loan Seller shall be the purchase or substitution obligations of the Mortgage
Loan Seller contained in Sections 5 and 7 hereof.
SECTION 16. Termination. This Agreement may be terminated (a) by the
mutual consent of the parties hereto prior to the Closing Date, (b) by the
Purchaser, if the conditions to the Purchaser's obligation to close set forth
under Section 10(a) hereof are not fulfilled as and when required to be
fulfilled or (c) by the Mortgage Loan Seller, if the conditions to the Mortgage
Loan Seller's obligation to close set forth under Section 10(b) hereof are not
fulfilled as and when required to be fulfilled. In the event of termination
pursuant to clause (b), the Mortgage Loan Seller shall pay, and in the event of
termination pursuant to clause (c), the Purchaser shall pay, all reasonable
out-of-pocket expenses incurred by the other in connection with the transactions
contemplated by this Agreement. In the event of a termination pursuant to clause
(a), each party shall be responsible for its own expenses.
SECTION 17. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Mortgage Loan Seller
submitted pursuant hereto, shall remain operative and in full force and effect
and shall survive delivery of the Mortgage Loans to the Purchaser (and by the
Purchaser to the Trustee). Subsequent to the delivery of the Mortgage Loans to
the Purchaser, the Mortgage Loan Seller's representations and warranties
contained herein with respect to the Mortgage Loans shall be deemed to relate to
the Mortgage Loans actually delivered to the Purchaser and included in the Final
Mortgage Loan Schedule and any Substitute Mortgage Loan and not to those
Mortgage Loans deleted from the Preliminary Mortgage Loan Schedule pursuant to
Section 3 hereof prior to the Closing.
SECTION 18. Severability. If any provision of this Agreement shall be
prohibited or invalid under applicable law, the Agreement shall be ineffective
only to such extent, without invalidating the remainder of this Agreement.
SECTION 19. Counterparts. This Agreement may be executed in counterparts,
each of which will be an original, but which together shall constitute one and
the same agreement.
SECTION 20. Amendment. This Agreement cannot be amended or modified in any
manner without the prior written consent of each party.
SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE AND PERFORMED IN THE STATE OF NEW YORK AND SHALL BE INTERPRETED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
SECTION 22. Further Assurances. Each of the parties agrees to execute and
deliver such instruments and take such actions as another party may, from time
to time, reasonably request in order to effectuate the purpose and to carry out
the terms of this Agreement including any amendments hereto which may be
required by either Rating Agency.
SECTION 23. Successors and Assigns.
J-22
This Agreement shall bind and inure to the benefit of and be enforceable
by the Mortgage Loan Seller and the Purchaser and their permitted successors and
assigns and, to the extent specified in Section 13 hereof, Bear ▇▇▇▇▇▇▇, and
their directors, officers and controlling persons (within the meaning of federal
securities laws). The Mortgage Loan Seller acknowledges and agrees that the
Purchaser may assign its rights under this Agreement (including, without
limitation, with respect to the Mortgage Loan Seller's representations and
warranties respecting the Mortgage Loans) to the Trustee. Any person into which
the Mortgage Loan Seller may be merged or consolidated (or any person resulting
from any merger or consolidation involving the Mortgage Loan Seller), any person
resulting from a change in form of the Mortgage Loan Seller or any person
succeeding to the business of the Mortgage Loan Seller, shall be considered the
"successor" of the Mortgage Loan Seller hereunder and shall be considered a
party hereto without the execution or filing of any paper or any further act or
consent on the part of any party hereto. Except as provided in the two preceding
sentences, this Agreement cannot be assigned, pledged or hypothecated by either
party hereto without the written consent of the other parties to this Agreement
and any such assignment or purported assignment shall be deemed null and void.
SECTION 24. The Mortgage Loan Seller. The Mortgage Loan Seller will keep
in full effect all rights as are necessary to perform their respective
obligations under this Agreement.
SECTION 25. Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties with respect to the subject matter hereof,
and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof.
SECTION 26. No Partnership. Nothing herein contained shall be deemed or
construed to create a partnership or joint venture between the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
J-23
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective duly authorized officers as of the date first
above written.
EMC MORTGAGE CORPORATION
By:
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
STRUCTURED ASSET MORTGAGE
INVESTMENTS II INC.
By:
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
J-24
EXHIBIT 1
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the Purchaser
or its designee, and which shall be delivered to the Purchaser or its designee
pursuant to the terms of the Agreement.
Section 4.6 with respect to each Mortgage Loan (other than a Cooperative
Loan):
(a) The original Mortgage Note, endorsed without recourse to the
order of the Trustee and showing an unbroken chain of endorsements from
the originator thereof to the Person endorsing it to the Trustee, or a
lost note affidavit together with a copy of the related Mortgage Note;
(b) The original Mortgage and, if the related Mortgage Loan is a MOM
Loan, noting the presence of the MIN and language indicating that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if the
original is not available, a copy), with evidence of such recording
indicated thereon (or if the original is not available, a copy), with
evidence of such recording indicated thereon (or if the original Security
Instrument, assignments to the Trustee or intervening assignments thereof
which have been delivered, are being delivered or will, upon receipt of
recording information relating to the Security Instrument required to be
included thereon, be delivered to recording offices for recording and have
not been returned to the Seller in time to permit their recording as
specified in Section 2.01(b) of the Pooling and Servicing Agreement, shall
be in recordable form);
(c) unless the Mortgage Loan is a MOM Loan, a certified copy of the
assignment (which may be in the form of a blanket assignment if permitted
in the jurisdiction in which the Mortgaged Property is located) to "U.S.
Bank National Association, as Trustee", with evidence of recording with
respect to each Mortgage Loan in the name of the Trustee thereon (or if
(A) the original Security Instrument, assignments to the Trustee or
intervening assignments thereof which have been delivered, are being
delivered or will, upon receipt of recording information relating to the
Security Instrument required to be included thereon, be delivered to
recording offices for recording and have not been returned to the Seller
in time to permit their delivery as specified in Section 2.01(b) of the
Pooling and Servicing Agreement, the Seller may deliver a true copy
thereof with a certification by the Seller, on the face of such copy,
substantially as follows: "Certified to be a true and correct copy of the
original, which has been transmitted for recording" or (B) the related
Mortgaged Property is located in a state other than Maryland and an
Opinion of Counsel has been provided as set forth in Section 2.01(b) of
the Pooling and Servicing Agreement, shall be in recordable form);
(d) all intervening assignments of the Security Instrument, if
applicable and only to the extent available to the Mortgage Loan Seller
with evidence of recording thereon;
J-25
(e) the original or a copy of the policy or certificate of primary
mortgage guaranty insurance, to the extent available, if any;
(f) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title
insurance; and
(g) originals of all modification agreements, if applicable and
available.
Section 4.7 with respect to each Cooperative Loan so assigned:
(a) The original Mortgage Note, endorsed without recourse to the
order of the Trustee and showing an unbroken chain of endorsements from
the originator thereof to the Person endorsing it to the Trustee, or lost
note affidavit, together with a copy of the related Mortgage Note;
(b) A counterpart of the Cooperative Lease and the Assignment of
Proprietary Lease to the originator of the Cooperative Loan with
intervening assignments showing an unbroken chain of title from such
originator to the Trustee;
(c) The related Cooperative Stock Certificate, representing the
related Cooperative Stock pledged with respect to such Cooperative Loan,
together with an undated stock power (or other similar instrument)
executed in blank;
(d) The original recognition agreement by the Cooperative of the
interests of the mortgagee with respect to the related Cooperative Loan
and any transfer documents related to the recognition agreement;
(e) The Security Agreement;
(f) Copies of the original UCC-1 financing statement, and any
continuation statements, filed by the originator of such Cooperative Loan
as secured party, each with evidence of recording thereof, evidencing the
interest of the originator under the Security Agreement and the Assignment
of Proprietary Lease;
(g) Copies of the filed UCC-3 assignments of the security interest
referenced in clause (vi) above showing an unbroken chain of title from
the originator to the Trustee, each with evidence of recording thereof,
evidencing the interest of the originator under the Security Agreement and
the Assignment of Proprietary Lease;
(h) An executed assignment of the interest of the originator in the
Security Agreement and Assignment of Proprietary Lease, showing an
unbroken chain of title from the originator to the Trustee; and
(i) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Cooperative Loan.
J-26
EXHIBIT 2
MORTGAGE LOAN SCHEDULE INFORMATION
The Preliminary and Final Mortgage Loan Schedules shall set forth the
following information with respect to each Mortgage Loan:
(a) the loan number;
(b) [the Mortgagor's name];
(c) the city, state and zip code of the Mortgaged Property;
(d) the property type;
(e) the Mortgage Interest Rate;
(f) the Servicing Rate;
(g) the Net Rate;
(h) the original term;
(i) the maturity date;
(j) the stated remaining term to maturity;
(k) the original principal balance;
(l) the first payment date;
(m) the principal and interest payment in effect as of the Cut-off
Date;
(n) the unpaid principal balance as of the Cut-off Date;
(o) the Loan-to-Value Ratio at origination;
(p) paid-through date;
(q) the insurer of any Primary Mortgage Insurance Policy;
(r) the Gross Margin, if applicable;
(s) the Maximum Lifetime Mortgage Rate, if applicable;
(t) the Minimum Lifetime Mortgage Rate, if applicable;
(u) the Periodic Rate Cap, if applicable;
(v) the number of days delinquent, if any;
J-27
(w) which Mortgage Loans adjust after an initial fixed-rate period
of three, five, seven or ten years;
(x) the Loan Group;
(y) the Prepayment Charge Loans; and
(z) the Servicer.
Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (k)
and (n) above, the weighted average by principal balance as of the Cut-off Date
of each of the rates described under (e), (f) and (g) above, and the weighted
average remaining term to maturity by unpaid principal balance as of the Cut-off
Date.
J-28
EXHIBIT 3
MORTGAGE LOAN SELLER'S INFORMATION
All information in the Prospectus Supplement described under the following
Sections: "SUMMARY OF PROSPECTUS SUPPLEMENT -- The Mortgage Loans," "THE
MORTGAGE POOL" and "SCHEDULE A -- CERTAIN CHARACTERISTICS OF THE MORTGAGE
LOANS."
J-29
EXHIBIT 4
PURCHASER'S INFORMATION
All information in the Prospectus Supplement and the Prospectus, except
the Mortgage Loan Seller's Information.
J-30
EXHIBIT 5
SCHEDULE OF LOST NOTES
Available Upon Request
J-31
EXHIBIT 6
APPENDIX E: Standard & Poor's Predatory Lending Categorization
Standard & Poor's has categorized loans governed by anti-predatory lending
laws in the Jurisdictions listed below into three categories based upon a
combination of factors that include (a) the risk exposure associated with the
assignee liability and (b) the tests and thresholds set forth in those laws.
Note that certain loans classified by the relevant statute as Covered are
included in Standard & Poor's High Cost Loan Category because they included
thresholds and tests that are typical of what is generally considered High Cost
by the industry.
------------------------------------------------------------------------------------------------------------------
STANDARD & POOR'S HIGH-COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------------
STATE/JURISDICTION CATEGORY UNDER APPLICABLE ANTI-PREDATORY LENDING LAW
------------------------------------------------------------------------------------------------------------------
Arkansas High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Cleveland Heights, Ohio Covered Loan
------------------------------------------------------------------------------------------------------------------
Colorado Covered Loan
------------------------------------------------------------------------------------------------------------------
Connecticut High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
District of Columbia Covered Loan
------------------------------------------------------------------------------------------------------------------
Florida High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Georgia (Oct. 1, 2002 - March 6, 2003) High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Georgia as amended (March 7, 2003 - current) High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
HOEPA Section 32 High Cost Loan
------------------------------------------------------------------------------------------------------------------
Illinois High Risk Home Loan
------------------------------------------------------------------------------------------------------------------
Kansas High Loan-to-Value Consumer Loans and High APR Consumer Loans
------------------------------------------------------------------------------------------------------------------
Kentucky High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Los Angeles, Calif. High Cost Refinance Home Loan
------------------------------------------------------------------------------------------------------------------
Maine High Rate High Fee Mortgage
------------------------------------------------------------------------------------------------------------------
Massachusetts High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Nevada Home Loan
------------------------------------------------------------------------------------------------------------------
New Jersey High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
New York High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
New Mexico High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
North Carolina High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Oakland, Calif. High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
Ohio Covered Loan
------------------------------------------------------------------------------------------------------------------
Oklahoma Subsection 10 Mortgage
------------------------------------------------------------------------------------------------------------------
South Carolina High Cost Home Loan
------------------------------------------------------------------------------------------------------------------
West Virginia West Virginia Mortgage Loan Act Loan
------------------------------------------------------------------------------------------------------------------
J-32
------------------------------------------------------------------------------------------------------------------
STANDARD & POOR'S COVERED LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------------
STATE/JURISDICTION CATEGORY UNDER APPLICABLE ANTI-PREDATORY LENDING LAW
------------------------------------------------------------------------------------------------------------------
Georgia (Oct. 1, 2002-March 6, 2003) Covered Loan
------------------------------------------------------------------------------------------------------------------
New Jersey Covered Home Loan
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
STANDARD & POOR'S HOME LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------------
STATE/JURISDICTION CATEGORY UNDER APPLICABLE ANTI-PREDATORY LENDING LAW
------------------------------------------------------------------------------------------------------------------
Georgia (Oct. 1, 2002-March 6, 2003) Home Loan
------------------------------------------------------------------------------------------------------------------
New Jersey Home Loan
------------------------------------------------------------------------------------------------------------------
New Mexico Home Loan
------------------------------------------------------------------------------------------------------------------
North Carolina Consumer Home Loan
------------------------------------------------------------------------------------------------------------------
Oakland, Calif. Home Loan
------------------------------------------------------------------------------------------------------------------
South Carolina Consumer Home Loan
------------------------------------------------------------------------------------------------------------------
J-33
SCHEDULE A
REQUIRED RATINGS FOR EACH CLASS OF CERTIFICATES
Public Certificates
Class S&P Fitch
------------------------------------- ----------- -----------
Class I-A-1.......................... AAA AAA
Class I-A-2.......................... AAA AAA
Class I-A-3.......................... AAA AAA
Class I-A-4.......................... AAA AAA
Class I-A-5.......................... AAA AAA
Class I-A-6.......................... AAA AAA
Class I-A-7.......................... AAA AAA
Class I-A-8.......................... AAA AAA
Class I-PO........................... AAA AAA
Class II-A-1......................... AAA AAA
Class II-A-2......................... AAA AAA
Class II-A-3......................... AAA AAA
Class II-PO.......................... AAA AAA
Class II-X-1......................... AAA AAA
Class R-I............................ AAA NR
Class R-II........................... AAA NR
Class R-III.......................... AAA NR
Class B-1............................ AA NR
Class B-2............................ A NR
Class B-3............................ BBB NR
None of the above ratings have been lowered since the respective dates of such
letters.
Private Certificates
Class S&P Fitch
------------------------------------- ----------- -----------
Class B-4............................ BB NR
Class B-5............................ B NR
Class B-6............................ NR NR
J-34
None of the above ratings have been lowered since the respective dates of such
letters.
J-35
SCHEDULE B
MORTGAGE LOAN SCHEDULE
[Provided upon request]
J-36