EXECUTION COPY
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES I LLC,
Depositor,
EMC MORTGAGE CORPORATION,
Seller,
GMAC MORTGAGE CORPORATION,
Servicer
and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
Trustee
____________________
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 2004
________________________________________
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES I TRUST 2004-BO1
ASSET-BACKED CERTIFICATES, SERIES 2004-BO1
TABLE OF CONTENTS
Page
-iv-
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms................................................6
Section 1.02 Allocation of Certain Interest Shortfalls...................58
ARTICLE II
CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Trust Fund....................................59
Section 2.02 Acceptance of the Mortgage Loans............................61
Section 2.03 Representations, Warranties and Covenants of the
Servicer and the Seller................................63
Section 2.04 Representations and Warranties of the Depositor.............67
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases..........................69
Section 2.06 Countersignature and Delivery of Certificates...............69
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01 The Servicer to act as Servicer.............................70
Section 3.02 Due-on-Sale Clauses; Assumption Agreements..................71
Section 3.03 Subservicers................................................72
Section 3.04 Documents, Records and Funds in Possession of the
Servicer To Be Held for Trustee........................73
Section 3.05 Maintenance of Fire Insurance; Errors and Omissions and
Fidelity Coverage......................................74
Section 3.06 Presentment of Claims and Collection of Proceeds............75
Section 3.07 Maintenance of the Primary Mortgage Insurance Policies;
Collections Thereunder.................................75
Section 3.08 Reserved....................................................76
Section 3.09 Realization Upon Defaulted Mortgage Loans;
Determination of Excess Liquidation Proceeds and
Realized Losses; Repurchases of Certain Mortgage
Loans..................................................76
Section 3.10 Servicing Compensation......................................79
Section 3.11 REO Property................................................80
Section 3.12 Liquidation Reports.........................................80
Section 3.13 Annual Certificate as to Compliance.........................80
Section 3.14 Annual Independent Certified Public Accountants'
Servicing Report.......................................80
Section 3.15 Books and Records...........................................81
Section 3.16 Reports Filed with Securities and Exchange Commission.......81
Section 3.17 Reserved....................................................83
Section 3.18 Optional Purchase of 2nd Special Servicing of
Certain Mortgage Loans.................................83
Section 3.19 Obligations of the Servicer in Respect of Mortgage
Rates and Scheduled Payments...........................84
Section 3.20 Reserve Fund................................................85
Section 3.21 Advancing Facility..........................................86
ARTICLE IV
ACCOUNTS
Section 4.01 Collection of Mortgage Loan Payments; Protected Account.....89
Section 4.02 Permitted Withdrawals From the Protected Account............91
Section 4.03 Collection of Taxes; Assessments and Similar Items;
Escrow Accounts........................................93
Section 4.04 Distribution Account........................................93
Section 4.05 Permitted Withdrawals and Transfers from the
Distribution Account...................................94
ARTICLE V
DISTRIBUTIONS AND ADVANCES
Section 5.01 Advances....................................................94
Section 5.02 Compensating Interest Payments..............................95
Section 5.03 REMIC Distributions.........................................96
Section 5.04 Distributions...............................................96
Section 5.04A Allocation of Realized Losses..............................101
Section 5.05 Monthly Statements to Certificateholders...................102
Section 5.06 REMIC Designations and REMIC Distributions.................105
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates...........................................107
Section 6.02 Certificate Register; Registration of Transfer and
Exchange of Certificates..............................108
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates..........112
Section 6.04 Persons Deemed Owners......................................112
Section 6.05 Access to List of Certificateholders' Names and
Addresses.............................................112
Section 6.06 Book-Entry Certificates....................................112
Section 6.07 Notices to Depository......................................113
Section 6.08 Definitive Certificates....................................113
Section 6.09 Maintenance of Office or Agency............................114
ARTICLE VII
THE DEPOSITOR AND THE SERVICER
Section 7.01 Liabilities of the Depositor and the Servicer..............115
Section 7.02 Merger or Consolidation of the Depositor or the Servicer...115
Section 7.03 Indemnification of the Trustee and the Servicer............115
Section 7.04 Limitations on Liability of the Depositor, the Servicer
and Others............................................116
Section 7.05 Servicer Not to Resign.....................................117
Section 7.06 Successor Servicer.........................................117
Section 7.07 Sale and Assignment of Servicing...........................117
ARTICLE VIII
DEFAULT; TERMINATION OF SERVICER
Section 8.01 Events of Default..........................................119
Section 8.02 Trustee to Act; Appointment of Successor...................121
Section 8.03 Notification to Certificateholders.........................122
Section 8.04 Waiver of Defaults.........................................122
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01 Duties of Trustee..........................................123
Section 9.02 Certain Matters Affecting the Trustee......................124
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans......126
Section 9.04 Trustee May Own Certificates...............................127
Section 9.05 Trustee's Fees and Expenses................................127
Section 9.06 Eligibility Requirements for Trustee.......................127
Section 9.07 Insurance..................................................128
Section 9.08 Resignation and Removal of Trustee.........................128
Section 9.09 Successor Trustee..........................................129
Section 9.10 Merger or Consolidation of Trustee.........................129
Section 9.11 Appointment of Co-Trustee or Separate Trustee..............129
Section 9.12 Federal Information Returns and Reports to Certificate;
REMIC Administration..................................130
ARTICLE X
TERMINATION
Section 10.01 Termination upon Liquidation or Repurchase of all
Mortgage Loans........................................134
Section 10.02 Final Distribution on the Certificates.....................134
Section 10.03 Additional Termination Requirements........................136
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment..................................................1236
Section 11.02 Recordation of Agreement; Counterparts.....................138
Section 11.03 Governing Law..............................................138
Section 11.04 Intention of Parties.......................................138
Section 11.05 Notices....................................................139
Section 11.06 Severability of Provisions.................................140
Section 11.07 Assignment.................................................140
Section 11.08 Limitation on Rights of Certificateholders.................140
Section 11.09 Inspection and Audit Rights................................141
Section 11.10 Certificates Nonassessable and Fully Paid..................141
Appendices
Appendix 1 Calculation of REMIC I Y Principal Reduction Amounts
Exhibits
Exhibit A-1 Form of Class I-A Certificates
Exhibit A-2 Form of Class II-A Certificates
Exhibit A-3 [Reserved]
Exhibit A-4 Form of Class M Certificates
Exhibit A-5 Form of Residual Certificates
Exhibit A-6 Form of Class CE Certificates
Exhibit B Mortgage Loan Schedule
Exhibit C [Reserved]
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A and Related Matters Certificate
Exhibit H Form of Request for Release
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
Exhibit K Form of Custodial Agreement
Exhibit L Form of Back-Up Certification
Exhibit M Form of Mortgage Loan Purchase Agreement
POOLING AND SERVICING AGREEMENT, dated as of October 1, 2004,
among BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES I LLC, a Delaware limited
liability company, as depositor (the "Depositor"), EMC MORTGAGE CORPORATION,
a Delaware corporation, as seller (in such capacity, the "Seller"), GMAC
MORTGAGE CORPORATION, a Pennsylvania corporation, as Servicer (in such
capacity, the "Servicer") and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, but solely as
trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates.
REMIC I
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (other than the Reserve Fund and the
Yield Maintenance Agreements) as a REMIC for federal income tax purposes, and
such segregated pool of assets will be designated as "REMIC I". The Class
R-1 Certificates will be the sole class of "residual interests" in REMIC I
for purposes of the REMIC Provisions (as defined herein). The following
table irrevocably sets forth the designation, the Uncertificated REMIC I
Pass-Through Rate, the initial Uncertificated Principal Balance and, solely
for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii),
the "latest possible maturity date" for each of the REMIC I Regular Interests
(as defined herein). None of the REMIC I Regular Interests will be
certificated.
Uncertificated Initial
REMIC I Uncertificated Latest Possible
Designation Pass-Through Rate Principal Balance Maturity Date (1)
Y-1 Variable(2) $466,608.73 October 25, 2034
Y-2 Variable(2) $206,131.33 October 25, 2034
Z-1 Variable(2) $932,750,859.27 October 25, 2034
Z-2 Variable (2) $412,059,349.67 October 25, 2034
___________________________
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(1) 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 has been
designated as the "latest possible maturity date" for each REMIC I
Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
REMIC II
As provided herein, the Trustee will make an election to treat
the segregated pool of assets consisting of the REMIC I Regular Interests as
a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC II". The Class R-2 Certificates will represent
the sole class of "residual interests" in REMIC II for purposes of the REMIC
Provisions.
The following table irrevocably sets forth the designation, the
Uncertificated REMIC II Pass-Through Rate, the initial Uncertificated
Principal Balance and, solely for purposes of satisfying Treasury regulation
Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of
the REMIC II Regular Interests (as defined herein). None of the REMIC II
Regular Interests will be certificated.
Uncertificated
Initial
REMIC II Uncertificated Latest Possible
Designation Pass-Through Rate Principal Balance Maturity Date(1)
LT1 Variable(2) $932,578,225.40 October 25, 2034
LT2 Variable(2) $14,009.63 October 25, 2034
LT3 0.00% $79,312.12 October 25, 2034
LT4 Variable(2) $79,312.12 October 25, 2034
LT5 Variable(2) $411,982,063.03 October 25, 2034
LT6 Variable(2) $5,166.46 October 25, 2034
LT7 0.00% $36,060.09 October 25, 2034
LT8 Variable(2) $36,060.09 October 25, 2034
LT-Y1(3) Variable(2) $466,608.73 October 25, 2034
LT-Y2(3) Variable(2) $ 206,131.33 October 25, 2034
___________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC II
Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC
II Pass-Through Rate" herein.
(3) REMIC II Regular Interest LT-Y1 will have the same interest rate,
principal balance, Principal Reduction Amount and allocation of
Realized Losses as the REMIC I Regular Interest Y-1. REMIC II Regular
Interest LT-Y2 will have the same interest rate, principal balance,
Principal Reduction Amount and allocation of Realized Losses as the
REMIC I Regular Interest Y-2.
REMIC III
As provided herein, the Trustee shall make an election to treat
the segregated pool of assets consisting of the REMIC II Regular Interests as
a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC III." The Class R-3 Certificates will represent
the sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions.
The following table sets forth (or describes) the Class
designation, Pass-Through Rate and aggregate Initial Certificate Principal
Balance for each indicated Class of Certificates that represents ownership of
a "regular interest" in REMIC III created hereunder (each a "REMIC III
Regular Interest"), and, solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date"
for each of the REMIC III Regular Interests and the Certificates:
Aggregate Initial Latest Possible
Pass-Through Certificate ------------------
Class Designation Rate Principal Balance Maturity Date(*)
I-A-1 (1) $571,593,000 October 25, 2034
I-A-2 (2) $113,708,000 October 25, 2034
I-A-3 (3) $82,737,000 October 25, 2034
II-A-1 (4) $305,365,000 October 25, 2034
II-A-2 (5) $33,930,000 October 25, 2034
M-1 (6) $63,910,000 October 25, 2034
M-2 (7) $19,509,000 October 25, 2034
M-3 (8) $18,837,000 October 25, 2034
M-4 (9) $16,146,000 October 25, 2034
M-5 (10) $18,164,000 October 25, 2034
M-6 (11) $17,491,000 October 25, 2034
M-7 (12) $13,455,000 October 25, 2034
M-8 (13) $13,454,000 October 25, 2034
M-9A (14) $9,082,000 October 25, 2034
M-9B (15) $9,082,000 October 25, 2034
Class CE Variable(16) $1,345,482,950 October 25, 2034
Certificates Notional Amount
_______________
* 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 has been
designated as the "latest possible maturity date" for the REMIC III
Regular Interests and the Certificates.
(1) The Pass-Through Rate per annum for the Class I-A-1 Certificates will
be equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class I-A-1 Certificates will be 0.20% per annum. The REMIC
III Regular Interest related to this Certificate is entitled to
interest at the foregoing rate but is not entitled to any payments of
Basis Risk Shortfall Carryforward Amounts to which this Certificate may
be entitled.
(2) The Pass-Through Rate per annum for the Class I-A-2 Certificates will
be equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class I-A-2 Certificates will be 0.35% per annum. The REMIC
III Regular Interest related to this Certificate is entitled to
interest at the foregoing rate but is not entitled to any payments of
Basis Risk Shortfall Carryforward Amounts to which this Certificate may
be entitled.
(3) The Pass-Through Rate per annum for the Class I-A-3 Certificates will
be equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class I-A-3 Certificates will be 0.55% per annum. The REMIC
III Regular Interest related to this Certificate is entitled to
interest at the foregoing rate but is not entitled to any payments of
Basis Risk Shortfall Carryforward Amounts to which this Certificate may
be entitled.
(4) The Pass-Through Rate per annum for the Class II-A-1 Certificates will
be equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class II-A-1 Certificates will be 0.32% per annum. The REMIC
III Regular Interest related to this Certificate is entitled to
interest at the foregoing rate but is not entitled to any payments of
Basis Risk Shortfall Carryforward Amounts to which this Certificate may
be entitled.
(5) The Pass-Through Rate per annum for the Class II-A-2 Certificates will
be equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class II-A-2 Certificates will be 0.40% per annum. The REMIC
III Regular Interest related to this Certificate is entitled to
interest at the foregoing rate but is not entitled to any payments of
Basis Risk Shortfall Carryforward Amounts to which this Certificate may
be entitled.
(6) The Pass-Through Rate per annum for the Class M-1 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-1 Certificates will be 0.70% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(7) The Pass-Through Rate per annum for the Class M-2 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-2 Certificates will be 0.75% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(8) The Pass-Through Rate per annum for the Class M-3 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-3 Certificates will be 1.05% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(9) The Pass-Through Rate per annum for the Class M-4 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-4 Certificates will be 1.20% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(10) The Pass-Through Rate per annum for the Class M-5 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-5 Certificates will be 1.40% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(11) The Pass-Through Rate per annum for the Class M-6 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-6 Certificates will be 2.00% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(12) The Pass-Through Rate per annum for the Class M-7 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-7 Certificates will be 2.00% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(13) The Pass-Through Rate per annum for the Class M-8 Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-8 Certificates will be 3.50% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(14) The Pass-Through Rate per annum for the Class M-9A Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-9A Certificates will be 4.00% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(15) The Pass-Through Rate per annum for the Class M-9B Certificates will be
equal to the lesser of (i) the related One-Month LIBOR Pass-Through
Rate and (ii) the related Net Rate Cap. The initial Certificate Margin
for the Class M-9B Certificates will be 4.00% per annum. The REMIC III
Regular Interest related to this Certificate is entitled to interest at
the foregoing rate but is not entitled to any payments of Basis Risk
Shortfall Carryforward Amounts to which this Certificate may be
entitled.
(16) The Class CE Certificates will bear interest at a per annum rate equal
to its Pass-Through Rate on its Certificate Notional Balance. The
Class CE Certificates will be comprised of two REMIC III Regular
Interests, a principal only regular interest designated CE-P and an
interest only regular interest designated CE-I, which will be entitled
to distributions as set forth herein.
The Trust Fund shall be named, and may be referred to as, the
"Bear ▇▇▇▇▇▇▇ Asset Backed Securities I Trust 2004-BO1." The Certificates
issued hereunder may be referred to as "Asset-Backed Certificates, Series
2004-BO1" (including for purposes of any endorsement or assignment of a
Mortgage Note or Mortgage).
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Seller and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01......Defined Terms.
In addition to those terms defined in Section 1.02, whenever used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
Accepted Servicing Practices: With respect to each Mortgage Loan, those
mortgage servicing practices (including collection procedures) that are in
accordance with all applicable statutes, regulations and servicing practices
employed by the Servicer for similar mortgage loans.
Account: The Distribution Account, the Reserve Account and the
Protected Account.
Accrual Period: With respect to the Certificates (other than the Class
CE and the Residual Certificates) and any Distribution Date, the period from
and including the immediately preceding Distribution Date (or with respect to
the first Accrual Period, the Closing Date) to and including the day prior to
such Distribution Date. With respect to the Class CE Certificates and any
Distribution Date, the calendar month immediately preceding such Distribution
Date. All calculations of interest on the Certificates (other than the Class
CE and the Residual Certificates) will be made on the basis of the actual
number of days elapsed in the related Accrual Period. All calculations of
interest on the Class CE Certificates will be made on the basis of a 360-day
year consisting of twelve 30-day months.
Actuarial Loans: The Mortgage Loans which provide for allocation of
principal and interest according to the customary method, on which 30 days of
interest is owed each month irrespective of the day on which the payment was
received.
Advance: An advance of delinquent payments of interest in respect of a
Mortgage Loan required to be made by the Servicer as provided in Section 5.01
hereof.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Adjustable Rate Mortgage Loan: Each of the Mortgage Loans identified
in the Mortgage Loan Schedule as having a Mortgage Rate that is subject to
adjustment.
Adjustment Date: With respect to each Adjustable Rate Mortgage Loan,
the first day of the month in which the Mortgage Rate of an Adjustable Rate
Mortgage Loan changes pursuant to the related Mortgage Note. The first
Adjustment Date following the applicable Cut-off Date as to each Adjustable
Rate Mortgage Loan is set forth in the Mortgage Loan Schedule.
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Protected Account at the close of business on
the immediately preceding Determination Date on account of (i) all Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due
after the related Due Period and (ii) Principal Prepayments, Liquidation
Proceeds, Subsequent Recoveries and Insurance Proceeds received in respect of
such Mortgage Loans after the last day of the related Prepayment Period,
subject to Section 4.02.
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
Trustee by either (i) an Opinion of Counsel reasonably acceptable to the
Trustee delivered to it by the Servicer, the Seller or the Depositor, or (ii)
written notice from the appropriate taxing authority as to the applicability
of such state law.
Applied Realized Loss Amount: With respect to any Distribution Date and
a Class of Class A Certificates and Class M Certificates, the sum of the
Realized Losses with respect to the Mortgage Loans which have been applied in
reduction of the Certificate Principal Balance of that Class of Certificates
pursuant to Section 5.04A of this Agreement reduced by any Subsequent
Recoveries applied to such Applied Realized Loss Amount.
Appraised Value: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made or considered in the underwriting decision at
the time of such refinancing or, with respect to any other Mortgage Loan, the
lesser of (x) the appraised value of the Mortgaged Property based upon the
appraisal made by a fee appraiser at the time of the origination of the
related Mortgage Loan, and (y) the sales price of the Mortgaged Property at
the time of such origination.
Basis Risk Shortfall Carry Forward Amount: With respect to any
Distribution Date and any Class of Class A Certificates and Class M
Certificates and any Distribution Date for which the Pass-Through Rate for
such Certificates is equal to the related Net Rate Cap, the sum of (A) the
excess, if any, of (a) the amount of Current Interest that such Class would
have been entitled to receive on such Distribution Date had the Pass-Though
Rate applicable to such Class been calculated at a per annum rate equal to
One-Month LIBOR plus the related Certificate Margin, over (b) the amount of
Current Interest that such Class received on such Distribution Date at a per
annum rate equal to the applicable Net Rate Cap and (B) the amount in clause
(A) for all previous Distribution Dates not previously paid, together with
interest thereon at a rate equal to the related Pass-Through Rate for such
Distribution Date.
Bankruptcy Code: Title 11 of the United States Code.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with
the rules of the Depository and as described in Section 6.06). As of the
Closing Date, each Class of Regular Certificates (other than the Class CE
Certificates) constitutes a Class of Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in The City of New York, New York,
Waterloo, Iowa or Horsham, Pennsylvania or any city in which the Corporate
Trust Office of the Trustee 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 one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-5.
Certificate Margin: With respect to the Class I-A-1 Certificates, 0.20%.
With respect to the Class I-A-2 Certificates, 0.35% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 0.70% in the case of each Distribution Date thereafter.
With respect to the Class I-A-3 Certificates, 0.55% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 1.10% in the case of each Distribution Date thereafter.
With respect to the Class II-A-1 Certificates, 0.32% in the case of
each Distribution Date through and including the first possible Optional
Termination Date and 0.64% in the case of each Distribution Date thereafter.
With respect to the Class II-A-2 Certificates, 0.40% in the case of
each Distribution Date through and including the first possible Optional
Termination Date and 0.80% in the case of each Distribution Date thereafter.
With respect to the Class M-1 Certificates, 0.70% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 1.05% in the case of each Distribution Date thereafter.
With respect to the Class M-2 Certificates, 0.75% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 1.125% in the case of each Distribution Date thereafter.
With respect to the Class M-3 Certificates, 1.05% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 1.575% in the case of each Distribution Date thereafter.
With respect to the Class M-4 Certificates, 1.20% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 1.80% in the case of each Distribution Date thereafter.
With respect to the Class M-5 Certificates, 1.40% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 2.10% in the case of each Distribution Date thereafter.
With respect to the Class M-6 Certificates, 2.00% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 3.00% in the case of each Distribution Date thereafter.
With respect to the Class M-7 Certificates, 2.00% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 3.00% in the case of each Distribution Date thereafter.
With respect to the Class M-8 Certificates, 3.50% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 5.25% in the case of each Distribution Date thereafter.
With respect to the Class M-9A Certificates, 4.00% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 6.00% in the case of each Distribution Date thereafter.
With respect to the Class M-9B Certificates, 4.00% in the case of each
Distribution Date through and including the first possible Optional
Termination Date and 6.00% in the case of each Distribution Date thereafter.
Certificate Notional Balance: With respect to the Class CE Certificates
and any Distribution Date, the aggregate Uncertificated Principal Balance of
the REMIC II Regular Interests for such Distribution Date.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than any
Class CE Certificate or Residual Certificate) and as of any Distribution
Date, the Initial Certificate Principal Balance of such Certificate plus, in
the case of a Class A Certificate and Class M Certificate, any Subsequent
Recoveries added to the Certificate Principal Balance of such Certificate
pursuant to Section 5.04(b), less the sum of (i) all amounts distributed with
respect to such Certificate in reduction of the Certificate Principal Balance
thereof on previous Distribution Dates pursuant to Section 5.04, and (ii) any
Applied Realized Loss Amounts allocated to such Certificate on previous
Distribution Dates.
Certificate Register: The register maintained pursuant to Section 6.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
Class: All Certificates bearing the same Class designation as set forth
in Section 6.01 hereof.
Class A Certificates: The Class I-A-1, Class I-A-2, Class I-A-3, Class
II-A-1 and Class II-A-2 Certificates.
Class A Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the Principal Distribution Amount for such
Distribution Date and (y) the excess, if any, of (i) the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior
to such Distribution Date, over (ii) the lesser of (a) the product of (1)
64.60% and (2) the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date, and (b) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus $6,727,415.
Class I-A Certificates: The Class I-A-1, Class I-A-2 and Class I-A-3
Certificates.
Class I-A-1 Certificate: Any Certificate designated as a "Class I-A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided
for the Class I-A-1 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class I-A-2 Certificate: Any Certificate designated as a "Class I-A-2
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided
for the Class I-A-2 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class I-A-3 Certificate: Any Certificate designated as a "Class I-A-3
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided
for the Class I-A-3 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III, together with certain rights to payments
from the Yield Maintenance Agreements.
Class I-A Principal Distribution Amount: For any Distribution Date,
with respect to the Class I-A Certificates and any Distribution Date, is the
product of the Class A Principal Distribution Amount and a fraction, the
numerator of which is the Principal Funds for Loan Group I for such
Distribution Date and the denominator of which is the Principal Funds for
both Loan Groups for such Distribution Date.
Class II-A Certificate: The Class II-A-1 Certificates and the Class
II-A-2 Certificates.
Class II-A-1 Certificate: Any Certificate designated as a "Class II-A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided
for the Class II-A-1 Certificates as set forth herein and evidencing
ownership of a Regular Interest in REMIC III together with certain rights to
payments from the Yield Maintenance Agreements.
Class II-A-2 Certificate: Any Certificate designated as a "Class II-A-2
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided
for the Class II-A-2 Certificates as set forth herein and evidencing
ownership of a Regular Interest in REMIC III together with certain rights to
payments from the Yield Maintenance Agreements.
Class II-A Principal Distribution Amount: For any Distribution Date,
with respect to the Class II-A Certificates and any Distribution Date, is the
product of the Class A Principal Distribution Amount and a fraction, the
numerator of which is the Principal Funds for Loan Group II for such
Distribution Date and the denominator of which is the Principal Funds for
both Loan Groups for such Distribution Date.
Class CE Certificate: Any Certificate designated as a "Class CE
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class CE Certificates herein and evidencing ownership of REMIC III
Regular Interests CE-I and CE-P.
Class CE Distribution Amount: With respect to any Distribution Date,
the sum of (i) the Current Interest for the Class CE Certificates for such
Distribution Date (which shall be deemed distributable to the REMIC III
Regular Interest CE-I) and (ii) any Overcollateralization Release Amount for
such Distribution Date (which shall be deemed distributable to the REMIC III
Regular Interest CE-I); provided, however that on any Distribution Date after
the Distribution Date on which the Certificate Principal Balances of the
Class A Certificates and Class M Certificates have been reduced to zero, the
Class CE Distribution Amount shall include the Overcollateralization Amount
(which shall be deemed distributable, first, to the REMIC III Regular
Interest CE-I in respect of accrued and unpaid interest thereon until such
accrued and unpaid interest shall have been reduced to zero and, thereafter,
to the REMIC III Regular Interest CE-P in respect of the principal balance
thereof).
Class M Certificate: The Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9A and Class M-9B
Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-1 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-1 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount and (y) the excess, if any, of (a) the sum of (1) the
aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the distribution of the Class A Principal Distribution
Amount on such Distribution Date and (2) the Certificate Principal Balance of
the Class M-1 Certificates immediately prior to such Distribution Date, over
(b) the lesser of (1) the product of (x) 74.10% and (y) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date, and (2)
the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus $6,727,415.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-2 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-2 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount and the Class M-1 Principal Distribution Amount and (y)
the excess, if any, of (a) the sum of (1) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the distribution of the Class M-1
Principal Distribution Amount on such Distribution Date) and (3) the
Certificate Principal Balance of the Class M-2 Certificates immediately prior
to such Distribution Date, over (b) the lesser of (1) the product of (x)
77.00% and (y) the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date, and (2) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus $6,727,415.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-3 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-3 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount and the
Class M-2 Principal Distribution Amount and (y) the excess, if any, of (a)
the sum of (1) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the distribution of the Class A
Principal Distribution Amount on such Distribution Date), (2) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account
the distribution of the Class M-1 Principal Distribution Amount on such
Distribution Date), (3) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the distribution of the Class M-2
Principal Distribution Amount on such Distribution Date) and (4) the
Certificate Principal Balance of the Class M-3 Certificates immediately prior
to such Distribution Date, over (b) the lesser of (1) the product of (x)
79.80% and (y) the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date, and (2) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus $6,727,415.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-4 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-4 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount and the Class M-3 Principal Distribution
Amount and (y) the excess, if any, of (a) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the distribution of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the distribution of the Class M-1
Principal Distribution Amount on such Distribution Date), (3) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
the distribution of the Class M-2 Principal Distribution Amount on such
Distribution Date), (4) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the distribution of the Class M-3
Principal Distribution Amount on such Distribution Date) and (5) the
Certificate Principal Balance of the Class M-4 Certificates immediately prior
to such Distribution Date, over (b) the lesser of (1) the product of (x)
82.20% and (y) the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date, and (2) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus $6,727,415.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-5 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-5 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount and the Class M-4 Principal Distribution Amount and (y) the excess, if
any, of (a) the sum of (1) the aggregate Certificate Principal Balance of the
Class A Certificates (after taking into account the distribution of the Class
A Principal Distribution Amount on such Distribution Date), (2) the
Certificate Principal Balance of the Class M-1 Certificates (after taking
into account the distribution of the Class M-1 Principal Distribution Amount
on such Distribution Date), (3) the Certificate Principal Balance of the
Class M-2 Certificates (after taking into account the distribution of the
Class M-2 Principal Distribution Amount on such Distribution Date), (4) the
Certificate Principal Balance of the Class M-3 Certificates (after taking
into account the distribution of the Class M-3 Principal Distribution Amount
on such Distribution Date), (5) the Certificate Principal Balance of the
Class M-4 Certificates (after taking into account the distribution of the
Class M-4 Principal Distribution Amount on such Distribution Date) and (6)
the Certificate Principal Balance of the Class M-5 Certificates immediately
prior to such Distribution Date, over (b) the lesser of (1) the product of
(x) 84.90% and (y) the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date, and (2) the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date minus $6,727,415.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-6 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-6 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount, the Class M-4 Principal Distribution Amount and the Class M-5
Principal Distribution Amount and (y) the excess, if any, of (a) the sum of
(1) the aggregate Certificate Principal Balance of the Class A Certificates
(after taking into account the distribution of the Class A Principal
Distribution Amount on such Distribution Date), (2) the Certificate Principal
Balance of the Class M-1 Certificates (after taking into account the
distribution of the Class M-1 Principal Distribution Amount on such
Distribution Date), (3) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the distribution of the Class M-2
Principal Distribution Amount on such Distribution Date), (4) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account
the distribution of the Class M-3 Principal Distribution Amount on such
Distribution Date), (5) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount on such Distribution Date), (6) the Certificate
Principal Balance of the Class M-5 Certificates (after taking into account
the distribution of the Class M-5 Principal Distribution Amount on such
Distribution Date) and (7) the Certificate Principal Balance of the Class M-6
Certificates immediately prior to such Distribution Date, over (b) the lesser
of (1) the product of (x) 87.50% and (y) the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date, and (2) the
aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus $6,727,415.
Class M-7 Certificate: Any Certificate designated as a "Class M-7
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-7 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-7 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount and the Class M-6 Principal Distribution Amount and (y)
the excess, if any, of (a) the sum of (1) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the distribution of the Class M-1
Principal Distribution Amount on such Distribution Date), (3) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
the distribution of the Class M-2 Principal Distribution Amount on such
Distribution Date), (4) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the distribution of the Class M-3
Principal Distribution Amount on such Distribution Date), (5) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the distribution of the Class M-4 Principal Distribution Amount on such
Distribution Date), (6) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account the distribution of the Class M-5
Principal Distribution Amount on such Distribution Date), (7) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
the distribution of the Class M-6 Principal Distribution Amount on such
Distribution Date) immediately prior to such Distribution Date and (8) the
Certificate Principal Balance of the Class M-7 Certificates immediately prior
to such Distribution Date, over (b) the lesser of (1) the product of (x)
89.50% and (y) the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date, and (2) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus $6,727,415.
Class M-8 Certificate: Any Certificate designated as a "Class M-8
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-8 Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-8 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount, the Class M-6 Principal Distribution Amount and the
Class M-7 Principal Distribution Amount and (y) the excess, if any, of (a)
the sum of (1) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the distribution of the Class A
Principal Distribution Amount on such Distribution Date), (2) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account
the distribution of the Class M-1 Principal Distribution Amount on such
Distribution Date), (3) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the distribution of the Class M-2
Principal Distribution Amount on such Distribution Date), (4) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account
the distribution of the Class M-3 Principal Distribution Amount on such
Distribution Date), (5) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount on such Distribution Date), (6) the Certificate
Principal Balance of the Class M-5 Certificates (after taking into account
the distribution of the Class M-5 Principal Distribution Amount on such
Distribution Date), (7) the Certificate Principal Balance of the Class M-6
Certificates (after taking into account the distribution of the Class M-6
Principal Distribution Amount on such Distribution Date) immediately prior to
such Distribution Date, (8) the Certificate Principal Balance of the Class
M-7 Certificates (after taking into account the distribution of the Class M-7
Principal Distribution Amount on such Distribution Date) immediately prior to
such Distribution Date and (9) the Certificate Principal Balance of the Class
M-8 Certificates immediately prior to such Distribution Date, over (b) the
lesser of (1) the product of (x) 91.50% and (y) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date, and (2)
the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus $6,727,415.
Class M-9 Certificates: The Class M-9A Certificates and the Class M-9B
Certificates.
Class M-9A Certificate: Any Certificate designated as a "Class M-9A
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-9A Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-9B Certificate: Any Certificate designated as a "Class M-9B
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided
for the Class M-9B Certificates as set forth herein and evidencing ownership
of a Regular Interest in REMIC III together with certain rights to payments
from the Yield Maintenance Agreements.
Class M-9 Principal Distribution Amount: For any Distribution Date, an
amount equal to the lesser of (x) the remaining Principal Distribution Amount
for such Distribution Date after distribution of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount, the Class M-3 Principal Distribution
Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount, the Class M-6 Principal Distribution Amount, the Class
M-7 Principal Distribution Amount and the Class M-8 Principal Distribution
Amount and (y) the excess, if any, of (a) the sum of (1) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the distribution of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the distribution of the Class M-1
Principal Distribution Amount on such Distribution Date), (3) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
the distribution of the Class M-2 Principal Distribution Amount on such
Distribution Date), (4) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the distribution of the Class M-3
Principal Distribution Amount on such Distribution Date), (5) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
the distribution of the Class M-4 Principal Distribution Amount on such
Distribution Date), (6) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account the distribution of the Class M-5
Principal Distribution Amount on such Distribution Date), (7) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
the distribution of the Class M-6 Principal Distribution Amount on such
Distribution Date), (8) the Certificate Principal Balance of the Class M-7
Certificates (after taking into account the distribution of the Class M-7
Principal Distribution Amount on such Distribution Date), (9) the Certificate
Principal Balance of the Class M-8 Certificates (after taking into account
the distribution of the Class M-8 Principal Distribution Amount on such
Distribution Date) immediately prior to such Distribution Date, and (10) the
aggregate Certificate Principal Balance of the Class M-9 Certificates
immediately prior to such Distribution Date, over (b) the lesser of (1) the
product of (x) 94.20% and (y) the aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date, and (2) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date minus
$6,727,415.
Class R-1 Certificate: Any Certificate designated a "Class R-1
Certificate" on the face thereof, in substantially the form set forth in
Exhibit A-5 hereto, evidencing the Residual Interest in REMIC I and
representing the right to the Percentage Interest of distributions provided
for the Class R-1 Certificates as set forth herein.
Class R-2 Certificate: Any Certificate designated a "Class R-2
Certificate" on the face thereof, in substantially the form set forth in
Exhibit A-5 hereto, evidencing the Residual Interest in REMIC II and
representing the right to the Percentage Interest of distributions provided
for the Class R-2 Certificates as set forth herein.
Class R-3 Certificate: Any Certificate designated a "Class R-3
Certificate" on the face thereof, in substantially the form set forth in
Exhibit A-5 hereto, evidencing the Residual Interest in REMIC III and
representing the right to the Percentage Interest of distributions provided
for the Class R-3 Certificates as set forth herein.
Closing Date: October 26, 2004.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Compensating Interest: An amount for any Distribution Date, not to
exceed the Servicing Fee, to be applied by the Servicer to the payment of any
Prepayment Interest Shortfalls on the Mortgage Loans during the related
Prepayment Periods.
Conveyed Assets: As defined in the Mortgage Loan Purchase Agreement.
Corporate Trust Office: The Trustee's corporate trust office for
purposes of presentment and surrender of the Certificates for the final
distribution thereon and for transfers and exchanges, which office at the
date of the execution of this Agreement is located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: BSABS 2004-BO1,
and for all other purposes is located at ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (or for overnight deliveries, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇), Attention: BSABS 2004-BO1, or at such other address as the
Trustee may designate from time to time.
Corresponding REMIC III Regular Interest: With respect to Certificates
(other than the Class CE Certificates), the REMIC III Regular Interest with
the corresponding designation, and with respect to the Class CE Certificates,
the REMIC III Regular Interests CE-I and CE-P.
Counterparty: With respect to each of the Yield Maintenance
Agreements, Bear ▇▇▇▇▇▇▇ Financial Products Inc.
Current Interest: As of any Distribution Date, with respect to
Certificates of each Class (other than the Residual Certificates), (i) the
interest accrued on the Certificate Principal Balance or Certificate Notional
Balance, as applicable, during the related Accrual Period at the applicable
Pass-Through Rate plus any amount previously distributed with respect to
interest for such Certificate that has been recovered as a voidable
preference by a trustee in bankruptcy minus (ii) the sum of (a) any
Prepayment Interest Shortfall for such Distribution Date, to the extent not
covered by Compensating Interest and (b) any Relief Act Interest Shortfalls
during the related Due Period, provided, however, that for purposes of
calculating Current Interest for any such Class, amounts specified in clause
(ii) hereof for any such Distribution Date shall be allocated first to the
Class CE Certificates and Residual Certificates in reduction of amounts
otherwise distributable to such Certificates on such Distribution Date and
then any excess shall be allocated to each Class of Class A Certificates and
Class M Certificates pro rata based on the respective amounts of interest
accrued pursuant to clause (i) hereof for each such Class on such
Distribution Date.
Current Specified Enhancement Percentage: With respect to any
Distribution Date, the percentage obtained by dividing (x) the sum of (i) the
aggregate Certificate Principal Balance of the Class M Certificates and (ii)
the Overcollateralization Amount, in each case prior to the distribution of
the Principal Distribution Amount on such Distribution Date, by (y) the
aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
Custodial Agreement: An agreement, dated as of October 26, 2004, among
the Depositor, the Seller, the Servicer, the Trustee and the Custodian in
substantially the form of Exhibit K hereto.
Custodian: LaSalle Bank National Association, or any successor
custodian appointed pursuant to the provisions hereof and the Custodial
Agreement.
Cut-off Date: With respect to the Actuarial Loans, the close of
business on October 1, 2004 and with respect to the Simple Interest Loans,
the close of business on October 14, 2004.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the applicable
Cut-off Date after application of all Principal Prepayments and scheduled
payments of principal received prior to the applicable Cut-off Date. The
aggregate Cut-off Date Principal Balance of the Mortgage Loans is
$1,345,482,949.88.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy
Code in the Scheduled Payment for such Mortgage Loan that became final and
non-appealable, except such a reduction resulting from a Deficient Valuation
or any other reduction that results in a permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 6.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquency Event: A Delinquency Event shall have occurred and be
continuing if at any time, (x) the percent equivalent of a fraction, the
numerator of which is the aggregate Stated Principal Balance of the Mortgage
Loans that are 60 days or more Delinquent (including for this purpose any
such Mortgage Loans in bankruptcy or foreclosure and Mortgage Loans with
respect to which the related Mortgaged Property is REO Property), and the
denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans for such Distribution Date exceeds (y) 50% of the Current
Specified Enhancement Percentage.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of
business on the day such payment is scheduled to be due. An Actuarial Loan
is considered to be "30 days delinquent" when a payment due on any due date
remains unpaid as of the close of business on the last business day
immediately prior to the next following monthly due date. A Simple Interest
Loan is "30 days delinquent" if such payment has not been received by the
close of business on the corresponding day of the month immediately
succeeding the month in which such payment was due, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31-day month in
which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent,"
"90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate".
Depositor: Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC, a Delaware
limited liability company, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other
organization registered as a "clearing agency" pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository shall initially
be the registered Holder of the Book-Entry Certificates. The Depository
shall at all times be a "clearing corporation" as defined in Section
8-102(a)(5) of the Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of
Exhibit I.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.04 in the name of the Trustee
for the benefit of the Certificateholders designated "▇▇▇▇▇ Fargo Bank,
National Association, in trust for registered holders of Bear ▇▇▇▇▇▇▇ Asset
Backed Securities I LLC, Asset-Backed Certificates, Series 2004-BO1". Funds
in the Distribution Account shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: The Business Day prior to each
Distribution Date.
Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in November 2004.
Due Date: As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.
Due Period: With respect to any Distribution Date and (i) the Actuarial
Loans, the period from the second day of the calendar month preceding the
calendar month in which such Distribution Date occurs through close of
business on the first day of the calendar month in which such Distribution
Date occurs or (ii) the Simple Interest Loans, the period from the fifteenth
day of the calendar month preceding the calendar month in which such
Distribution Date occurs through close of business on the fourteenth day of
the calendar month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company, so long as ▇▇▇▇▇'▇ is not a Rating
Agency) are rated by each Rating Agency in one of its two highest long-term
and its highest short-term rating categories, respectively, at the time any
amounts are held on deposit therein, or (ii) an account or accounts in a
depository institution or trust company in which such accounts are insured by
the FDIC (to the limits established by the FDIC) and the uninsured deposits
in which accounts are otherwise secured such that, as evidenced by an Opinion
of Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or
a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution or trust company in which such account is maintained, or (iii) a
trust account or accounts maintained with the corporate trust department of a
federal or state chartered depository institution or trust company having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity or (iv) any other account acceptable to the Rating Agencies, as
evidenced in writing. Eligible Accounts may bear interest, and may include,
if otherwise qualified under this definition, accounts maintained with the
Trustee.
EMC: EMC Mortgage Corporation, a Delaware corporation, and its
successors and assigns.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Restricted Certificate: Each of the Class CE Certificates and the
Residual Certificates.
Event of Default: As defined in Section 8.01 hereof.
Excess Cashflow: With respect to any Distribution Date, an amount, if
any, equal to the sum of (a) the Remaining Excess Spread for such
Distribution Date and (b) the Overcollateralization Release Amount for such
Distribution Date.
Excess Liquidation Proceeds: To the extent not required by law to be
paid to the related Mortgagor, the excess, if any, of any Liquidation
Proceeds with respect to a Mortgage Loan over the Stated Principal Balance of
such Mortgage Loan and accrued and unpaid interest at the related Mortgage
Rate through the last day of the month in which the Mortgage Loan has been
liquidated.
Excess Spread: With respect to any Distribution Date, the excess, if
any, of (i) the Interest Funds for such Distribution Date over (ii) the sum
of Current Interest on the Class A Certificates and Class M Certificates and
Interest Carry Forward Amounts on the Class A Certificates (other than
Interest Carry Forward Amounts paid pursuant to Section 5.04(a)(4)(A)), in
each case for such Distribution Date.
Exemption: Prohibited Transaction Exemption 90-30, as amended from time
to time.
Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (i) the excess, if any, of the Overcollateralization
Target Amount for such Distribution Date over the Overcollateralization
Amount for such Distribution Date (after giving effect to distributions of
principal on the Certificates other than any Extra Principal Distribution
Amount) and (ii) the Excess Spread for such Distribution Date.
▇▇▇▇▇▇ Mae: ▇▇▇▇▇▇ ▇▇▇ (formerly, Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Certification: The certification substantially in the form of
Exhibit Three to the Custodial Agreement.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller pursuant to or as contemplated by Section 2.03(c) or
Section 10.01), a determination made by the Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records of each Final Recovery Determination made thereby.
▇▇▇▇▇▇▇ Mac: Federal Home Loan Mortgage Corporation, or any successor
thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
Group I Loans: The Mortgage Loans identified as such on the Mortgage
Loan Schedule.
Group I Net WAC Rate: With respect to any Distribution Date, the
weighted average of the Net Mortgage Rates on the Mortgage Loans in Loan
Group I, weighted on the basis of the Stated Principal Balances thereof for
the preceding Distribution Date, adjusted to an effective rate reflecting the
accrual of interest on an actual/360 basis.
Group I Principal Distribution Amount: With respect to any Distribution
Date, the product of the Principal Distribution Amount for such Distribution
Date and a fraction, the numerator of which is the Principal Funds for the
Loan Group I for such Distribution Date and the denominator of which is the
Principal Funds for both Loan Groups for such Distribution Date.
Group II Loans: The Mortgage Loans identified as such on the Mortgage
Loan Schedule.
Group II Principal Distribution Amount: With respect to any
Distribution Date, the product of the Principal Distribution Amount for such
Distribution Date and a fraction, the numerator of which is the Principal
Funds for the Loan Group II for such Distribution Date and the denominator of
which is the Principal Funds for both loan Groups for such Distribution Date.
Group II Net WAC Rate: With respect to any Distribution Date, the
weighted average of the Net Mortgage Rates on the Mortgage Loans in Loan
Group II, weighted on the basis of the Stated Principal Balances thereof for
the preceding Distribution Date, adjusted to an effective rate reflecting the
accrual of interest on an actual/360 basis.
Indemnified Persons: The Trustee, the Servicer, the Trust Fund and
their officers, directors, agents and employees and, with respect to the
Trustee, any separate co-trustee and its officers, directors, agents and
employees, as applicable.
Index: With respect to each Adjustable Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the
related Mortgage Note.
Initial Certification: The certification substantially in the form of
Exhibit One to the Custodial Agreement.
Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date.
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.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy and any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to
the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing mortgage loans held for its own account, in each case
other than any amount included in such Insurance Proceeds in respect of
Insured Expenses.
Insured Expenses: Expenses covered by any insurance policy with respect
to the Mortgage Loans.
Interest Carry Forward Amount: As of any Distribution Date and with
respect to each Class of Certificates (other than the Class CE Certificates
and the Residual Certificates), the sum of (i) the excess of (a) the Current
Interest for such Class with respect to such Distribution Date and any prior
Distribution Dates over (b) the amount actually distributed to such Class of
Certificates with respect to interest on such Distribution Dates and (ii)
interest thereon (to the extent permitted by applicable law) at the
applicable Pass-Through Rate for such Class for the related Accrual Period
including the Accrual Period relating to such Distribution Date.
Interest Determination Date: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.
Interest Funds: With respect to each Loan Group and any Distribution
Date (i) the sum, without duplication, of (a) all interest collected in
respect of the related Due Period and received by the Servicer on or prior to
the related Determination Date with respect to the related Mortgage Loans
less the Servicing Fee, the Trustee Fee and the LMPI Fee, if any, (b) all
Advances relating to interest with respect to the related Mortgage Loans made
on or prior to the related Distribution Account Deposit Date, (c) all
Compensating Interest with respect to the related Mortgage Loans and required
to be remitted by the Servicer pursuant to this Agreement with respect to
such Distribution Date, (d) Liquidation Proceeds and Subsequent Recoveries
with respect to the related Mortgage Loans collected during the related
Prepayment Period (to the extent such Liquidation Proceeds and Subsequent
Recoveries relate to interest), and (e) all amounts relating to interest with
respect to each Mortgage Loan in such Loan Group repurchased by the Seller
pursuant to Sections 2.02 and 2.03 and by the Majority ▇▇ ▇▇▇▇▇▇ pursuant to
Section 3.18, in each case to the extent remitted by the Servicer to the
Distribution Account pursuant to this Agreement, minus (ii) all amounts
required to be reimbursed pursuant to Sections 4.02 and 4.05 or as otherwise
set forth in this Agreement.
Interim Certification: The certification substantially in the form of
Exhibit Two to the Custodial Agreement.
Last Scheduled Distribution Date: Solely for purposes of the face of
the Certificates as follows: with respect to (i) the Certificates, other than
the Class I-A-1 Certificates and Class M-9A Certificates, the Distribution
Date in October 2034; with respect to the Class I-A-1 Certificates, the
Distribution Date in January 2018; with respect to the Class M-9A
Certificates, the Distribution Date in March 2022.
Latest Possible Maturity Date: The Distribution Date in the month
following the final scheduled maturity date of the Mortgage Loan in the Trust
Fund having the latest scheduled maturity date as of the applicable Cut-off
Date. For purposes of the Treasury Regulations under Code section 860A
through 860G, the latest possible maturity date of each regular interest
issued by REMIC I, REMIC II and REMIC III shall be the Latest Possible
Maturity Date.
LIBOR Business Day: Shall mean a day on which banks are open for
dealing in foreign currency and exchange in London and New York City.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by
applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Servicer has made a Final
Recovery Determination with respect thereto.
Liquidation Proceeds: Amounts, other than Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or in
connection with any condemnation or partial release of a Mortgaged Property
and any other proceeds received with respect to an REO Property, less the sum
of related unreimbursed Advances, Servicing Fees and Servicing Advances and
all expenses of liquidation, including property protection expenses and
foreclosure and sale costs, including court and reasonable attorneys fees.
Loan-to-Value Ratio: 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 Appraised Value of the related
Mortgaged Property.
Loan Group: Any of Loan Group I or Loan Group II.
Loan Group I: The Mortgage Loans included as such on the Mortgage Loan
Schedule.
Loan Group II: The Mortgage Loans included as such on the Mortgage Loan
Schedule.
LPMI Fee: The fee payable to the insurer for each Mortgage Loan subject
to an LPMI Policy as set forth in such LPMI Policy.
LPMI Policy: A policy of mortgage guaranty insurance issued by an
insurer meeting the requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac in which the
Servicer or the related subservicer of the related Mortgage Loan is
responsible for the payment of the LPMI Fee thereunder from collections on
the related Mortgage Loan.
Majority ▇▇ ▇▇▇▇▇▇: The holder of a majority of the Percentage
Interests of the Class CE Certificates, or if no such single holder, then EMC
or its designee.
Marker Rate: With respect to the Class CE Certificates or the REMIC
III Regular Interest CE-I and any Distribution Date, in relation to the
REMIC II Regular Interests LT1, LT2, LT3, LT4 and LT-Y1, a per annum rate
equal to two (2) times the weighted average of the Uncertificated REMIC II
Pass-Through Rates for REMIC II Regular Interest LT2 and REMIC II Regular
Interest LT3. With respect to the Class CE Certificates or the REMIC III
Regular Interest CE-I and any Distribution Date, in relation to the REMIC II
Regular Interests LT5, LT6, LT7, LT8 and LT-Y2, a per annum rate equal to two
(2) times the weighted average of the Uncertificated REMIC II Pass-Through
Rates for REMIC II Regular Interest LT6 and REMIC II Regular Interest LT7.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the maximum
Mortgage Rate thereunder.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any
successor thereto.
MERS® 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® System.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
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.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 5.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or more junior lien on or first or more junior priority ownership
interest in an estate in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents
delivered to the Custodian to be added to the Mortgage File pursuant to this
Agreement and the Custodial Agreement.
Mortgage Loans: Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions hereof, as from time to time are held
as a part of the Trust Fund (including any REO Property), the mortgage loans
so held being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property.
"Mortgage Loans" shall mean, with respect to the Servicer, the Mortgage Loans
other than the Specially Serviced Mortgage Loans, and with respect to a
Special Servicer, the related Specially Serviced Mortgage Loans; with the
result that the Servicer shall service the Mortgage Loans, other than the
Specially Serviced Mortgage Loans, in accordance with the terms of this
Agreement and the Specially Serviced Mortgage Loans shall be serviced by the
related Special Servicer, in accordance with the terms of this Agreement and
the applicable Special Servicing Agreement.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement,
dated as of October 26, 2004, between the Seller, as seller and the
Depositor, as purchaser, in the form attached hereto as Exhibit M.
Mortgage Loan 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.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Seller or the Servicer to reflect the deletion of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, the initial Mortgage
Loan Schedule being attached hereto as Exhibit B, setting forth the following
information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgage Rate in effect as of the applicable Cut-off Date;
(iii) the Servicing Fee Rate;
(iv) the Trustee Fee;
(v) the LPMI Fee, if applicable;
(vi) the Net Mortgage Rate in effect as of the applicable Cut-off Date;
(vii) the maturity date;
(viii) the original principal balance;
(ix) the applicable Cut-off Date Principal Balance;
(x) the original term;
(xi) the remaining term;
(xii) the property type;
(xiii) the MIN with respect to each MOM Loan;
(xiv) with respect to each Adjustable Rate Mortgage Loan, the Minimum
Mortgage Rate;
(xv) with respect to each Adjustable Rate Mortgage Loan, the Maximum
Mortgage Rate;
(xvi) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(xvii) with respect to each Adjustable Rate Mortgage Loan, the next
Adjustment Date;
(xviii) with respect to each Adjustable Rate Mortgage Loan, the Periodic
Rate Cap;
(xix) the Loan Group;
(xx) the amount of any Seller Arrearages, if any;
(xxi) a code indicating whether such Mortgage Loan is an Actuarial Loan or
Simple Interest Loan; and
(xxii) a code indicating whether such Mortgage Loan is a first lien, a
second lien or a third lien Mortgage Loan.
Such schedule shall also set forth the aggregate Cut-off Date Principal
Balance for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: With respect to each fixed rate Mortgage Loan, the rate
set forth in the related Mortgage Note. With respect to each Adjustable Rate
Mortgage Loan, the annual rate at which interest accrues on such Mortgage
Loan from time to time in accordance with the provisions of the related
Mortgage Note, which rate (A) as of any date of determination until the first
Adjustment Date following the applicable Cut-off Date shall be the rate set
forth in the Mortgage Loan Schedule as the Mortgage Rate in effect
immediately following the applicable Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date, to equal the sum, rounded to the next highest or nearest
0.125% (as provided in the Mortgage Note), of the Index, determined as set
forth in the related Mortgage Note, plus the related Gross Margin subject to
the limitations set forth in the related Mortgage Note. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of determination,
the annual rate determined in accordance with the immediately preceding
sentence as of the date such Mortgage Loan became an REO Property.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligors on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the Mortgage Rate less the sum of (i) the Servicing Fee
Rate, (ii) the Trustee Fee and (iii) the rate at which the LPMI Fee is
calculated, if any.
Net Rate Cap: With respect to the Class I-A-1, Class I-A-2 and Class
I-A-3 Certificates and any Distribution Date, a rate per annum equal to the
weighted average of the Net Mortgage Rates during the related Due Periods on
the then Outstanding Mortgage Loans in Loan Group I, weighted based on their
Stated Principal Balances for such preceding Distribution Date. For federal
income tax purposes, however, such rate shall be equal to the Uncertificated
REMIC II Pass-Through Rate for the REMIC II Regular Interests LT1, LT2 and
LT-Y1.
With respect to the Class II-A-1 Certificates and Class II-A-2
Certificates and any Distribution Date, a rate per annum equal to the
weighted average of the Net Mortgage Rates during the related Due Periods on
the then Outstanding Mortgage Loans in Loan Group II, weighted based on their
Stated Principal Balances for such preceding Distribution Date. For federal
income tax purposes, however, such rate shall be equal to the Uncertificated
REMIC II Pass-Through Rate for the REMIC II Regular Interests LT5, LT6 and
LT-Y2.
With respect to the Class M Certificates and any Distribution Date, a
rate per annum equal to the weighted average of the weighted average of the
Net Mortgage Rates during the related Due Periods on the then Outstanding
Mortgage Loans in each Loan Group, weighted in proportion to the results of
subtracting from the aggregate Stated Principal Balance of each such Loan
Group for such preceding Distribution Date, the Current Principal Amount of
the related Classes of Senior Certificates. For federal income tax purposes,
however, such rate shall be equal to the weighted average of the
Uncertificated REMIC II Pass-Through Rates on the REMIC II Regular Interests
LT-Y1 and LT-Y2, weighted on the basis of their respective Uncertificated
Principal Balances.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Nonrecoverable Advance: Any portion of an Advance or Servicing Advance
previously made or proposed to be made by the Servicer pursuant to this
Agreement, that, in the good faith judgment of the Servicer, will not or, in
the case of a proposed advance, would not, be ultimately recoverable by it
from the related Mortgagor, related Liquidation Proceeds, Insurance Proceeds
or otherwise.
Offered Certificates: The Class I-A-1, Class I-A-2, Class I-A-3, Class
II-A-1, Class II-A-2, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9A and Class M-9B Certificates.
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the assistant treasurers or assistant secretaries of the
Depositor or the Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers
and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with a
particular subject) or (ii), if provided for in this Agreement, signed by a
Servicing Officer, as the case may be, and delivered to the Depositor, the
Seller and/or the Trustee, as the case may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of the rate for U.S. dollar deposits for one month that appears on
Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that the parties hereto acknowledge that
One-Month LIBOR for the first Accrual Period shall equal 1.94% per annum. 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, such
other service for displaying One-Month LIBOR or comparable rates as may be
reasonably selected by the Trustee), One-Month LIBOR for the applicable
Accrual Period will be the Reference Bank Rate. If no such quotations can be
obtained by the Trustee and no Reference Bank Rate is available, One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual Period.
The establishment of One-Month LIBOR on each Interest Determination Date by
the Trustee and the Trustee's calculation of the rate of interest applicable
to the Class A Certificates and Class M Certificates for the related Accrual
Period shall, in the absence of manifest error, be final and binding.
One-Month LIBOR Pass-Through Rate: With respect to each Class of
Certificates, a per annum rate equal to One-Month LIBOR plus the related
Certificate Margin.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller, the Depositor or the Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 2.05, 7.05,
7.07, 912(d) (and the definition of Applicable State Law) or 11.01, or the
interpretation or application of the REMIC Provisions, such counsel must (i)
in fact be independent of the Seller, Depositor and the Servicer, (ii) not
have any direct financial interest in the Seller, the Depositor or the
Servicer or in any affiliate of either, and (iii) not be connected with the
Seller, the Depositor or the Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
Optional Termination: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans and any
REO Property pursuant to the last sentence of Section 10.01 hereof.
Optional Termination Date: The Distribution Date on which the Stated
Principal Balance of all of the Mortgage Loans is equal to or less than 10%
of the Stated Principal Balance of all of the Mortgage Loans as of the
applicable Cut-off Date.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or delivered to the
Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any date of determination, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the
subject of a Principal Prepayment in full, that did not become a Liquidated
Loan, and that was not charged-off pursuant to Sections 3.09 or 3.18(c) prior
to the end of the related Prepayment Period.
Overcollateralization Amount: With respect to any Distribution Date,
the excess, if any, of the aggregate Stated Principal Balances of the
Mortgage Loans for such Distribution Date (including any reduction due to
Realized Losses) over the Certificate Principal Balances of Class A
Certificates and the Class M Certificates on such Distribution Date (after
taking into account the payment of principal other than any Extra Principal
Distribution Amount on such Certificates).
Overcollateralization Release Amount: With respect to any Distribution
Date, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the excess, if any, of (i) the Overcollateralization Amount for
such Distribution Date (assuming that 100% of the Principal Remittance Amount
is applied as a principal payment on such Distribution Date) over (ii) the
Overcollateralization Target Amount for such Distribution Date (with the
amount pursuant to clause (y) deemed to be $0 if the Overcollateralization
Amount is less than or equal to the Overcollateralization Target Amount on
that Distribution Date).
Overcollateralization Target Amount: With respect to any Distribution
Date, (a) prior to the Stepdown Date, 2.90% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the applicable Cut-off Date, (b) on or
after the Stepdown Date and if a Trigger Event is not in effect, the greater
of (i) 5.80% of the then current aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date and (ii) $6,727,415 or (c) on or
after the Stepdown Date and if a Trigger Event is in effect, the
Overcollateralization Target Amount for the immediately preceding
Distribution Date.
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to the Class A Certificates and Class M
Certificates and any Distribution Date, a rate per annum equal to the lesser
of (i) the related One-Month LIBOR Pass-Through Rate for such Distribution
Date and (ii) the related Net Rate Cap for such Distribution Date, as
adjusted to reflect the accrual of interest on the Class A Certificates and
Class M Certificates on an actual/360-day year basis and the accrual of
interest on the Mortgage Loans on an actual/365-day basis or a 30/360 basis,
as applicable.
With respect to the Class CE Certificates and any Distribution Date, a
rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses
(a) through (h) below, and the denominator of which is the aggregate
Uncertificated Principal Balances of the REMIC II Regular Interests. For
purposes of calculating the Pass-Through Rate for the Class CE Certificates,
the numerator is equal to the sum of the following components:
(a) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT1 minus the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II
Regular Interest LT1;
(b) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT2 minus the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II
Regular Interest LT2;
(c) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT4 minus twice the related Marker Rate, applied to a
notional amount equal to the Uncertificated Principal Balance of
REMIC II Regular Interest LT4;
(d) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT5 minus the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II
Regular Interest LT5;
(e) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT6 minus the related Marker Rate, applied to a notional
amount equal to the Uncertificated Principal Balance of REMIC II
Regular Interest LT6;
(f) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT8 minus twice the related Marker Rate, applied to a
notional amount equal to the Uncertificated Principal Balance of
REMIC II Regular Interest LT8;
(g) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT-Y1 minus the related Marker Rate, applied to a
notional amount equal to the Uncertificated Principal Balance of
REMIC II Regular Interest LT-Y1; and
(h) the Uncertificated REMIC II Pass-Through Rate for REMIC II Regular
Interest LT-Y2 minus the related Marker Rate, applied to a
notional amount equal to the Uncertificated Principal Balance of
REMIC II Regular Interest LT-Y2.
Percentage Interest: With respect to any Certificate of a specified
Class, the Percentage Interest set forth on the face thereof or the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the such Class.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage Rate
for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date
from the Mortgage Rate in effect immediately prior to such Adjustment Date.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided such
obligations are backed by the full faith and credit of the United
States;
(ii) general obligations of or obligations guaranteed by any state of the
United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency, or such lower rating as
will not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency, as evidenced in
writing;
(iii) [Reserved];
(iv) commercial or finance company paper which is then receiving the highest
commercial or finance company paper rating of each Rating Agency, or
such lower rating as will not result in the downgrading or withdrawal
of the ratings then assigned to the Certificates by each Rating Agency,
as evidenced in writing;
(v) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or
state banking authorities (including the Trustee in its commercial
banking capacity), provided that the commercial paper and/or long term
unsecured debt obligations of such depository institution or trust
company are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such securities, or
such lower ratings as will not result in the downgrading or withdrawal
of the rating then assigned to the Certificates by any Rating Agency,
as evidenced in writing;
(vi) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of
such agreements, such terms and conditions as will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency, as evidenced in writing;
(vii) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described
in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the
two highest short term ratings of each Rating Agency (except if the
Rating Agency is ▇▇▇▇▇'▇, such rating shall be the highest commercial
paper rating of ▇▇▇▇▇'▇ for any such securities), or such lower rating
as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency, as evidenced by a
signed writing delivered by each Rating Agency;
(ix) interests in any money market fund (including any such fund managed or
advised by the Trustee or any affiliate thereof) which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable short term
rating by each Rating Agency or such lower rating as will not result in
the downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency, as evidenced in writing;
(x) short term investment funds sponsored by any trust company or banking
association incorporated under the laws of the United States or any
state thereof (including any such fund managed or advised by the
Trustee or the Servicer or any affiliate thereof) which on the date of
acquisition has been rated by each Rating Agency in their respective
highest applicable rating category or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each Rating Agency, as evidenced in writing; and
(xi) such other investments having a specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency and as
will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency, as evidenced by a
signed writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (vii) above);
provided further that no amount beneficially owned by any REMIC may be
invested in investments (other than money market funds) treated as equity
interests for federal income tax purposes, unless the Servicer shall receive
an Opinion of Counsel, at the expense of the Servicer, to the effect that
such investment will not adversely affect the status of any such REMIC as a
REMIC under the Code or result in imposition of a tax on any such REMIC.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted Transferee: Any person other than (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, (ii) a foreign
government, International Organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in
section 1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or
resident of the United States, a corporation, partnership (other than a
partnership that has any direct or indirect foreign partners) or other entity
(treated as a corporation or a partnership for federal income tax purposes),
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of
a trade or business within the United States, 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 United States persons have
authority to control all substantial decisions of the trustor and (vi) any
other Person so designated by the Trustee based upon an Opinion of Counsel
addressed to the Trustee (which shall not be an expense of the Trustee) that
states that the Transfer of an Ownership Interest in a Residual Certificate
to such Person may cause REMIC I, REMIC II, or REMIC III to fail to qualify
as a REMIC at any time that any Certificates are Outstanding. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of
its activities are subject to tax and, with the exception of ▇▇▇▇▇▇▇ Mac, a
majority of its board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint- stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Prepayment Assumption: The applicable rate of prepayment, as described
in the Prospectus Supplement relating to each Class of Offered Certificates.
Prepayment Charge: Any prepayment premium, penalty or charge payable by
a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment
or a Principal Prepayment in full by the Mortgagor, the amount, if any, by
which (i) one month's interest at the applicable Net Mortgage Rate on the
Stated Principal Balance of such Mortgage Loan immediately prior to such
prepayment or in the case of a partial Principal Prepayment on the amount of
such prepayment exceeds (ii) the amount of interest paid or collected in
connection with such Principal Prepayment proceeds less the sum of (a) the
Trustee Fee, (b) the Servicing Fee and (c) the LPMI Fee, if any.
Prepayment Period: With respect to any Distribution Date and (i) the
Actuarial Loans, the period from the second day of the calendar month
preceding the calendar month in which such Distribution Date occurs through
close of business on the first day of the calendar month in which such
Distribution Date occurs or (ii) the Simple Interest Loans, the period from
the fifteenth day of the calendar month preceding the calendar month in which
such Distribution Date occurs through close of business on the fourteenth day
of the calendar month in which such Distribution Date occurs.
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 Accrual Period for such Class
relating to a Distribution Date.
Principal Distribution Amount: With respect to each Distribution Date,
an amount equal to (x) the Principal Funds for both Loan Groups for such
Distribution Date plus (y) any Extra Principal Distribution Amount for such
Distribution Date, less (z) any Overcollateralization Release Amount for such
Distribution Date.
Principal Funds: With respect to each Loan Group and any Distribution
Date, (i) the sum, without duplication, of (a) all scheduled principal
collected in respect of the related Due Period and received by the Servicer
on or prior to the related Determination Date, (b) Principal Prepayments
exclusive of Prepayment Charges collected during the related Prepayment
Period (or on or before the 20th of the related month if applied on that
Distribution Date pursuant to Section 4.02) and not included in Principal
Funds for any prior Distribution Date, (c) the Stated Principal Balance of
each Mortgage Loan in the related Loan Group that was repurchased by the
Seller pursuant to Sections 2.02 and 2.03 or by the Majority ▇▇ ▇▇▇▇▇▇
pursuant to Section 3.18, (d) the aggregate of all Substitution Adjustment
Amounts for the related Determination Date in connection with the
substitution of Mortgage Loans pursuant to Section 2.03(c), (e) all
Liquidation Proceeds and Subsequent Recoveries (net of any Recovery Fee)
collected during the related Prepayment Period (to the extent such
Liquidation Proceeds and Subsequent Recoveries relate to principal), in each
case to the extent remitted by the Servicer to the Distribution Account
pursuant to this Agreement and (f) amounts in respect of principal paid by
EMC (or its designee) pursuant to Section 10.01, minus (ii) all amounts
required to be reimbursed pursuant to Sections 4.02 and 4.05 or as otherwise
set forth in this Agreement and not applied to reduce Interest Funds on that
Distribution Date.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 3.18 and 10.01 hereof)
that is received in advance of its scheduled Due Date and 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.
Partial Principal Prepayments shall be applied by the Servicer, as
appropriate, in accordance with the terms of the related Mortgage Note.
Principal Remittance Amount: With respect to each Distribution Date,
the sum of the amounts listed in clauses (a) through (e) of the definition of
Principal Funds.
Private Certificates: Each of the Class CE Certificates and Residual
Certificates.
Prospectus Supplement: The Prospectus Supplement dated October 25, 2004
relating to the public offering of the Class I-A-1, Class I-A-2, Class I-A-3,
Class II-A-1, Class II-A-2, Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9A and Class M-9B Certificates.
Protected Account: The separate Eligible Account established and
maintained by the Servicer with respect to the Mortgage Loans and REO
Property in accordance with Section 4.01 hereof.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof or (y) that
the Majority ▇▇ ▇▇▇▇▇▇ has a right to purchase pursuant to Section 3.18
hereof, an amount equal to the sum of (i) 100% of the outstanding principal
balance of the Mortgage Loan as of the date of such purchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition), plus (ii)
accrued interest thereon at the applicable Mortgage Rate through the last day
of the related Due Period ending in the month in which the Purchase Price is
to be distributed to Certificateholders, reduced by any portion of the
Servicing Fee, Servicing Advances and Advances, if any, payable to the
purchaser of the Mortgage Loan plus (iii) any costs and damages (if any)
incurred by the Trust in connection with any violation of such Mortgage Loan
of any anti-predatory lending laws.
Rating Agency: Each of ▇▇▇▇▇'▇ and S&P. If any such organization or
its successor is no longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization, or other comparable
Person, designated by the Depositor, notice of which designation shall be
given to the Trustee. References herein to a given rating category of a
Rating Agency shall mean such rating category without giving effect to any
modifiers.
Realized Loss: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero), as
reported by the Servicer to the Trustee, equal to (i) the Stated Principal
Balance of such Mortgage Loan as of the date on which the Final Recovery
Determination was made, plus (ii) accrued interest from the Due Date as to
which interest was last paid by the Mortgagor through the last day of the Due
Period in which such Final Recovery Determination was made, calculated (A) at
an annual rate equal to the annual rate at which interest was then accruing
on such Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of such Mortgage Loan as of such date, minus (v) the
proceeds, if any, received in respect of such Mortgage Loan during such Due
Period, net of amounts that are payable therefrom to the Servicer pursuant to
this Agreement. In addition, to the extent the 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 Certificate Principal Balance of any
Class of Certificates on any Distribution Date.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
Stated Principal Balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the last day of the
related Due Period in which such REO Property was acquired, calculated in the
case of each calendar month during such period (A) at an annual rate equal to
the annual rate at which interest was then accruing on the related Mortgage
Loan and (B) on a principal amount equal to the Stated Principal Balance of
the related Mortgage Loan as of the last day of the related Due Period, plus
(iii) REO Imputed Interest for such REO Property for the related Due Period
in which such REO Property was acquired and ending with the calendar month in
which such Final Recovery Determination was made, minus (iv) the aggregate of
all unreimbursed Advances and Servicing Advances.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each
affected Scheduled Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall
be deemed to have been incurred on the Due Date for each affected Scheduled
Payment.
Record Date: With respect to any Distribution Date and the Offered
Certificates, so long as such Classes of Certificates are Book-Entry
Certificates, the Business Day preceding such Distribution Date, and
otherwise, the close of business on the last Business Day of the month
preceding the month in which such Distribution Date occurs. With respect to
the Class CE Certificates and Residual Certificates and (a) the first
Distribution Date, the Closing Date and (b) with respect to any other
Distribution Date, the close of business on the last Business Day of the
month preceding the month in which such Distribution Date occurs.
Recovery Fee: A fee to be paid to the Servicer in an amount equal to
30% of all Subsequent Recoveries on any non-first lien Mortgage Loan which is
at least 120 days Delinquent after the date on which such Mortgage Loan has
been charged off pursuant to Section 3.18.
Reference Banks: Shall mean leading banks selected by the Trustee and
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
which have been designated as such by the Trustee and (iii) which are not
controlling, controlled by, or under common control with, the Depositor, the
Seller or the Servicer.
Reference Bank Rate: With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple
of 0.03125%, of the offered rates for United States dollar deposits for one
month that are quoted by the Reference Banks as of 11:00 a.m., New York City
time, on the related Interest Determination Date to prime banks in the London
interbank market for a period of one month in an amount approximately equal
to the aggregate Certificate Principal Balance of the Class A Certificates
and Class M Certificates for such Accrual Period, provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates
appear, the Reference Bank Rate will be the arithmetic mean, rounded upwards,
if necessary, to the nearest whole multiple of 0.03125%, of the rates quoted
by one or more major banks in New York City, selected by the Trustee, as of
11:00 a.m., New York City time, on such date for loans in United States
dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the
Class A Certificates and Class M Certificates for such Accrual Period.
Regular Certificate: Any Certificate other than a Residual Certificate.
Regular Interest: A "regular interest" in a REMIC within the meaning of
Section 860G(a)(1) of the Code.
Relief Act: The Servicemembers Civil Relief Act, as amended, or similar
state law.
Relief Act Interest Shortfall: With respect to any Distribution Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Relief Act.
Remaining Excess Spread: With respect to any Distribution Date, the
Excess Spread less any Extra Principal Distribution Amount, in each case for
such Distribution Date.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.
REMIC I: The segregated pool of assets described in Section 5.06(a).
REMIC I Available Distribution Amount: For each Loan Group for any
Distribution Date, the sum of the Principal Funds and Interest Funds for such
Loan Group.
REMIC I Distribution Amount: For any Distribution Date, the REMIC I
Available Distribution Amount shall be distributed to the REMIC I Regular
Interests and the Class R-1 Certificates in the following amounts and
priority:
(a) To the extent of the REMIC I Available Distribution Amount for
Loan Group I:
(i) first, to REMIC I Regular Interests Y-1 and Z-1,
concurrently, the Uncertificated Accrued Interest for such REMIC I
Regular Interests remaining unpaid from previous Distribution Dates,
pro rata according to their respective shares of such unpaid amounts;
(ii) second, to the REMIC I Regular Interests Y-1 and Z-1,
concurrently, the Uncertificated Accrued Interest for such REMIC I
Regular Interests for the current Distribution Date, pro rata according
to their respective Uncertificated Accrued Interest;
(iii) third, to the REMIC I Regular Interests Y-1 and Z-1, the
REMIC I Y-1 Principal Distribution Amount and the REMIC I Z-1 Principal
Distribution Amount, respectively.
(b) To the extent of the REMIC I Available Distribution Amount for
Loan Group II:
(i) first, to the REMIC I Regular Interests Y-2 and Z-2,
concurrently, the Uncertificated Accrued Interest for such REMIC I
Regular Interests remaining unpaid from previous Distribution Dates,
pro rata according to their respective shares of such unpaid amounts;
(ii) second, to the REMIC I Regular Interests Y-2 and Z-2,
concurrently, the Uncertificated Accrued Interest for such REMIC I
Regular Interests for the current Distribution Date, pro rata according
to their respective Uncertificated Accrued Interest; and
(iii) third, to the REMIC I Regular Interests Y-2 and Z-2, the
REMIC I Y-2 Principal Distribution Amount and the REMIC I Z-2 Principal
Distribution Amount, respectively.
(c) To the extent of the REMIC I Available Distribution Amounts for
Loan Group I and Loan Group II for such Distribution Date remaining after
payment of the amounts pursuant to paragraphs (a) and (b) of this definition
of "REMIC I Distribution Amount":
(i) first, to each Class of REMIC I Y and REMIC I Z Regular
Interests, pro rata according to the amount of unreimbursed Realized
Losses allocable to principal previously allocated to each such REMIC I
Regular Interest, the aggregate amount of any distributions to the
Certificates as reimbursement of such Realized Losses on such
Distribution Date pursuant to section 5.04(a)(4)(A) or (B); provided,
however, that any amounts distributed pursuant to this paragraph (c)(i)
of this definition of "REMIC I Distribution Amount" shall not cause a
reduction in the Uncertificated Principal Balances of any of the REMIC
I Y and REMIC I Z Regular Interests; and
(ii) second, to the Class R-1 Certificates, any remaining amount.
REMIC I Realized Loss: Realized Losses on Group I Loans and Group II
Loans shall be allocated to the REMIC I Regular Interests as follows: (1) The
interest portion of Realized Losses on Group I Loans, if any, shall be
allocated among the REMIC I Regular Interests Y-1 and Z-1 pro rata according
to the amount of interest accrued but unpaid thereon, in reduction thereof
and (2) the interest portion of Realized Losses on Group II Loans, if any,
shall be allocated among the REMIC I Regular Interests Y-2 and Z-2 pro rata
according to the amount of interest accrued but unpaid thereon, in reduction
thereof. Any interest portion of such Realized Losses in excess of the
amount allocated pursuant to the preceding sentence shall be treated as a
principal portion of Realized Losses not attributable to any specific
Mortgage Loan in such Loan Group and allocated pursuant to the succeeding
sentences. The principal portion of Realized Losses with respect to Loan
Group I and Loan Group II shall be allocated to the REMIC I Regular Interests
as follows: (1) The principal portion of Realized Losses on Group I Loans
shall be allocated, first, to the REMIC I Regular Interest Y-1 to the extent
of the REMIC I Y-1 Principal Reduction Amount in reduction of the
Uncertificated Principal Balance of such REMIC I Regular Interest and,
second, the remainder, if any, of such principal portion of such Realized
Losses shall be allocated to the REMIC I Regular Interest Z-1 in reduction of
the Uncertificated Principal Balance thereof and (2) the principal portion of
Realized Losses on Group II Loans shall be allocated, first, to the REMIC I
Regular Interest Y-2 to the extent of the REMIC I Y-2 Principal Reduction
Amount in reduction of the Uncertificated Principal Balance of such REMIC I
Regular Interest and, second, the remainder, if any, of such principal
portion of such Realized Losses shall be allocated to the REMIC I Regular
Interest Z-2 in reduction of the Uncertificated Principal Balance thereof.
REMIC I Regular Interest: Any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as
a Regular Interest in REMIC I and held as an asset of REMIC II. Each REMIC I
Regular Interest shall accrue interest at the related Uncertificated REMIC I
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto. The designations for the
respective REMIC I Regular Interests are set forth in the Preliminary
Statement hereto.
REMIC I Regular Interest Y-1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as
a Regular Interest in REMIC I and held as an asset of REMIC II. REMIC I
Regular Interest Y-1 shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC I Regular Interest Y-2: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as
a Regular Interest in REMIC I and held as an asset of REMIC II. REMIC I
Regular Interest Y-2 shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC I Regular Interest Z-1: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as
a Regular Interest in REMIC I and held as an asset of REMIC II. REMIC I
Regular Interest Z-1 shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC I Regular Interest Z-2: One of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as
a Regular Interest in REMIC I and held as an asset of REMIC II. REMIC I
Regular Interest Z-2 shall accrue interest at the related Uncertificated
REMIC I Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC I Y Principal Reduction Amounts: For any Distribution Date, the
amounts by which the Uncertificated Principal Balances of the REMIC I Regular
Interest Y-1 and REMIC I Regular Interest Y-2, respectively, will be reduced
on such Distribution Date by the allocation of Realized Losses and the
distribution of principal, determined as described in Appendix 1.
REMIC I Y Regular Interests: The REMIC I Regular Interest Y-1 and REMIC
I Regular Interest Y-2.
REMIC I Y-1 Principal Distribution Amount: For any Distribution Date,
the excess, if any, of the REMIC I Y-1 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the REMIC I Regular Interest Y-1 on such Distribution Date.
REMIC I Y-2 Principal Distribution Amount: For any Distribution Date,
the excess, if any, of the REMIC I Y-2 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the REMIC I Regular Interest Y-2 on such Distribution Date.
REMIC I Z Regular Interests: The REMIC II Regular Interest Z-1 and
REMIC I Regular Interest Z-2.
REMIC I Z Principal Reduction Amounts: For any Distribution Date, the
amounts by which the Uncertificated Principal Balances of the REMIC I Regular
Interest Z-1 and REMIC I Regular Interest Z-2, respectively, will be reduced
on such Distribution Date by the allocation of Realized Losses and the
distribution of principal, which shall be in each case the excess of (A) the
sum of (x) the excess of the REMIC I Available Distribution Amount for the
related Loan Group (i.e. the "related Loan Group" for the REMIC I Regular
Interest Z-1 is Loan Group I and the "related Loan Group" for the REMIC I
Regular Interest Z-2 is Loan Group II) over the sum of the amounts thereof
distributable (i) in respect of interest on such REMIC I Z Regular Interest
and the related REMIC I Y Regular Interest and (iv) to such REMIC I Z Regular
Interest and the related REMIC I Y Regular Interest pursuant to clause (c)(i)
of the definition of "REMIC I Distribution Amount" and (y) the amount of
Realized Losses allocable to principal for the related Loan Group over (B)
the REMIC I Y Principal Reduction Amount for the related Loan Group.
REMIC I Z-1 Principal Distribution Amount: For any Distribution Date,
the excess, if any, of the REMIC I Z-1 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the REMIC I Regular Interest Z-1 on such Distribution Date.
REMIC I Z-2 Principal Distribution Amount: For any Distribution Date,
the excess, if any, of the REMIC I Z-2 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the REMIC I Regular Interest Z-2 on such Distribution Date.
REMIC II: The segregated pool of assets described in Section 5.06(a).
REMIC II Available Distribution Amount: For each Loan Group and a
Distribution Date, the sum of the Principal Funds and Interest Funds for such
Loan Group less any amount distributed to the Class R-I Certificates for such
Distribution Date.
REMIC II Distribution Amount:
(i) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC II to REMIC III on
account of the REMIC II Regular Interests related to Loan Group I:
(1) to the extent of the REMIC II Available Distribution Amount related to
Loan Group I, to REMIC III as the holder of REMIC II
Regular Interests LT1, LT2, LT3, LT4 and LT-Y1, pro rata,
in an amount equal to (A) their Uncertificated Accrued
Interest for such Distribution Date, plus (B) any amounts
in respect thereof remaining unpaid from previous
Distribution Dates; and
(2) on each Distribution Date, to REMIC III as the holder of the REMIC II
Regular Interests, in an amount equal to the remainder of
the REMIC II Available Distribution Amount related to Loan
Group I after the distributions made pursuant to clause (1)
above, allocated as follows (except as provided below):
(A) in respect of the REMIC II Regular Interests
LT2, LT3, LT4 and LT-Y1, their respective Principal
Distribution Amounts;
(B) in respect of the REMIC II Regular Interest LT1
any remainder until the Uncertificated Principal Balance
thereof is reduced to zero;
(C) any remainder in respect of the REMIC II
Regular Interests LT2, LT3 and LT4, pro rata according to
their respective Uncertificated Principal Balances as
reduced by the distributions deemed made pursuant to (A)
above, until their respective Uncertificated Principal
Balances are reduced to zero;
(D) any remainder in respect of the REMIC II
Regular Interest LT-Y1 until its Uncertificated Principal
Balance is reduced to zero; and
(E) any remaining amounts of the REMIC II Available
Distribution Amount related to Loan Group I to the Holders
of the Class R-2 Certificates.
(ii) On each Distribution Date, the following amounts, in the following
order of priority, shall be distributed by REMIC II to REMIC III on
account of the REMIC II Regular Interests related to Loan Group II:
(1) to the extent of the REMIC II Available Distribution Amount related to
Loan Group II, to REMIC III as the holder of REMIC II
Regular Interests LT5, LT6, LT7, LT8 and LT-Y2, pro rata,
in an amount equal to (A) their Uncertificated Accrued
Interest for such Distribution Date, plus (B) any amounts
in respect thereof remaining unpaid from previous
Distribution Dates; and
(2) on each Distribution Date, to REMIC III as the holder of the REMIC II
Regular Interests, in an amount equal to the remainder of
the REMIC II Available Distribution Amount related to Loan
Group II after the distributions made pursuant to clause
(1) above, allocated as follows (except as provided below):
(A) in respect of the REMIC II Regular Interests
LT6, LT7, LT8 and LT-Y2, their respective Principal
Distribution Amounts;
(B) in respect of the REMIC II Regular Interest LT5
any remainder until the Uncertificated Principal Balance
thereof is reduced to zero;
(C) any remainder in respect of the REMIC II
Regular Interests LT6, LT7 and LT8, pro rata according to
their respective Uncertificated Principal Balances as
reduced by the distributions deemed made pursuant to (A)
above, until their respective Uncertificated Principal
Balances are reduced to zero;
(D) any remainder in respect of the the REMIC II
Regular Interest LT-Y2 until its Uncertificated Principal
Balance is reduced to zero; and
(E) any remaining amounts of the Group II REMIC II
Available Distribution Amount related to Loan Group II to
the Holders of the Class R-2 Certificates.
REMIC II Principal Reduction Amounts: For any Distribution Date, the
amounts by which the principal balances of the REMIC II Regular Interests
LT1, LT2, LT3, LT4, LT5, LT6, LT7, LT8, LT-Y1 and LT-Y2, respectively, will
be reduced on such Distribution Date by the allocation of Realized Losses and
the distribution of principal, determined as follows:
For purposes of the succeeding formulas the following symbols shall
have the meanings set forth below:
Y1 = the aggregate principal balance of the REMIC II Regular Interests
LT1 and LT-Y1 after distributions on the prior Distribution Date.
Y2 = the principal balance of the REMIC II Regular Interest LT2 after
distributions on the prior Distribution Date.
Y3 = the principal balance of the REMIC II Regular Interest LT3 after
distributions on the prior Distribution Date.
Y4 = the principal balance of the REMIC II Regular Interest LT4 after
distributions on the prior Distribution Date (note: Y3 = Y4).
ΔY1 = the combined REMIC II Regular Interest LT1 and LT-Y1 Principal
Reduction Amount. Such amount shall be allocated first to REMIC II Regular
Interest LT-Y1 up to the REMIC II Regular Interest LT-Y1 Principal Reduction
Amount and thereafter the remainder shall be allocated to REMIC II Regular
Interest LT1.
ΔY2 = the REMIC II Regular Interest LT2 Principal Reduction Amount.
ΔY3 = the REMIC II Regular Interest LT3 Principal Reduction Amount.
ΔY4 = the REMIC II Regular Interest LT4 Principal Reduction Amount.
P0 = the aggregate principal balance of the REMIC II Regular Interests
LT1, LT2, LT3, LT4 and LT-Y1 after distributions and the allocation of
Realized Losses on the prior Distribution Date.
P1 = the aggregate principal balance of the REMIC II Regular Interests
LT1, LT2, LT3, LT4 and LT-Y1 after distributions and the allocation of
Realized Losses to be made on such Distribution Date.
ΔP = P0 - P1 = the aggregate of the REMIC II Regular Interest LT1,
LT2, LT3, LT4 and LT-Y1 Principal Reduction Amounts, which
= the aggregate of the principal portions of Realized Losses
to be allocated, and the principal distributions to be made with respect to
the Mortgage Loans in Loan Group I on such Distribution Date (including
principal distributed in respect of accrued and unpaid interest on the Class
CE Certificates for prior Distribution Dates).
R0 = the Group I Net WAC Rate (stated as a monthly rate) after giving
effect to amounts distributed and Realized Losses allocated on the prior
Distribution Date.
R1 = the Group I Net WAC Rate (stated as a monthly rate) after giving
effect to amounts to be distributed and Realized Losses to be allocated on
such Distribution Date.
α = (Y2 + Y3)/P0. The initial value of α on the Closing Date for use
on the first Distribution Date shall be 0.0001.
γ0 = the lesser of (A) the sum of (1) for all Classes of Class I-A
Certificates of the product for each Class of (i) the monthly interest rate
(as limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on such Distribution Date and (ii) the aggregate
Certificate Principal Balance for such Class after distributions and the
allocation of Realized Losses on the prior Distribution Date, (2) for all
Classes of Class M Certificates of the product for each Class of (i) the
monthly interest rate (as limited by the Net Rate Cap, if applicable) for
such Class applicable for distributions to be made on such Distribution Date
and (ii) the aggregate Certificate Principal Balance for such Class
multiplied by a fraction whose numerator is the principal balance of the
REMIC I Regular Interest Y-1 and whose denominator is the sum of the
principal balances of the REMIC I Regular Interests Y-1 and Y-2 after
distributions and the allocation of Realized Losses on the prior Distribution
Date and (3) the amount, if any, by which the sum of the amounts in clauses
(A)(1), (2) and (3) of the definition of Γ0 exceeds S0 * Q0 and (B)RO * PO.
γ1 = the lesser of (A) the sum of (1) for all Classes of Class I-A
Certificates of the product for each Class of (i) the monthly interest rate
(as limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on the next succeeding Distribution Date and (ii)
the aggregate Certificate Principal Balance for such Class after
distributions and the allocation of Realized Losses to be made on such
Distribution Date, (2) for all Classes of Class M Certificates of the product
for each Class of (i) the monthly interest rate (as limited by the Net Rate
Cap, if applicable) for such Class applicable for distributions to be made on
the next succeeding Distribution Date and (ii) the aggregate Certificate
Principal Balance for such Class multiplied by a fraction whose numerator is
the principal balance of the REMIC I Regular Interest Y-1 and whose
denominator is the sum of the principal balances of the REMIC I Regular
Interests Y-1 and Y-2 after distributions and the allocation of Realized
Losses to be made on such Distribution Date and (3) the amount, if any, by
which the sum of the amounts in clauses (A)(1), (2) and (3) of the definition
of Γ1 exceeds S1 * Q1 and (B)R1 * P1.
Then, based on the foregoing definitions:
ΔY1 = ΔP - ΔY2 - ΔY3 - ΔY4;
ΔY2 = (α/2){( γ0R1 - γ1R0)/R0R1};
ΔY3 = αΔP - ΔY2; and
ΔY4 = ΔY3.
if both ΔY2 and ΔY3, as so determined, are non-negative numbers.
Otherwise:
(1) If ΔY2, as so determined, is negative, then
ΔY2 = 0;
ΔY3 = α{γ1R0P0 - γ0R1P1}/{γ1R0};
ΔY4 = ΔY3; and
ΔY1 = ΔP - ΔY2 - ΔY3 - ΔY4.
(2) If ΔY3, as so determined, is negative, then
ΔY3 = 0;
ΔY2 = α{γ1R0P0 - γ0R1P1}/{2R1R0P1 - γ1R0};
ΔY4 = ΔY3; and
ΔY1 = ΔP - ΔY2 - ΔY3 - ΔY4.
For purposes of the succeeding formulas the following symbols shall
have the meanings set forth below:
Y5 = the aggregate principal balance of the REMIC II Regular Interests
LT5 and LT-Y2 after distributions on the prior Distribution Date.
Y6 = the principal balance of the REMIC II Regular Interest LT6 after
distributions on the prior Distribution Date.
Y7 = the principal balance of the REMIC II Regular Interest LT7 after
distributions on the prior Distribution Date.
Y8 = the principal balance of the REMIC II Regular Interest LT8 after
distributions on the prior Distribution Date (note: Y7 = Y8).
ΔY5 = the aggregate of the REMIC II Regular Interest LT5 and LT-Y-2
Principal Reduction Amounts. Such amount shall be allocated first to
REMIC II Regular Interest LT-Y2 up to the REMIC II Regular Interest LT-Y-2
Principal Reduction Amount and thereafter the remainder shall be allocated to
REMIC II Regular Interest LT5.
ΔY6 = the REMIC II Regular Interest LT6 Principal Reduction Amount.
ΔY7 = the REMIC II Regular Interest LT7 Principal Reduction Amount.
ΔY8 = the REMIC II Regular Interest LT8 Principal Reduction Amount.
Q0 = the aggregate principal balance of the REMIC II Regular Interests
LT5, LT6, LT7, LT8 and LT-Y-2 after distributions and the allocation of
Realized Losses on the prior Distribution Date.
Q1 = the aggregate principal balance of the REMIC II Regular Interests
LT5, LT6, LT7, LT8 and LT-Y2 after distributions and the allocation of
Realized Losses to be made on such Distribution Date.
ΔQ = Q0 - Q1 = the aggregate of the REMIC II Regular Interest LT5,
LT6, LT7, LT8 and LT-Y2 Principal Reduction Amounts, which
= the aggregate of the principal portions of Realized Losses
to be allocated, and the principal distributions to be made with respect to
the Mortgage Loans in Loan Group II on such Distribution Date (including
principal distributed in respect of accrued and unpaid interest on the Class
B-IO Certificates for prior Distribution Dates).
S0 = the Group II Net WAC Rate (stated as a monthly rate) after giving
effect to amounts distributed and Realized Losses allocated on the prior
Distribution Date.
S1 = the Group II Net WAC Rate (stated as a monthly rate) after giving
effect to amounts to be distributed and Realized Losses to be allocated on
such Distribution Date.
β = (Y6 + Y7)/Q0. The initial value of β on the Closing Date for use
on the first Distribution Date shall be 0.0001.
Γ0 = the lesser of (A) the sum of (1) for all Classes of Class II-A
Certificates of the product for each Class of (i) the monthly interest rate
(as limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on such Distribution Date and (ii) the aggregate
Certificate Principal Balance for such Class after distributions and the
allocation of Realized Losses on the prior Distribution Date, (2) for all
Classes of Class M Certificates of the product for each Class of (i) the
monthly interest rate (as limited by the Net Rate Cap, if applicable) for
such Class applicable for distributions to be made on such Distribution Date
and (ii) the aggregate Certificate Principal Balance for such Class
multiplied by a fraction whose numerator is the principal balance of the
REMIC I Regular Interest Y-2 and whose denominator is the sum of the
principal balances of the REMIC I Regular Interests Y-1 and Y-2 after
distributions and the allocation of Realized Losses on the prior Distribution
Date and (3) the amount, if any, by which the sum of the amounts in clauses
(A)(1), (2) and (3) of the definition of γ0 exceeds R0 * P0 and (B)SO * QO.
Γ1 = the lesser of (A) the sum of (1) for all Classes of Class II-A
Certificates of the product for each Class of (i) the monthly interest rate
(as limited by the Net Rate Cap, if applicable) for such Class applicable for
distributions to be made on the next succeeding Distribution Date and (ii)
the aggregate Certificate Principal Balance for such Class after
distributions and the allocation of Realized Losses to be made on such
Distribution Date, (2) for all Classes of Class M Certificates of the product
for each Class of (i) the monthly interest rate (as limited by the Net Rate
Cap, if applicable) for such Class applicable for distributions to be made on
the next succeeding Distribution Date and (ii) the aggregate Certificate
Principal Balance for such Class multiplied by a fraction whose numerator is
the principal balance of the REMIC I Regular Interest Y-2 and whose
denominator is the sum of the principal balances of the REMIC I Regular
Interests Y-1 and Y-2 after distributions and the allocation of Realized
Losses to be made on such Distribution Date and (3) the amount, if any, by
which the sum of the amounts in clauses (A)(1), (2) and (3) of the definition
of γ1 exceeds R1 * P1 and (B)S1 * Q1.
Then, based on the foregoing definitions:
ΔY5 = ΔQ - ΔY6 - ΔY7 - ΔY8;
ΔY6 = (β/2){(Γ0S1 - Γ1S0)/S0S1};
ΔY7 = βΔQ - ΔY6; and
ΔY8 = ΔY7.
if both ΔY6 and ΔY7, as so determined, are non-negative numbers.
Otherwise:
(1) If ΔY6, as so determined, is negative, then
ΔY6 = 0;
ΔY7 = β{Γ1S0Q0 - Γ0S1Q1}/{Γ1S0};
ΔY8 = ΔY7; and
ΔY5 = ΔQ - ΔY6 - ΔY7 - ΔY8.
(2) If ΔY7, as so determined, is negative, then
ΔY7 = 0;
ΔY6 = β{Γ1S0Q0 - Γ0S1Q1}/{2S1S0Q1 - Γ1S0};
ΔY8 = ΔY7; and
ΔY5 = ΔQ - ΔY6 - ΔY7 - ΔY8.
REMIC II Realized Loss: Realized Losses on Mortgage Loans shall be
allocated to the REMIC II Regular Interests as follows: (1) The interest
portion of Realized Losses on Mortgage Loans in Loan Group I, if any, shall
be allocated among the REMIC II Regular Interests LT1, LT2, LT4 and LT-Y1 pro
rata according to the amount of interest accrued but unpaid thereon, in
reduction thereof and (2) the interest portion of Realized Losses on Mortgage
Loans in Loan Group II, if any, shall be allocated among the REMIC II Regular
Interests LT5, LT6, LT8 and LT-Y2 pro rata according to the amount of
interest accrued but unpaid thereon, in reduction thereof. Any interest
portion of such Realized Losses in excess of the amount allocated pursuant to
the preceding sentence shall be treated as a principal portion of Realized
Losses not attributable to any specific Mortgage Loan in such Loan Group and
allocated pursuant to the succeeding sentences. The principal portion of
Realized Losses with respect to Loan Group I and Loan Group II shall be
allocated to the REMIC II Regular Interests as follows: (1) The principal
portion of Realized Losses on Mortgage Loans in Loan Group I shall be
allocated, first, to the REMIC II Regular Interest LT-Y1 to the extent that
such losses were allocated to the REMIC I Regular Interest Y-1 in reduction
of the Uncertificated Principal Balance thereof, second, to the REMIC II
Regular Interests LT2, LT3 and LT4 pro-rata according to their respective
REMIC II Principal Reduction Amounts to the extent thereof in reduction of
the Uncertificated Principal Balance of such REMIC II Regular Interests and,
third, the remainder, if any, of such principal portion of such Realized
Losses shall be allocated to the REMIC II Regular Interest LT1 in reduction
of the Uncertificated Principal Balance thereof and (2) the principal portion
of Realized Losses on Mortgage Loans in Loan Group II shall be allocated,
first, to the REMIC II Regular Interest LT-Y2 to the extent that such losses
were allocated to the REMIC I Regular Interest Y-2 in reduction of the
Uncertificated Principal Balance thereof, second, to the REMIC II Regular
Interests LT6, LT7 and LT8 pro-rata according to their respective REMIC II
Principal Reduction Amounts to the extent thereof in reduction of the
Uncertificated Principal Balance of such REMIC II Regular Interests and,
third, the remainder, if any, of such principal portion of such Realized
Losses shall be allocated to the REMIC II Regular Interest LT5 in reduction
of the Uncertificated Principal Balance thereof.
REMIC II Regular Interest: Any of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. Each REMIC
II Regular Interest shall accrue interest at the related Uncertificated REMIC
II Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto. The designations for the
respective REMIC II Regular Interests are set forth in the Preliminary
Statement hereto.
REMIC II Regular Interest LT1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT1 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT1
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT1 on such Distribution
Date.
REMIC II Regular Interest LT2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT2 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT2
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT2 on such Distribution
Date.
REMIC II Regular Interest LT3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT3 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT3 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT3
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT3 on such Distribution
Date.
REMIC II Regular Interest LT4: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT4 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT4 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT4
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT4 on such Distribution
Date.
REMIC II Regular Interest LT5: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT5 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT5 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT5
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT5 on such Distribution
Date.
REMIC II Regular Interest LT6: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT6 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT6 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT6
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT6 on such Distribution
Date.
REMIC II Regular Interest LT7: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT7 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT7 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT7
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT7 on such Distribution
Date.
REMIC II Regular Interest LT8: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT8 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT8 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT8
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT8 on such Distribution
Date.
REMIC II Regular Interest LT-Y1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT-Y1 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT-Y1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT-Y1
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT-Y1 on such Distribution
Date.
REMIC II Regular Interest LT-Y2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a Regular Interest in REMIC II and held as an asset of REMIC III. REMIC II
Regular Interest LT-Y2 shall accrue interest at the related Uncertificated
REMIC II Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof, in
an aggregate amount equal to its initial Uncertificated Principal Balance as
set forth in the Preliminary Statement hereto.
REMIC II Regular Interest LT-Y2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the REMIC II Regular Interest LT-Y2
Principal Reduction Amount for such Distribution Date over the Realized
Losses allocated to the REMIC II Regular Interest LT-Y2 on such Distribution
Date.
REMIC III Regular Interest: As defined in the Preliminary Statement
hereto under "REMIC III."
REMIC III: The segregated pool of assets consisting of the REMIC II
Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Class CE Certificates and the Class R-3 Certificates, with
respect to which a separate REMIC election is to be made.
REMIC III Certificate: Any Class A Certificate, Class M Certificate,
Class CE Certificate or Class R-3 Certificate.
REMIC III Realized Losses: Realized Losses allocated to and in
reduction of the Overcollateralization Amount shall be deemed to first reduce
the principal balance of the REMIC III Regular Interest CE-P until such
balance shall have been reduced to zero and thereafter to reduce the accrued
and unpaid interest on the REMIC III Regular Interest CE-I. Realized Losses
allocated to the Certificates in reduction of the interest or principal
attributes thereof shall be deemed allocated to the Corresponding REMIC III
Regular Interests in reduction of the corresponding attributes thereof.
REMIC Opinion: Shall mean an Opinion of Counsel to the effect that the
proposed action will not cause any of REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC at any time that any Certificates are outstanding.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final regulations and published
rulings, notices and announcements promulgated thereunder, as the foregoing
may be in effect from time to time as well as provisions of applicable state
laws.
Remittance Date: Shall mean the Business Day immediately preceding the
Distribution Account Deposit Date.
REO Imputed Interest: As to any REO Property, for any calendar month
during which such REO Property was at any time part of REMIC I, one month's
interest at the applicable Net Mortgage Rate on the Stated Principal Balance
of such REO Property (or, in the case of the first such calendar month, of
the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must,
on the date of such substitution, as confirmed in a Request for Release, (i)
have a Stated Principal Balance, after deduction of the principal portion of
the Scheduled Payment due in the month of substitution, not in excess of, and
not less than 90% of, the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) if the Replacement Mortgage Loan is a fixed rate Mortgage Loan,
have a fixed Mortgage Rate not less than or more than 1% per annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or
higher credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (v) have a remaining term to maturity no greater than (and not more
than one year less than) that of the Deleted Mortgage Loan; (vi) not permit
conversion of the Mortgage Rate from a fixed rate to a variable rate; (vii)
have the same lien priority as the Deleted Mortgage Loan; (viii) constitute
the same occupancy type as the Deleted Mortgage Loan or be owner occupied;
(ix) if the Replacement Mortgage Loan is an Adjustable Rate Mortgage Loan,
have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the
Deleted Mortgage Loan, (x) if the Replacement Mortgage Loan is an Adjustable
Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the Minimum
Mortgage Rate of the Deleted Mortgage Loan, (xi) if the Replacement Mortgage
Loan is an Adjustable Rate Mortgage Loan, have a Gross Margin equal to or
greater than the Gross Margin of the Deleted Mortgage Loan, (xii) if the
Replacement Mortgage Loan is an Adjustable Rate Mortgage Loan, have a next
Adjustment Date not more than two months later than the next Adjustment Date
on the Deleted Mortgage Loan, (xiii) comply with each representation and
warranty set forth in Section 7 of the Mortgage Loan Purchase Agreement and
(xiv) the Custodian has delivered a Final Certification noting no defects or
exceptions.
Request for Release: The Request for Release to be submitted by the
Seller or the Servicer to the Custodian substantially in the form of Exhibit
H. Each Request for Release furnished to the Custodian by the Seller or the
Servicer shall be in duplicate and shall be executed by an officer of such
Person or a Servicing Officer (or, if furnished electronically to the
Custodian, shall be deemed to have been sent and executed by an officer of
such Person or a Servicing Officer) of the Servicer.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under
this Agreement.
Reserve Fund: Shall mean the separate trust account created and
maintained by the Trustee pursuant to Section 3.20 hereof.
Residual Certificates: The Class R-1, Class R-2 and Class R-3
Certificates, each evidencing the sole class of "residual interests" (within
the meaning of Section 860G(a)(2) of the Code) in the related REMIC.
Residual Interest: The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
Responsible Officer: With respect to the Trustee, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, or any
Trust Officer with specific responsibility for the transactions contemplated
hereby, any other officer customarily performing functions similar to those
performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee, as to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
and any successor thereto.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Seller: EMC Mortgage Corporation, a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to
the Depositor.
Seller Arrearages: Any accrued and unpaid interest for any period
prior to the Cut-off Date for any Mortgage Loan which is Delinquent on the
related Cut-off Date; such amount to be paid first from late payments on the
Mortgage Loans received by the Servicer or Liquidation Proceeds from the
related Mortgage Loan and, if such amounts are not sufficient, then from
amounts on deposit in the Protected Account.
Senior Certificates: The Class I-A-1, Class I-A-2, Class I-A-3, Class
II-A-1 and Class II-A-2 Certificates.
Servicer: GMAC Mortgage Corporation, a Pennsylvania corporation, in its
capacity as Servicer, and its successors and assigns. Unless otherwise
provided for in the applicable Special Servicing Agreement, all references to
"Servicer" hereunder shall be deemed to include any Special Servicer
appointed pursuant to Section 3.18(b) hereof, as it relates to any Specially
Serviced Mortgage Loan serviced by such Special Servicer and the obligations
of the Servicer to service the Mortgage Loans.
Servicer Certification: A written certification covering servicing of
the Mortgage Loans by the Servicer and signed by an officer of the 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 Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Servicer Certification shall be as agreed to by the
Servicer, the Depositor and the Seller following a negotiation in good faith
to determine how to comply with any such new requirements.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by the Servicer of its servicing obligations hereunder,
including, but not limited to, the cost of (i) the preservation, restoration
and protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including foreclosures, and including any expenses incurred in
relation to any such proceedings that result from the Mortgage Loan being
registered in the MERS® System, (iii) the management and liquidation of any
REO Property (including, without limitation, realtor's commissions) and (iv)
compliance with any obligations under Section 3.07 hereof to cause insurance
to be maintained.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the first day of the related
Due Period or, in the event of any payment of interest that accompanies a
Principal Prepayment in full during the related Due Period made by the
Mortgagor immediately prior to such prepayment, interest at the Servicing Fee
Rate on the Stated Principal Balance of such Mortgage Loan for the period
covered by such payment of interest. For avoidance of doubt, the Servicing
Fee with respect to any Specially Serviced Mortgage Loan will be paid to the
related Special Servicer.
Servicing Fee Rate: 0.500% per annum.
Servicing Modification: With respect to any Mortgage Loan that is in
default or, in the reasonable judgment of the Servicer, as to which default
is reasonably foreseeable, any modification which is effected by the Servicer
in accordance with the terms of this Agreement which results in any change in
the outstanding Stated Principal Balance, any change in the Mortgage Rate or
any extension of the term of such Mortgage Loan.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished
to the Trustee by the Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Simple Interest Loans: The Mortgage Loans that provide for monthly
payments to be allocated to principal and interest according to the daily
simple interest method.
Simple Interest Shortfall Advance: Any Advance made by the Servicer in
connection with a Simple Interest Loan resulting from any shortfall in the
amount of any Scheduled Payment applied to interest on the Simple Interest
Loan due to the payment by the related Mortgagor of the Scheduled Payment
less than one month after payment of the preceeding Scheduled Payment.
Special Servicer: Any special servicer to which the servicing of a
Mortgage Loan is transferred to pursuant to Section 3.18(b) hereof.
Special Servicing Agreement: Any agreement entered into among the
Servicer, the Special Servicer and the Trustee with respect to the servicing
of a Specially Serviced Mortgage Loan.
Specially Serviced Mortgage Loan: The Mortgage Loans being serviced by
the Special Servicer pursuant to Section 3.18(b) hereof.
Startup Day: The Startup Day for each REMIC formed hereunder shall be
the Closing Date.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property and any Distribution Date, the applicable Cut-off Date Principal
Balance thereof minus the sum of (i) the principal portion of the Scheduled
Payments received with respect to such Mortgage Loan prior to or during each
Due Period ending prior to such Distribution Date, (ii) all Principal
Prepayments with respect to such Mortgage Loan received prior to or during
the related Prepayment Period, and all Liquidation Proceeds to the extent
applied by the Servicer as recoveries of principal in accordance with Section
3.09 with respect to such Mortgage Loan, that were received by the Servicer
as of the close of business on the last day of the Prepayment Period related
to such Distribution Date and (iii) any Realized Losses on such Mortgage Loan
incurred during the related Prepayment Period. The Stated Principal Balance
of a Liquidated Loan equals zero.
Stepdown Date: The later to occur of (a) the Distribution Date in
November 2007 and (b) the first Distribution Date on which the Current
Specified Enhancement Percentage (calculated for this purpose only, prior to
distributions on the Certificates but following distributions on the Mortgage
Loans for the related Due Period) is greater than or equal to 35.40%.
Subordinated Certificates: The Class M Certificates, Class CE
Certificates and Residual Certificates.
Subsequent Recoveries: As of any Distribution Date, amounts received by
the Servicer (net of any related expenses permitted to be reimbursed pursuant
to Section 4.02 and any Recovery Fee) or surplus amounts held by the Servicer
to cover estimated expenses (including, but not limited to, recoveries in
respect of the representations and warranties made by the Seller pursuant to
the Mortgage Loan Purchase Agreement) specifically related to a Mortgage Loan
that was the subject of a liquidation or final disposition of any REO
Property prior to the related Prepayment Period that resulted in a Realized
Loss.
Subservicing Agreement: Any agreement entered into between the Servicer
and a subservicer with respect to the subservicing of any Mortgage Loan
hereunder by such subservicer.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Successor Servicer: The meaning ascribed to such term pursuant to
Section 8.01.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury Regulation § 1.860F-4(d) and temporary
Treasury Regulation § 301.6231(a)(7)-1T. The Holder of the greatest
Percentage Interest in a Class of Residual Certificates shall be the Tax
Matters Person for the related REMIC, as more particularly set forth in
Section 9.12 hereof. The Trustee, or any successor thereto or assignee
thereof shall serve as tax administrator hereunder and as agent for the
related Tax Matters Person.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Transfer Affidavit: As defined in Section 6.02(c).
Trigger Event: With respect to any Distribution Date, a Trigger Event
exists if (i) a Delinquency Event shall have occurred and be continuing or
(ii) the aggregate amount of Realized Losses on the Mortgage Loans since the
applicable Cut-off Date as a percentage of the initial aggregate Stated
Principal Balance of the Mortgage Loans as of the applicable Cut-off Date
exceeds the applicable percentages set forth below with respect to such
Distribution Date:
Distribution Date Percentage
November 2007 to October 2008 4.75%
November 2008 to October 2009 7.00%
November 2009 to October 2010 8.50%
November 2010 and thereafter 9.00%
Trust Fund: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest accruing and principal due with respect
thereto after the applicable Cut-off Date to the extent not applied in
computing the applicable Cut-off Date Principal Balance thereof; (ii) the
Distribution Account, the Reserve Fund and the Protected Account and all
amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired
by the Servicer on behalf of the Trust Fund by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loans; (v) the rights under the Yield
Maintenance Agreements; (vi) the rights under the Mortgage Loan Purchase
Agreement; and (vii) all proceeds of the foregoing, including proceeds of
conversion, voluntary or involuntary, of any of the foregoing into cash or
other liquid property.
Trustee: ▇▇▇▇▇ Fargo Bank, National Association, a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee as may from time to time
be serving as successor trustee hereunder.
Trustee Fee: As to each Mortgage Loan and any Distribution Date, a fee
per annum equal to 0.01% multiplied by the Stated Principal Balance of such
Mortgage Loan as of the first day of the related Due Period.
Uncertificated Accrued Interest: With respect to each REMIC I Regular
Interest and REMIC II Regular Interest on each Distribution Date, an amount
equal to one month's interest at the related Uncertificated REMIC I
Pass-Through Rate or Uncertificated REMIC II Pass-Through Rate, as
applicable, on the Uncertificated Principal Balance of such Regular
Interest. Uncertificated Accrued Interest for such Regular Interests shall
accrue on the basis of a 360-day year consisting of twelve 30-day months. For
purposes of calculating the amount of Uncertificated Accrued Interest for the
REMIC I Regular Interests for any Distribution Date, any Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (to the extent not covered by
Compensating Interest) (i) relating to the Mortgage Loans in Loan Group I for
any Distribution Date shall be allocated among REMIC I Regular Interests Y-1
and Z-1 and (ii) relating to the Mortgage Loans in Loan Group II for any
Distribution Date shall be allocated among REMIC I Regular Interests Y-2 and
Z-2, pro rata, based on, and to the extent of, Uncertificated Accrued
Interest, as calculated without application of this sentence. For purposes
of calculating the amount of Uncertificated Accrued Interest for the REMIC II
Regular Interests for any Distribution Date, any Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (to the extent not covered by
Compensating Interest) (i) relating to the Mortgage Loans in Loan Group I for
any Distribution Date shall be allocated among REMIC II Regular Interests
LT1, LT2, LT3, LT4 and LT-Y1 and (ii) relating to the Mortgage Loans in Loan
Group II for any Distribution Date shall be allocated among REMIC II Regular
Interests LT5, LT6, LT7, LT8 and LT-Y2, pro rata, based on, and to the extent
of, Uncertificated Accrued Interest, as calculated without application of
this sentence.
Uncertificated Principal Balance: With respect to reach REMIC I Regular
Interest and REMIC II Regular Interest, the principal amount of such Regular
Interest outstanding as of any date of determination. As of the Closing
Date, the Uncertificated Principal Balance of each REMIC I Regular Interest
and REMIC II Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto. On each Distribution Date, the Uncertificated
Principal Balance of each REMIC I Regular Interest and REMIC II Regular
Interest shall be reduced by all distributions of principal made on such
Regular Interest on such Distribution Date pursuant to Section 5.06(b) and
(c) and, if and to the extent necessary and appropriate, shall be further
reduced on such Distribution Date by Realized Losses as provided by the
definitions of REMIC I Realized Losses and REMIC II Realized Losses. The
Uncertificated Principal Balance of each REMIC I Regular Interest and REMIC
II Regular Interest shall never be less than zero.
Uncertificated REMIC I Pass-Through Rate: With respect to any
Distribution Date and (i) REMIC I Regular Interest Y-1 and REMIC I Regular
Interest Z-1, the weighted average of the Net Mortgage Rates of the Mortgage
Loans in Loan Group I (adjusted, as necessary, to state such weighted average
as a rate that accrues on a 30/360 basis) and (ii) REMIC I Regular Interest
Y-2 and REMIC I Regular Interest Z-2, the weighted average of the Net
Mortgage Rates of the Mortgage Loans in Loan Group II (adjusted, as
necessary, to state such weighted average as a rate that accrues on a 30/360
basis).
Uncertificated REMIC II Pass-Through Rate: With respect to any
Distribution Date and (i) REMIC II Regular Interests LT1, LT2 and LT-Y1, the
weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan
Group I (adjusted, as necessary, to state such weighted average as a rate
that accrues on a 30/360 basis), (ii) REMIC II Regular Interests LT5, LT6 and
LT-Y2, the weighted average of the Net Mortgage Rates of the Mortgage Loans
in Loan Group II (adjusted, as necessary, to state such weighted average as a
rate that accrues on a 30/360 basis), (iii) REMIC II Regular Interests LT3
and LT7, zero (0.00%), (v) REMIC II Regular Interest LT4, twice the weighted
average of the Net Mortgage Rates of the Mortgage Loans in Loan Group I
(adjusted, as necessary, to state such weighted average as a rate that
accrues on a 30/360 basis) and (vi) REMIC II Regular Interest LT8, twice the
weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan
Group II (adjusted, as necessary, to state such weighted average as a rate
that accrues on a 30/360 basis).
Underwriting Agreement: The Underwriting Agreement, dated as of April
28, 2004, between the Depositor and Bear, ▇▇▇▇▇▇▇ & Co. Inc, together with
the related Terms Agreement, dated as of October 25, 2004 between the
Depositor and Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Unpaid Realized Loss Amount: With respect to any Class A Certificates
and as to any Distribution Date, is the excess of Applied Realized Loss
Amounts with respect to such Class over the sum of all distributions in
reduction of the Applied Realized Loss Amounts on all previous Distribution
Dates. Any amounts distributed to the Class A Certificates in respect of any
Unpaid Realized Loss Amount shall not be applied to reduce the Certificate
Principal Balance of such Class.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions
hereunder. Voting Rights shall be allocated (i) 94% to the Class A
Certificates and Class M Certificates, (ii) 3% to the Class CE Certificates
until paid in full, and (iii) 1% to each Class of Residual Certificates, with
the allocation among the Certificates (other than the Class CE and the
Residual Certificates) to be in proportion to the Certificate Principal
Balance of each Class relative to the Certificate Principal Balance of all
other such Classes. Voting Rights will be allocated among the Certificates
of each such Class in accordance with their respective Percentage Interests.
Yield Maintenance Agreements: Each of the Yield Maintenance Agreements
dated October 26, 2004 between the Trust (on behalf of the Class I-A, Class
II-A-1, Class II-A-2 and Class M Certificateholders) and the Counterparty.
Section 1.02 Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Current Interest for the
Class A Certificates, the Class M Certificates and the Class CE Certificates
for any Distribution Date, the aggregate amount of any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Servicer pursuant to
Section 5.02) and any Relief Act Interest Shortfalls incurred in respect of
the Mortgage Loans for any Distribution Date shall be allocated first, to the
Class CE Certificates based on, and to the extent of, one month's interest at
the then applicable respective Pass-Through Rate on the Certificate Notional
Balance thereof and, thereafter, among the Offered Certificates, in each case
on a pro rata basis based on, and to the extent of, interest at the then
applicable respective Pass-Through Rate on the respective Certificate
Principal Balance of each such Certificate for the related Accrual Period
absent such reduction.
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Trust Fund.
Pursuant to the Mortgage Loan Purchase Agreement, the Seller sold,
transferred, assigned, set over and otherwise conveyed to the Depositor,
without recourse, all the right, title and interest of the Seller in and to
the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor pursuant to the Mortgage Loan
Purchase Agreement and has agreed to take the actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse,
all the right, title and interest of the Depositor in and to the Trust Fund.
In connection with such sale, the Depositor has delivered to, and
deposited with, the Trustee or the Custodian, as its agent, the following
documents or instruments with respect to each Mortgage Loan so assigned: (i)
the original Mortgage Note, including any riders thereto, endorsed without
recourse to the order of "▇▇▇▇▇ Fargo Bank, National Association, as Trustee
for certificateholders of Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC Asset
Backed Certificates, Series 2004-BO1," and showing an unbroken chain of
endorsements from the original payee thereof to the Person endorsing it to
the Trustee, (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 (x) in the proviso below applies, shall be in
recordable form), (iii) unless the Mortgage Loan is a MOM Loan, the
assignment (either an original or a copy, which may be in the form of a
blanket assignment if permitted in the jurisdiction in which the Mortgaged
Property is located) to the Trustee of the Mortgage with respect to each
Mortgage Loan in the name of "▇▇▇▇▇ Fargo Bank, National Association, as
Trustee for certificateholders of Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC
Asset Backed Certificates, Series 2004-BO1," in recordable form) (iv) an
original or a copy of all intervening assignments of the Mortgage, if any,
with evidence of recording thereon, (v) the original policy of title
insurance or mortgagee's certificate of title insurance or commitment or
binder for title insurance, if available, or a copy thereof, or, in the event
that such original title insurance policy is unavailable, a photocopy
thereof, or in lieu thereof, a current lien search on the related Mortgaged
Property and (vi) originals or copies of all available assumption,
modification or substitution agreements, if any; provided, however, that in
lieu of the foregoing, the Seller may deliver the following documents, under
the circumstances set forth below: (x) if any Mortgage or intervening
assignments thereof have been delivered or are being delivered to recording
offices for recording and have not been returned in time to permit their
delivery as specified above, the Depositor may deliver a true copy thereof
with a certification by the Seller or the title company issuing the
commitment for title insurance, 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"; and (y) in lieu of the Mortgage Notes
relating to the Mortgage Loans identified in the list set forth in Exhibit J,
the Depositor may deliver a lost note affidavit and indemnity and a copy of
the original note, if available; and provided, further, however, that in the
case of Mortgage Loans which have been prepaid in full after the applicable
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, may deliver to the Trustee and its Custodian
a certification of a Servicing Officer to such effect and in such case shall
deposit all amounts paid in respect of such Mortgage Loans, in the Protected
Account or in the Distribution Account on the Closing Date. In the case of
the documents referred to in clause (x) above, the Depositor shall deliver
such documents to the Trustee or its Custodian promptly after they are
received. The Seller shall cause, at its expense, the Mortgage and
intervening assignments, if any, and to the extent required in accordance
with the foregoing, the assignment of the Mortgage to the Trustee to be
submitted for recording promptly after the Closing Date; provided that the
Seller need not cause to be recorded (a) any assignment in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel addressed to
the Trustee delivered by the Seller to the Trustee and the Rating Agencies on
the Closing Date, the recordation of such assignment is not necessary to
protect the Trustee's interest in the related Mortgage Loan or (b) if MERS is
identified on the Mortgage or on a properly recorded assignment of the
Mortgage as the mortgagee of record solely as nominee for Seller and its
successors and assigns. In the event that the Seller, the Depositor or the
Servicer gives written notice to the Trustee that a court has recharacterized
the sale of the Mortgage Loans as a financing, the Seller shall submit or
cause to be submitted for recording as specified above each such previously
unrecorded assignment to be submitted for recording as specified above at the
expense of the Trust. In the event a Mortgage File is released to the
Servicer as a result of such Person having completed a Request for Release,
the Custodian shall, if not so completed, complete the assignment of the
related Mortgage in the manner specified in clause (iii) above.
In connection with the assignment of any Mortgage Loan registered on
the MERS® System, the Seller further agrees that it will cause, at the
Seller's own expense, within 30 days after the Closing Date, the MERS® System
to indicate that such Mortgage Loans have been assigned by the Seller to the
Depositor and by the Depositor 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 Seller further agrees that it will not, and will
not permit the Servicer to, and the Servicer agrees that it will not, alter
the codes referenced in this paragraph with respect to any Mortgage Loan
during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement or the Mortgage
Loan Purchase Agreement.
Section 2.02 Acceptance of the Mortgage Loans.
(a) Based on the Initial Certification received by it from the Custodian,
the Trustee acknowledges receipt of, subject to the further review and
exceptions reported by the Custodian pursuant to the procedures described
below, the documents (or certified copies thereof) delivered to the Trustee
or the Custodian on its behalf pursuant to Section 2.01 and declares that it
holds and will continue to hold directly or through a custodian those
documents and any amendments, replacements or supplements thereto and all
other assets of the Trust Fund delivered to it in trust for the use and
benefit of all present and future Holders of the Certificates. On the
Closing Date, the Trustee or the Custodian on its behalf will deliver an
Initial Certification in the form of Exhibit One to the Custodial Agreement
confirming whether or not it has received the Mortgage File for each Mortgage
Loan, but without review of such Mortgage File, except to the extent
necessary to confirm whether such Mortgage File contains the original
Mortgage Note or a lost note affidavit and indemnity in lieu thereof. No
later than 90 days after the Closing Date, the Trustee or the Custodian on
its behalf shall, for the benefit of the Certificateholders, review each
Mortgage File delivered to it and execute and deliver to the Seller, the
Servicer and, if reviewed by the Custodian, the Trustee, an Interim
Certification substantially in the form of Exhibit Two to the Custodial
Agreement. In conducting such review, the Trustee or the Custodian on its
behalf will ascertain whether all required documents have been executed and
received and whether those documents relate, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans identified in Exhibit B to this Agreement, as supplemented (provided,
however, that with respect to those documents described in subclauses (iv)
and (vi) of Section 2.01, such obligations shall extend only to documents
actually delivered pursuant to such subclauses). In performing any such
review, the Trustee and the Custodian 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 on its
behalf finds any document constituting part of the Mortgage File not to have
been executed or received, or to be unrelated to the Mortgage Loans
identified in Exhibit B or to appear to be defective on its face, the Trustee
or the Custodian on its behalf shall include such information in the
exception report attached to the Interim Certification. The Seller shall
correct or cure any such defect or, if prior to the end of the second
anniversary of the Closing Date, the Seller may substitute for the related
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee an Opinion of Counsel addressed to the
Trustee to the effect that such defect does not materially or adversely
affect the interests of the Certificateholders in such Mortgage Loan within
60 days from the date of notice of the defect and if the Seller fails to
correct or cure the defect or deliver such opinion within such period, the
Seller will, subject to Section 2.03, within 90 days from the notification of
the Trustee purchase such Mortgage Loan at the Purchase Price; provided,
however, that if such defect relates solely to the inability of the Seller to
deliver the Mortgage or intervening assignments thereof with evidence of
recording thereon because such documents have been submitted for recording
and have not been returned by the applicable jurisdiction, the Seller shall
not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after
the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee or the
Custodian on its behalf will review, for the benefit of the
Certificateholders, the Mortgage Files and will execute and deliver or cause
to be executed and delivered to the Seller, the Servicer and, if reviewed by
the Custodian, the Trustee, a Final Certification substantially in the form
of Exhibit Three to the Custodial Agreement. In conducting such review, the
Trustee or the Custodian on its behalf will ascertain whether each document
required to be recorded has been returned from the recording office with
evidence of recording thereon and the Trustee or the Custodian on its behalf
has received either an original or a copy thereof, as required in Section
2.01 (provided, however, that with respect to those documents described in
subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only
to documents actually delivered pursuant to such subclauses). If the Trustee
or the Custodian on its behalf finds any document with respect to a Mortgage
Loan has not been 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,
the Trustee or the Custodian on its behalf shall note such defect in the
exception report attached to the Final Certification and shall promptly
notify the Seller. The Seller shall correct or cure any such defect or, if
prior to the end of the second anniversary of the Closing Date, the Seller
may substitute for the related Mortgage Loan a Replacement Mortgage Loan,
which substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03 or shall deliver to the Trustee an
Opinion of Counsel addressed to the Trustee to the effect that such defect
does not materially or adversely affect the interests of Certificateholders
in such Mortgage Loan within 60 days from the date of notice of the defect
and if the Seller is unable within such period to correct or cure such
defect, or to substitute the related Mortgage Loan with a Replacement
Mortgage Loan or to deliver such opinion, the Seller shall, subject to
Section 2.03, within 90 days from the notification, purchase such Mortgage
Loan at the Purchase Price; provided, however, that if such defect relates
solely to the inability of the Seller to deliver the Mortgage or intervening
assignments thereof with evidence of recording thereon, because such
documents have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan, if the Seller delivers
such documents promptly upon receipt, but in no event later than 360 days
after the Closing Date. Notwithstanding anything to the contrary herein, the
parties hereto acknowledge that all obligations of the Trustee with respect
to the custody and review of the Mortgage Files shall be performed by the
Custodian pursuant to the Custodial Agreement, and that the Trustee shall
have no responsibility with respect to the custody or review of Mortgage
Files held by the Custodian pursuant to the Custodial Agreement. The Trustee
shall have no liability for the failure of the Custodian to perform its
obligations under the Custodial Agreement.
(c) In the event that a Mortgage Loan is purchased by the Seller in
accordance with subsections 2.02(a) or (b) above or Section 2.03, the Seller
shall remit the applicable Purchase Price to the Servicer for deposit in the
Protected Account and shall provide written notice to the Trustee detailing
the components of the Purchase Price, signed by a Servicing Officer. Upon
deposit of the Purchase Price in the Protected Account and upon receipt of a
Request for Release with respect to such Mortgage Loan, the Trustee or the
Custodian will 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 deposit into the Protected Account was made. The Trustee shall notify the
Rating Agencies of such repurchase in accordance with Section 11.05. The
obligation of the Seller to cure, repurchase or substitute for any Mortgage
Loan as to which a defect in a constituent document exists shall be the sole
remedies respecting such defect available to the Certificateholders or to the
Trustee on their behalf.
(d) The Seller shall deliver to the Trustee or the Custodian on its behalf,
and Trustee agrees to accept the Mortgage Note and other documents
constituting the Mortgage File with respect to any Replacement Mortgage Loan,
which the Trustee or the Custodian will review as provided in subsections
2.02(a) and 2.02(b), provided, that the Closing Date referred to therein
shall instead be the date of delivery of the Mortgage File with respect to
each Replacement Mortgage Loan.
Section 2.03 Representations, Warranties and Covenants of the Servicer
and the Seller.
(a) The Servicer hereby represents and warrants to the Depositor, the
Trustee as follows, as of the Closing Date:
(i) It is duly organized and is validly existing and in good standing under
the laws of the Commonwealth of Pennsylvania and is duly authorized and
qualified to transact any and all business contemplated by this
Agreement to be conducted by it in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the
Mortgage Loans in accordance with the terms of this Agreement and to
perform any of its other obligations under this Agreement in accordance
with the terms hereof or thereof.
(ii) It has the full corporate power and authority to service each Mortgage
Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on its part the execution,
delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery hereof by the
other parties hereto or thereto, as applicable, constitutes its legal,
valid and binding obligation, enforceable against it in accordance with
its terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the servicing of
the Mortgage Loans by it under this Agreement, the consummation of any
other of the transactions contemplated by this Agreement, and the
fulfillment of or compliance with the terms hereof and thereof are in
its ordinary course of business and will not (A) result in a breach of
any term or provision of its articles of incorporation or by-laws or
(B) conflict with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material agreement or
instrument to which it is a party or by which it may be bound, or (C)
constitute a violation of any statute, order or regulation applicable
to it of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it; and it is not in breach
or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair its ability to perform or meet any of its obligations under this
Agreement.
(iv) It is an approved servicer of conventional mortgage loans for ▇▇▇▇▇▇
▇▇▇ or ▇▇▇▇▇▇▇ Mac and is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of its knowledge, threatened,
against it that would materially and adversely affect the execution,
delivery or enforceability of this Agreement or its ability to service
the Mortgage Loans or to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for its execution, delivery and
performance of, or compliance with, this Agreement or the consummation
of the transactions contemplated hereby or thereby, or if any such
consent, approval, authorization or order is required, it has obtained
the same.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan in Loan Group II pursuant to ▇▇▇▇▇▇ Mae Guide Announcement
95-19 and that for each Mortgage Loan in Loan Group II, the Servicer agrees
it shall report on the following statuses each month as follows: new
origination, current, delinquent (30-, 60-, 90-days, etc.), foreclosed, or
charged-off.
(b) The Seller hereby represents and warrants to the Depositor, the Trustee
as follows, as of the Closing Date:
(i) The Seller is duly organized as a Delaware corporation and is validly
existing and in good standing under the laws of the State of Delaware
and is duly authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Seller in any
state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state,
to the extent necessary to ensure its ability to enforce each Mortgage
Loan, to sell the Mortgage Loans in accordance with the terms of the
Mortgage Loan Purchase Agreement and to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to sell each
Mortgage Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and has
duly authorized by all necessary corporate action on the part of the
Seller the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto or thereto, as applicable,
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except
that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Seller, the sale of
the Mortgage Loans by the Seller under the Mortgage Loan Purchase
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof and thereof are in the ordinary course of
business of the Seller and will not (A) result in a material breach of
any term or provision of the charter or by-laws of the Seller or (B)
conflict with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material agreement or
instrument to which the Seller is a party or by which it may be bound,
or (C) constitute a violation of any statute, order or regulation
applicable to the Seller of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Seller; and
the Seller is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Seller's ability to perform or meet
any of its obligations under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage loans for
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and is a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act.
(v) No litigation is pending or, to the best of the Seller's knowledge,
threatened, against the Seller that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or
the ability of the Seller to sell the Mortgage Loans or to perform any
of its other obligations under this Agreement in accordance with the
terms hereof or thereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated hereby
or thereby, or if any such consent, approval, authorization or order is
required, the Seller has obtained the same.
(vii) With respect to each Mortgage Loan as of the Closing Date (or such
other date as may be specified in Section 7 of the Mortgage Loan
Purchase Agreement), the Seller hereby remakes and restates each of the
representations and warranties set forth in Section 7 of the Mortgage
Loan Purchase Agreement to the Depositor and the Trustee to the same
extent as if fully set forth herein.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in the Mortgage Loan Purchase Agreement
with respect to the Mortgage Loans that materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt written notice thereof to the other
parties. The Seller hereby covenants with respect to the representations and
warranties set forth in the Mortgage Loan Purchase Agreement with respect to
the Mortgage Loans, that within 90 days of the discovery of a breach of any
representation or warranty set forth therein that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, it
shall cure such breach in all material respects and, if such breach is not so
cured, (i) if such 90 day period expires prior to the second anniversary of
the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from
the Trust Fund and substitute in its place a Replacement Mortgage Loan, in
the manner and subject to the conditions set forth in this Section; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at
the Purchase Price in the manner set forth below; provided that any such
substitution pursuant to (i) above or repurchase pursuant to (ii) above shall
not be effected prior to the delivery to the Trustee of an Opinion of Counsel
if required by Section 2.05 hereof and any such substitution pursuant to (i)
above shall not be effected prior to the additional delivery to the Custodian
of a Request for Release. The Trustee shall give prompt written notice to
the parties hereto of the Seller's failure to cure such breach as set forth
in the preceding sentence. The Seller shall promptly reimburse the Servicer
and the Trustee for any expenses reasonably incurred by the Servicer or the
Trustee in respect of enforcing the remedies for such breach. To enable the
Servicer to amend the Mortgage Loan Schedule, the Seller shall, unless it
cures such breach in a timely fashion pursuant to this Section 2.03, promptly
notify the Servicer whether it intends either to repurchase, or to substitute
for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties with respect to the Mortgage Loans that are
made to the best of the Seller's knowledge, if it is discovered by any of the
Depositor, the Servicer, the Seller, the Trustee or the Custodian that the
substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, notwithstanding the Seller's lack of knowledge with respect to the
substance of such representation or warranty, the Seller shall nevertheless
be required to cure, substitute for or repurchase the affected Mortgage Loan
in accordance with the foregoing.
With respect to any Replacement Mortgage Loan or Loans, the Seller
shall deliver to the Trustee or the Custodian on its behalf for the benefit
of the Certificateholders such documents and agreements as are required by
Section 2.01. No substitution will be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Replacement Mortgage Loans in the Due Period related to the Distribution Date
on which such proceeds are to be distributed shall not be part of the Trust
Fund and will be retained by the Seller. For the month of substitution,
distributions to Certificateholders will include the Scheduled Payment due on
any Deleted Mortgage Loan for the related Due Period and thereafter the
Seller shall be entitled to retain all amounts received in respect of such
Deleted Mortgage Loan. The Servicer shall amend the Mortgage Loan Schedule
for the benefit of the Certificateholders to reflect the removal of such
Deleted Mortgage Loan and the substitution of the Replacement Mortgage Loan
or Loans and the Servicer shall deliver the amended Mortgage Loan Schedule to
the Trustee and the Custodian. Upon such substitution, the Replacement
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Seller shall be deemed to have made with respect to such
Replacement Mortgage Loan or Loans, as of the date of substitution, the
representations and warranties set forth in Section 7 of the Mortgage Loan
Purchase Agreement with respect to such Mortgage Loan and to have represented
that each such Mortgage Loan satisifies the criteria set forth in the
definition of Replacement Mortgage Loans. Upon any such substitution and the
deposit into the Protected Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph and receipt by the Custodian of a Request for Release for such
Mortgage Loan, the Trustee or the Custodian shall release to the Seller the
Mortgage File relating to such Deleted Mortgage Loan and held for the benefit
of the Certificateholders and the Trustee shall execute and deliver at the
Seller's direction such instruments of transfer or assignment as have been
prepared by the Seller, in each case without recourse, representation or
warranty as shall be necessary to vest in the Seller, or its respective
designee, title to the Trustee's interest in any Deleted Mortgage Loan
substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Servicer will determine the
amount (if any) by which the aggregate principal balance of all the
Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution) of such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in
the preceding sentence for any Distribution Date (such amount, the
"Substitution Adjustment Amount") shall be deposited into the Protected
Account, by the Seller delivering such Replacement Mortgage Loan on the
Determination Date for the Distribution Date relating to the Prepayment
Period during which the related Mortgage Loan became required to be purchased
or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited into the Protected Account, on
the Determination Date for the Distribution Date in the month following the
month during which the Seller became obligated to repurchase or replace such
Mortgage Loan and upon such deposit of the Purchase Price, the delivery of an
Opinion of Counsel if required by Section 2.05 and the receipt of a Request
for Release, the Trustee or the Custodian shall release the related Mortgage
File held for the benefit of the Certificateholders to the Seller, and the
Trustee shall execute and deliver at such Person's direction the related
instruments of transfer or assignment prepared by the Seller, in each case
without recourse, as shall be necessary to transfer title from the Trustee
for the benefit of the Certificateholders and transfer the Trustee's interest
to the Seller to any Mortgage Loan purchased pursuant to this Section 2.03.
It is understood and agreed that the obligation under this Agreement of the
Seller to cure, repurchase or replace any Mortgage Loan as to which a breach
has occurred and is continuing shall constitute the sole remedies against the
Seller respecting such breach available to the Certificateholders, the
Depositor or the Trustee.
(d) The representations and warranties set forth in this Section 2.03
hereof shall survive delivery of the respective Mortgage Loans and Mortgage
Files to the Trustee or the Custodian for the benefit of the
Certificateholders.
Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Servicer, the
Trustee as follows, as of the date hereof and as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as a limited
liability company in good standing under the laws of the State of
Delaware and has full power and authority necessary to own or hold its
properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full power and authority to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by, this Agreement and has duly authorized, by all necessary corporate
action on its part, the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes
a legal, valid and binding obligation of the Depositor, enforceable
against the Depositor in accordance with its terms, subject, as to
enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and (ii) general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the Depositor, the
consummation of the transactions contemplated by this Agreement, and
the fulfillment of or compliance with the terms hereof and thereof are
in the ordinary course of business of the Depositor and will not (A)
result in a material breach of any term or provision of the certificate
of formation or limited liability company agreement of the Depositor or
(B) conflict with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a violation of any statute, order or regulation
applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's knowledge,
threatened, against the Depositor that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or
the ability of the Depositor to perform its obligations under this
Agreement in accordance with the terms hereof or thereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with,
this Agreement or the consummation of the transactions contemplated
hereby or thereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as of the
Closing Date, following the transfer of the Mortgage Loans to it by the
Seller, the Depositor had good title to the Mortgage Loans and the related
Mortgage Notes were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee or the Custodian for the benefit of the Certificateholders. Upon
discovery by the Depositor, the Trustee of a breach of such representations
and warranties, the party discovering such breach shall give prompt written
notice to the others and to each Rating Agency.
Section 2.05......Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement, with respect
to any Mortgage Loan that is not in default or as to which default is not
imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion of
Counsel, addressed to the Trustee, to the effect that such repurchase or
substitution would not (i) result in the imposition of the tax on "prohibited
transactions" of REMIC I, REMIC II or REMIC III or contributions after the
Closing Date, as defined in sections 860F(a)(2) and 860G(d) of the Code,
respectively or (ii) cause any of REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding. Any
Mortgage Loan as to which repurchase or substitution was delayed pursuant to
this paragraph shall be repurchased or the substitution therefor shall occur
(subject to compliance with Sections 2.02 or 2.03) upon the earlier of (a)
the occurrence of a default or imminent default with respect to such Mortgage
Loan and (b) receipt by the Trustee of an Opinion of Counsel addressed to the
Trustee to the effect that such repurchase or substitution, as applicable,
will not result in the events described in clause (i) or clause (ii) of the
preceding sentence.
(b) Upon discovery by the Depositor, the Seller or the Servicer that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning
of section 860G(a)(3) of the Code, the party discovering such fact shall
promptly (and in any event within 5 Business Days of discovery) give written
notice thereof to the other parties and the Trustee. In connection
therewith, the Seller, at the Seller's option, shall either (i) substitute,
if the conditions in Section 2.03 with respect to substitutions are
satisfied, a Replacement Mortgage Loan for the affected Mortgage Loan, or
(ii) repurchase the affected Mortgage Loan within 90 days of such discovery
in the same manner as it would a Mortgage Loan for a breach of representation
or warranty in accordance with Section 2.03. The Trustee shall reconvey to
the Seller the Mortgage Loan to be released pursuant hereto (and the
Custodian shall deliver the related Mortgage File) in the same manner, and on
the same terms and conditions, as it would a Mortgage Loan repurchased for
breach of a representation or warranty in accordance with Section 2.03.
Section 2.06......Countersignature and Delivery of Certificates.
(a) The Trustee acknowledges the sale, transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
countersigned and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement in
accordance with its terms.
(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 Regular Interests and the Class
R-2 Certificates. 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 Regular Interests and the Class
R-2 Certificates.
(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 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 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 III Certificates.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01 The Servicer to act as Servicer.
The Servicer shall service and administer the Mortgage Loans in
accordance with the terms of this Agreement and the respective Mortgage
Loans, shall follow such practices and procedures as it shall deem necessary
or advisable and as shall be normal and usual in its general mortgage
servicing activities, and shall have full power and authority, acting alone
or through subservicers as provided in Section 3.03, to do or cause to be
done any and all things that it may deem necessary or desirable in connection
with such servicing and administration, including but not limited to, the
power and authority, subject to the terms hereof (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 related Mortgaged Property and assumptions of the Mortgage Notes and
related Mortgages (but only in the manner provided herein), (iii) to collect
any Insurance Proceeds and other Liquidation Proceeds or Subsequent
Recoveries, and (iv) subject to Section 3.09, to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Servicer shall take no action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or the rights and interests of the
Depositor or the Trustee under this Agreement.
Without limiting the generality of the foregoing, the Servicer, in its
own name or in the name of the Trust, the Depositor or the Trustee, is hereby
authorized and empowered by the Trust, the Depositor and the Trustee, when
the Servicer believes it appropriate in its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the Depositor, the Certificateholders
or any of them, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans, and with respect to the Mortgaged
Properties held for the benefit of the Certificateholders. The Servicer
shall prepare and deliver to the Depositor and/or the Trustee such documents
requiring execution and delivery by any or all of them as are necessary or
appropriate to enable the Servicer to service and administer the Mortgage
Loans. Upon receipt of such documents, the Depositor and/or the Trustee
shall execute such documents and deliver them to the Servicer.
The Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, in its own name or in the
name of a subservicer, when the Servicer or a subservicer, as the case may
be, believes it appropriate in its best judgment to register any Mortgage
Loan on the MERS® System, or cause the removal from the registration of any
Mortgage Loan on the MERS® System, to execute and deliver, on behalf of the
Trustee and the Certificateholders or any of them, any and all instruments of
assignment and other comparable instruments with respect to such assignment
or re-recording of a Mortgage in the name of MERS, solely as nominee for the
Trustee and its successors and assigns. Any expenses incurred in connection
with the actions described in the preceding sentence shall be borne by the
Servicer with no right of reimbursement; provided, that if, as a result of
MERS discontinuing or becoming unable to continue operations in connection
with the MERS System, it becomes necessary to remove any Mortgage Loan from
registration on the MERS System and to arrange for the assignment of the
related Mortgages to the Trustee, then any related expenses shall be
reimbursable to the Servicer.
In accordance with the standards of the first paragraph of this Section
3.01, the Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
5.03, and further as provided in Section 5.02. All costs incurred by the
Servicer, if any, in effecting the timely payments of taxes and assessments
on the Mortgaged Properties and related insurance premiums shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be
added to the Stated Principal Balance under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.
Section 3.02......Due-on-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.02, when any property
subject to a Mortgage has been or is about to be conveyed by the Mortgagor,
the Servicer shall to the extent that it has knowledge of such conveyance,
enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to
the extent permitted under applicable law and governmental regulations, but
only to the extent that such enforcement will not adversely affect or
jeopardize coverage under any Required Insurance Policy. Notwithstanding the
foregoing, the Servicer is not required to exercise such rights with respect
to a Mortgage Loan if the Person to whom the related Mortgaged Property has
been conveyed or is proposed to be conveyed satisfies the terms and
conditions contained in the Mortgage Note and Mortgage related thereto and
the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is
otherwise permitted hereunder, the Servicer is authorized, subject to Section
3.02(b), to take or enter into an assumption and modification agreement from
or with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and,
unless prohibited by applicable state law, the Mortgagor remains liable
thereon, provided that the Mortgage Loan shall continue to be covered (if so
covered before the Servicer enters such agreement) by the applicable Required
Insurance Policies. The Servicer, subject to Section 3.02(b), is also
authorized with the prior approval of the insurers under any Required
Insurance Policies to enter into a substitution of liability agreement with
such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Notwithstanding the foregoing, the Servicer shall
not be deemed to be in default under this Section 3.02(a) by reason of any
transfer or assumption that the Servicer reasonably believes it is restricted
by law from preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to the
extent set forth in Section 3.02(a), in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the related Mortgage Loan, the Servicer shall
prepare and deliver or cause to be prepared and delivered to the Trustee for
signature and shall direct, in writing, the Trustee to execute the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed
and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. In connection with any such assumption, no material
term of the Mortgage Note (including, but not limited to, the Mortgage Rate,
the amount of the Scheduled Payment and any other term affecting the amount
or timing of payment on the Mortgage Loan) may be changed. In addition, the
substitute Mortgagor and the Mortgaged Property must be acceptable to the
Servicer in accordance with its servicing standards as then in effect. The
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed and forward to the Custodian the original of
such substitution or assumption agreement, which in the case of the original
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. Any fee collected by
the Servicer for entering into an assumption or substitution of liability
agreement will be retained by the Servicer as additional servicing
compensation.
Section 3.03 Subservicers.
The Servicer shall perform all of its servicing responsibilities
hereunder or may cause a subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Servicer of a subservicer
shall not release the Servicer from any of its obligations hereunder and the
Servicer shall remain responsible hereunder for all acts and omissions of
each subservicer as fully as if such acts and omissions were those of the
Servicer. The Servicer shall pay all fees of each subservicer from its own
funds, and a subservicer's fee shall not exceed the Servicing Fee payable to
the Servicer hereunder.
At the cost and expense of the Servicer, without any right of
reimbursement from its Protected Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for
any servicing responsibilities to be performed by a successor subservicer;
provided, however, that nothing contained herein shall be deemed to prevent
or prohibit the Servicer, at the Servicer's option, from electing to service
the related Mortgage Loans itself. In the event that the Servicer's
responsibilities and duties under this Agreement are terminated pursuant to
Section 8.03, the Servicer shall at its own cost and expense terminate the
rights and responsibilities of each subservicer effective as of the date of
termination of the Servicer. The Servicer shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of
each subservicer from the Servicer's own funds without reimbursement from the
Trust Fund.
Notwithstanding the foregoing, the Servicer shall not be relieved of
its obligations hereunder and shall be obligated to the same extent and under
the same terms and conditions as if it alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to enter into an
agreement with a subservicer for indemnification of the Servicer by the
subservicer and nothing contained in this Agreement shall be deemed to limit
or modify such indemnification.
Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving a subservicer shall be deemed to be
between such subservicer and the Servicer alone, and the Trustee shall not
have any obligations, duties or liabilities with respect to such subservicer
including any obligation, duty or liability of the Trustee to pay such
subservicer's fees and expenses. Each subservicing agreement shall provide
that such agreement may be assumed or terminated without cause or penalty by
the Trustee or other Successor Servicer in the event the Servicer is
terminated in accordance with this Agreement. For purposes of remittances to
the Trustee pursuant to this Agreement, the Servicer shall be deemed to have
received a payment on a Mortgage Loan when a subservicer has received such
payment.
Section 3.04......Documents, Records and Funds in Possession of the Servicer
To Be Held for Trustee.
Notwithstanding any other provisions of this Agreement, the Servicer
shall transmit to the Trustee or the Custodian on behalf of the Trustee as
required by this Agreement all documents and instruments in respect of a
Mortgage Loan coming into the possession of the Servicer from time to time
and shall account fully to the Trustee for any funds received by the Servicer
or that otherwise are collected by the Servicer as Liquidation Proceeds,
Insurance Proceeds or Subsequent Recoveries in respect of any such Mortgage
Loan. All Mortgage Files and funds collected or held by, or under the
control of, the Servicer in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds or
Subsequent Recoveries, including but not limited to, any funds on deposit in
the Protected Account, shall be held by the Servicer for and on behalf of the
Trustee and shall be and remain the sole and exclusive property of the
Trustee, subject to the applicable provisions of this Agreement. The
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Protected Account or in any
Escrow Account, or any funds that otherwise are or may become due or payable
to the Trustee for the benefit of the Certificateholders, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance,
or assert by legal action or otherwise any claim or right of set off against
any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the Servicer shall be entitled to set
off against and deduct from any such funds any amounts that are properly due
and payable to the Servicer under this Agreement.
Section 3.05 Maintenance of Fire Insurance; Errors and Omissions and
Fidelity Coverage.
(a) The Servicer shall cause to be maintained, for each Mortgage Loan,
hazard insurance on buildings upon, or comprising part of, the Mortgaged
Property against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the related Mortgaged Property is
located with an insurer which is licensed to do business in the state where
the related Mortgaged Property is located. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause and shall have extended coverage in an
amount which is equal to the lesser of (i) the greater of (A) the principal
balance owing on such Mortgage Loan and (B) the percentage such that the
proceeds thereof shall be sufficient to prevent the application of a
co-insurance clause; or (ii) 100 percent of the insurable value of the
improvements. If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as being a
special flood hazard area that has federally-mandated flood insurance
requirements, the Servicer will cause to be maintained a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the maximum insurable value of
the improvements securing such Mortgage Loan or (iii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973,
as amended. The Servicer shall also cause to be maintained on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage
Loan, fire insurance with extended coverage in an amount which is at least
equal to the maximum insurable value of the improvements which are a part of
such property, liability insurance and, to the extent required and available
under the Flood Disaster Protection Act of 1973, as amended, flood insurance
in an amount as provided above. Pursuant to Section 4.01, any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance
with the Servicer's normal servicing procedures) shall be deposited in the
Protected Account, subject to withdrawal pursuant to Section 4.02. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be
added to the amount owing under the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs shall be recoverable by the
Servicer out of related late payments by the Mortgagor or out of Insurance
Proceeds and Liquidation Proceeds to the extent permitted by Section 4.02.
It is understood and agreed that no earthquake or other additional insurance
is to be required of any Mortgagor or maintained on property acquired in
respect of a Mortgage 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. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and its successors and/or
assigns and shall provide for at least thirty days prior written notice of
any cancellation, reduction in the amount or material change in coverage to
the Servicer. The Servicer shall not interfere with the Mortgagor's freedom
of choice in selecting either his insurance carrier or agent, provided,
however, that the Servicer shall not accept any such insurance policies from
insurance companies unless such companies currently reflect a General Policy
Rating in Best's Key Rating Guide currently acceptable to ▇▇▇▇▇▇ ▇▇▇ and are
licensed to do business in the state wherein the property subject to the
policy is located.
If the Servicer shall obtain and maintain a blanket fire insurance
policy with extended coverage insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.05, it being
understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with the
first sentence of this Section 3.05 and there shall have been a loss which
would have been covered by such policy, deposit in the Payment Account the
amount not otherwise payable under the blanket policy because of such
deductible clause. Any such deposit by the Servicer shall be made on the
Distribution Account Deposit Date next preceding the Distribution Date which
occurs in the month following the month in which payments under any such
policy would have been deposited in the Protected Account. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Servicer agrees to present, on behalf of itself, the Trustee and the
Certificateholders, claims under any such blanket policy.
The Servicer shall obtain and maintain at its own expense and keep in
full force and effect throughout the term of this Agreement a blanket
fidelity bond and an errors and omissions insurance policy covering the
Servicer's officers and employees and other persons acting on behalf of the
Servicer in connection with its activities under this Agreement. The amount
of coverage, taken together, shall be at least equal to the coverage that
would be required by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, with respect to the Servicer
if the Servicer were servicing and administering the Mortgage Loans for
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. In the event that any such bond or policy ceases
to be in effect, the Servicer shall obtain a comparable replacement bond or
policy from an issuer or insurer, as the case may be, meeting the
requirements set forth above.
Section 3.06 Presentment of Claims and Collection of Proceeds.
The Servicer shall prepare and present on behalf of the Trustee 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
Insurance Policies. Any proceeds disbursed to the Servicer in respect of
such Insurance Policies shall be promptly deposited in the Protected Account
upon receipt, 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 3.07 Maintenance of the Primary Mortgage Insurance Policies;
Collections Thereunder.
The Servicer shall not take, or permit any subservicer to take, any
action which would result in non-coverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the
Servicer or subservicer, would have been covered thereunder. To the extent
coverage is available, the Servicer shall keep or cause to be kept in full
force and effect a Primary Mortgage Insurance Policy in the case of each
Mortgage Loan having a Loan-to-Value Ratio at origination in excess of 80%,
until the principal balance of the related Mortgage Loan secured by a
Mortgaged Property is reduced to 80% or less of the appraised value based on
the most recent appraisal of the Mortgaged Property performed by a qualified
appraiser, such appraisal to be included in the related servicing file. The
Servicer shall not cancel or refuse to renew any such Primary Mortgage
Insurance Policy applicable to a non-subserviced Mortgage Loan, or consent to
any subservicer canceling or refusing to renew any such Primary Mortgage
Insurance Policy applicable to a Mortgage Loan subserviced by it, that is in
effect at the date of the initial issuance of the Certificates and is
required to be kept in force hereunder unless the replacement Primary
Mortgage Insurance Policy for such canceled or non-renewed policy is
maintained with an insurer whose claims-paying ability is acceptable to each
Rating Agency for mortgage pass-through certificates having a rating equal to
or better than the lower of the then-current rating or the rating assigned to
the Certificates as of the Closing Date by such Rating Agency. In connection
with any assumption or substitution agreement entered into or to be entered
into pursuant to Section 3.02, the Servicer shall promptly notify the insurer
under the related Primary Mortgage Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Mortgage
Insurance Policy. If such Primary Mortgage Insurance Policy is terminated as
a result of such assumption or substitution of liability, the Servicer shall
obtain a replacement Primary Mortgage Insurance Policy as provided above.
In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to present or to cause the related
subservicer to present, on behalf of the Servicer, a subservicer, if any, the
Trustee and Certificateholders, claims to the related insurer under any
Primary Mortgage Insurance Policies, in a timely manner in accordance with
such policies, and, in this regard, to take or cause to be taken 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, any Insurance Proceeds collected by or remitted to the Servicer
under any Primary Mortgage Insurance Policies shall be deposited in the
Protected Account, subject to withdrawal pursuant to Section 4.02 hereof.
Section 3.08 Reserved.
Section 3.09 Realization Upon Defaulted Mortgage Loans; Determination of
Excess Liquidation Proceeds and Realized Losses; Repurchases of Certain
Mortgage Loans.
(a) The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments.
In connection with such foreclosure or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable
and as shall be normal and usual in its general mortgage servicing activities
and the requirements of the insurer under any Required Insurance Policy;
provided that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement
to itself of such expenses and (ii) that such expenses will be recoverable to
it through Insurance Proceeds, Liquidation Proceeds (respecting which it
shall have priority for purposes of withdrawals from the Protected Account
pursuant to Section 4.02). If the Servicer reasonably believes that
Liquidation Proceeds with respect to any such Mortgage Loan would not be
increased as a result of such foreclosure or other action, such Mortgage Loan
will be charged-off and will become a Liquidated Loan. The Servicer will
give notice of any such charge-off to the Trustee. The Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided that such costs and expenses shall be Servicing
Advances and that it shall be entitled to reimbursement thereof from the
proceeds of liquidation of the related Mortgaged Property, as contemplated in
Section 4.02. If the Servicer has knowledge that a Mortgaged Property that
the Servicer is contemplating acquiring in foreclosure or by deed- in-lieu of
foreclosure is located within a one-mile radius of any site with
environmental or hazardous waste risks known to the Servicer, the Servicer
will, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with its established environmental review
procedures. Prior to any foreclosure or other liquidation of a Mortgage
Loan, the Servicer (at its expense) shall cause the Assignments of Mortgage
to be recorded in the appropriate public recording office.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee for the benefit of the Certificateholders
(or the Trustee's nominee on behalf of the Certificateholders). The
Trustee's name shall be placed on the title to such REO Property solely as
the Trustee hereunder and not in its individual capacity. The Servicer shall
ensure that the title to such REO Property references this Agreement and the
Trustee's capacity hereunder. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by
the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests
of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property.
The Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate
rental income received and all expenses incurred in connection with the
management and maintenance of such REO Property at such times as is necessary
to enable the Trustee to comply with the reporting requirements of the REMIC
Provisions. The net monthly rental income, if any, from such REO Property
shall be deposited in the Protected Account no later than the close of
business on each Determination Date. The Servicer shall perform the tax
reporting and withholding related to foreclosures, abandonments and
cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns,
as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
three years after its acquisition by the Trust Fund or, at the expense of the
Trust Fund, request more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year
grace period unless the Servicer shall have furnished to the Trustee an
Opinion of Counsel addressed to the Trustee (such opinion not to be an
expense of the Trustee) to the effect that the holding by the Trust Fund of
such Mortgaged Property subsequent to such three-year period will not result
in the imposition of taxes on "prohibited transactions" of REMIC I, REMIC II
or REMIC III as defined in section 860F of the Code or cause any of REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed
to continue to be rented) or otherwise used for the production of income by
or on behalf of the Trust Fund in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or (ii)
subject any of REMIC I, REMIC II or REMIC III to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the Servicer
has agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any Mortgaged
Properties acquired through foreclosure or other judicial proceeding, net of
reimbursement to the Servicer for expenses incurred (including any property
or other taxes) in connection with such management and net of unreimbursed
Servicing Fees, Advances, Servicing Advances and any management fee paid or
to be paid with respect to the management of such Mortgaged Property, shall
be applied to the payment of principal of, and interest on, the related
defaulted Mortgage Loans (with interest accruing as though such Mortgage
Loans were still current) and all such income shall be deemed, for all
purposes in the Agreement, to be payments on account of principal and
interest on the related Mortgage Notes and shall be deposited into the
Protected Account. To the extent the income received during a Prepayment
Period is in excess of the amount attributable to amortizing principal and
accrued interest at the related Mortgage Rate on the related Mortgage Loan,
such excess shall be considered to be a partial Principal Prepayment for all
purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Protected Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date, except that any
Excess Liquidation Proceeds shall be retained by the Servicer as additional
servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 4.02 or this Section 3.09; second, to
reimburse the Servicer for any unreimbursed Advances, pursuant to Section
4.02 or this Section 3.09; third, to accrued and unpaid interest (to the
extent no Advance has been made for such amount) on the Mortgage Loan or
related REO Property, at the Net Mortgage Rate to the first day of the month
in which such amounts are required to be distributed; and fourth, as a
recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the Servicer shall determine the respective
aggregate amounts of Excess Liquidation Proceeds and Realized Losses, if any,
for the related Prepayment Period.
(c) The Servicer has no intent to foreclose on any Mortgage Loan based on
the delinquency characteristics as of the Closing Date; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure
proceedings on any date hereafter if the facts and circumstances of such
Mortgage Loans including delinquency characteristics in the Servicer's
discretion so warrant such action.
Section 3.10......Servicing Compensation.
(a) The Servicer, as compensation for its activities hereunder, shall be
entitled to receive on each Distribution Date the amounts provided for in
Section 4.02, subject to clause (e) below. The amount of servicing
compensation provided for in such clauses shall be accounted for on a
mortgage loan-by-mortgage loan basis. In the event that Liquidation
Proceeds, Insurance Proceeds and REO Proceeds (net of amounts reimbursable
therefrom pursuant to Section 4.02) in respect of a Liquidation or REO
Disposition exceed the unpaid principal balance of such Mortgage Loan plus
unpaid interest accrued thereon at a per annum rate equal to the related Net
Mortgage Rate, the Servicer shall be entitled to retain therefrom and to pay
to itself and/or the related Subservicer, any Excess Liquidation Proceeds and
any Servicing Fee considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of Prepayment Charges,
assumption fees, late payment charges, investment income on amounts in the
Protected Account and the Distribution Account or otherwise shall be retained
by the Servicer to the extent provided herein, subject to clause (e) below.
In addition, the Servicer shall be entitled to receive, as additional
compensation, any amount received from a Scheduled Payment on a Simple
Interest Loan that is applied to an amount of interest in excess of
one-month's interest on that Mortgage Loan due during the related Due Period.
(c) The Servicer shall be required to pay, or cause to be paid, all
expenses incurred by it in connection with its servicing activities hereunder
(including payment of premiums for the Primary Mortgage Insurance Policies,
if any, to the extent such premiums are not required to be paid by the
related Mortgagors) and shall not be entitled to reimbursement therefor
except as specifically provided in Sections 3.09, 4.01 and 4.02.
(d) The Servicer's right to receive servicing compensation may not be
transferred in whole or in part except in connection with the transfer of all
of its responsibilities and obligations as Servicer under this Agreement.
(e) Notwithstanding any other provision herein, the amount of the Servicing
Fee that the Servicer shall be entitled to receive for its activities
hereunder for the period ending on each Distribution Date shall be reduced
(but not below zero) by an amount equal to Compensating Interest (if any) for
such Distribution Date. In making such reduction, the Servicer will not
withdraw from the Protected Account any such amount representing all or a
portion of the Servicing Fee to which it is entitled pursuant to Section
4.02.
Section 3.11 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. The Servicer shall, either itself or through an agent
selected by the Servicer, and in accordance with the ▇▇▇▇▇▇ ▇▇▇ guidelines,
manage, conserve, protect and operate each REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property
for its own account, and in the same manner that similar property in the same
locality as the REO Property is managed and in accordance with the terms of
this Agreement. Each disposition of REO Property shall be carried out by the
Servicer at such price and upon such terms and conditions as the Servicer
deems to be in the best interest of the Certificateholders. Pursuant to its
efforts to sell such REO Property, the Servicer shall protect and conserve
such REO Property in the manner and to the extent required herein, in
accordance with the REMIC Provisions.
(b) The Servicer shall deposit all funds collected and received in
connection with the operation of any REO Property into the Protected Account.
(c) The Servicer, upon the final disposition of any REO Property, shall be
entitled to reimbursement for any related unreimbursed Advances, unreimbursed
Servicing Advances or Servicing Fees from Liquidation Proceeds received in
connection with the final disposition of such REO Property; provided, that
any such unreimbursed Advances or Servicing Fees 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.
Section 3.12 Liquidation Reports.
Upon the foreclosure of any Mortgaged Property or the acquisition
thereof by the Trust Fund pursuant to a deed-in-lieu of foreclosure, the
Servicer shall submit a liquidation report to the Trustee containing such
information as shall be mutually acceptable to the Servicer and the Trustee
with respect to such Mortgaged Property.
Section 3.13 Annual Certificate as to Compliance.
The Servicer shall deliver to the Depositor and the Trustee on or
before 75 days after the end of each calendar year, commencing with the year
ending December 31, 2004, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of the Servicer during the
preceding calendar year and of the performance of the Servicer under this
Agreement has been made under such officer's supervision and (ii) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof except
for such defaults as such officer in his or her good faith judgment believes
to be immaterial.
Section 3.14 Annual Independent Certified Public Accountants' Servicing
Report.
On or before 75 days after the end of each calendar year, commencing
with the year ending December 31, 2004, the Servicer at its expense shall
cause a firm of independent public accountants (who may also render other
services to the Servicer, the Depositor or any affiliate thereof) which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Trustee, and the Depositor to the effect that such firm has
examined certain documents and records relating to the Servicer's servicing
of mortgage loans of the same type as the Mortgage Loans pursuant to
servicing agreements substantially similar to this Agreement, which
agreements may include this Agreement, and that, on the basis of such an
examination, conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that
the Servicer's servicing has been conducted in compliance with the agreements
examined pursuant to this Section, except for (i) such exceptions as such
firm shall believe to be immaterial, and (ii) such other exceptions as shall
be set forth in such statement. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request at the Servicer's
expense, provided such statement is delivered to the Trustee.
Section 3.15 Books and Records.
The Servicer shall be responsible for maintaining, and shall maintain,
a complete set of books and records for the Mortgage Loans which shall be
appropriately identified in the Servicer's computer system to clearly reflect
the ownership of the Mortgage Loans by the Trust. In particular, the
Servicer shall maintain in its possession, available for inspection by the
Trustee and shall deliver to the Trustee upon demand, evidence of compliance
with all federal, state and local laws, rules and regulations. To the extent
that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the
Servicer may be in the form of microfilm or microfiche or such other reliable
means of recreating original documents, including, but not limited to,
optical imagery techniques so long as the Servicer complies with the
requirements of Accepted Servicing Practices.
The Servicer shall maintain with respect to each Mortgage Loan and
shall make available for inspection by the Trustee the related servicing file
during the time such Mortgage Loan is subject to this Agreement and
thereafter in accordance with applicable law.
Section 3.16 Reports Filed with Securities and Exchange Commission.
(a) The Depositor shall prepare or cause to be prepared the initial current
report on Form 8-K. Within 15 days after each Distribution Date, the Trustee
shall, in accordance with industry standards, file with the Commission via
the Electronic Data Gathering and Retrieval System ("▇▇▇▇▇"), a Form 8-K with
a copy of the monthly statement to be furnished by the Trustee to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior
to January 30 in each year commencing in 2005, the Trustee shall, in
accordance with industry standards, 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 Servicer shall provide the
Trustee with a Servicer Certification, together with a copy of the annual
independent accountant's servicing report and annual statement of compliance
to be delivered by the Servicer pursuant to Sections 3.13 and 3.14. Prior to
(i) March 31, 2005 and (ii) unless and until a Form 15 Suspension Notice
shall have been filed, March 31 of each year thereafter, the Trustee shall,
subject to subsection (d) below, file a Form 10K, in substance conforming to
industry standards, with respect to the Trust Fund. Such Form 10K shall
include the Servicer Certification and other documentation provided by the
Servicer pursuant to the second preceding sentence and the Form 10K
certification signed by the Depositor. The Depositor hereby grants to the
Trustee a limited power of attorney to execute each Form 8-K 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 Trustee 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 Trustee, from time to time upon request, such further information,
reports and financial statements within its control related to this
Agreement, the Mortgage Loans as the Trustee reasonably deems appropriate to
prepare and file all necessary reports with the Commission. The Trustee
shall have no responsibility to file any items other than those specified in
this Section 3.16; provided, however, the Trustee 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"). Copies of all reports filed by the
Trustee under the Exchange Act shall be sent to: the Depositor c/o Bear,
▇▇▇▇▇▇▇ & Co. Inc., Attn: Managing Director-Analysis and Control, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. Fees and expenses
incurred by the Trustee in connection with this Section 3.16 shall not be
reimbursable from the Trust Fund.
(b) In connection with the filing of any 10-K hereunder, the Trustee shall
sign a certification (in the form attached hereto as Exhibit L) for the
Depositor regarding certain aspects of the Form 10-K certification signed by
the Depositor, provided, however, that the Trustee shall not be required to
undertake an analysis of any accountant's report attached as an exhibit to
the Form 10-K.
(c) (i) The Trustee shall indemnify and hold harmless the Depositor and
its officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach of the Trustee's obligations under this Section 3.16 or the
Trustee's negligence, bad faith or willful misconduct in connection therewith.
(ii) The Depositor shall indemnify and hold harmless the Trustee and its
officers, directors and affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising
out of or based upon a breach of the obligations of the Depositor under
this Section 3.16 or the Depositor's negligence, bad faith or willful
misconduct in connection therewith.
(iii) The Servicer shall indemnify and hold harmless the Trustee and the
Depositor and their respective officers, directors and affiliates from
and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and
other costs and expenses arising out of or based upon a breach of the
obligations of the Servicer under this Section 3.16 or the Servicer's
negligence, bad faith or willful misconduct in connection therewith.
(iv) If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Depositor or the Trustee, as
applicable, then the defaulting party, in connection with a breach of
its respective obligations under this Section 3.16 or its respective
negligence, bad faith or willful misconduct in connection therewith,
agrees that it shall contribute to the amount paid or payable by the
other parties as a result of the losses, claims, damages or liabilities
of the other party in such proportion as is appropriate to reflect the
relative fault and the relative benefit of the Depositor on the one
hand and the Trustee on the other.
(d) Nothing shall be construed from the foregoing subsections (a), (b) and
(c) to require the Trustee or any officer, director or Affiliate thereof to
sign any Form 10-K or any certification contained therein. Furthermore, the
inability of the Trustee to file a Form 10-K as a result of the lack of
required information as set forth in Section 3.16(a) or required signatures
on such Form 10-K or any certification contained therein shall not be
regarded as a breach by the Trustee of any obligation under this Agreement.
(e) Notwithstanding the provisions of Section 11.01, this Section 3.16 may
be amended without the consent of the Certificateholders.
Section 3.17 Reserved.
Section 3.18 Optional Purchase of and Special Servicing of Certain
Mortgage Loans; Charge-offs.
(a) With respect to any Mortgage Loans 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 Majority ▇▇ ▇▇▇▇▇▇, shall have the right to purchase any
Mortgage Loan from the Trust which becomes 90 days or more delinquent or
becomes an REO Property at a price equal to the Purchase 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.
If at any time the Majority ▇▇ ▇▇▇▇▇▇ remits to the Servicer a payment
for deposit in the Protected Account covering the amount of the Purchase
Price for such a Mortgage Loan, and the Majority ▇▇ ▇▇▇▇▇▇ provides to the
Trustee a certification signed by a Servicing Officer stating that the amount
of such payment has been deposited in the Protected Account, then the Trustee
shall execute the assignment of such Mortgage Loan prepared and delivered to
the Trustee, at the request of the Majority ▇▇ ▇▇▇▇▇▇, without recourse,
representation or warranty, to the Majority ▇▇ ▇▇▇▇▇▇ which shall succeed to
all 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 Majority ▇▇ ▇▇▇▇▇▇ 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.
(b) Upon the occurrence of a first lien Mortgage Loan becoming 120 or
more days Delinquent (each such Mortgage Loan, a "Specially Serviced Mortgage
Loan"), EMC or its designee may cause the Servicer to transfer the servicing
with respect to each such Mortgage Loan to a Special Servicer to be serviced
in accordance with the terms of this Agreement and a Special Servicing
Agreement. Upon the transfer of a Specially Serviced Mortgage Loan to a
Special Servicer, the Servicer shall no longer be responsible for the
servicing of such Specially Serviced Mortgage Loan and shall receive a
one-time fee, from the Majority ▇▇ ▇▇▇▇▇▇, of $50.00 for each Specially
Serviced Mortgage Loan transferred hereunder. With respect to each Specially
Serviced Mortgage Loan, the Servicer shall be reimbursed for any due but
unpaid Servicing Advances and/or Advances (other than any Simple Interest
Shortfall Advance) previously made by the Servicer or any unpaid Servicing
Fees due to the Servicer, in accordance with the terms of this Agreement, in
the same manner as if the Servicer continued to service such Specially
Serviced Mortgage Loan. No other fee, compensation or price shall be paid
thereafter to the predecessor Servicer for any Specially Serviced Mortgage
Loan.
Any such Special Servicing Agreement shall be in a form reasonably
acceptable to the Trustee; provided, however, that the Trustee shall have no
responsibility for determining whether such Special Servicing Agreement
complies with the provisions of this Agreement, and in executing any such
Special Servicing Agreement may rely on EMC's direction to the Trustee to
enter into such Special Servicing Agreement. The servicing of a Mortgage
Loan by a Special Servicer and the entering into a Special Servicing
Agreement is subject to the prior written confirmation from each Rating
Agency then rating any Class of Certificates, that the entering into of such
Special Servicing Agreement will not cause such Rating Agency to lower or
withdraw its rating on any Class of Certificates below the lower of (i) the
initial rating of such Class or (ii) the then-current rating on such Class.
(c) Any non-first lien Mortgage Loan which becomes 120 or more days
Delinquent, shall be charged-off by the Servicer and the Servicer shall be
entitled to any due and unpaid Servicing Fee on such Mortgage Loan, the
Recovery Fee and any unreimbursed Servicing Advances made with respect to
such Mortgage Loan.
Section 3.19 Obligations of the Servicer in Respect of Mortgage Rates
and Scheduled Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments
to Mortgage Rates, Scheduled Payments or Stated Principal Balances that were
made by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor
and any successor Servicer in respect of any such liability. Such
indemnities shall survive the termination or discharge of this Agreement.
Notwithstanding the foregoing, this Section 3.19 shall not limit the ability
of the Servicer to seek recovery of any such amounts from the related
Mortgagor under the terms of the related Mortgage Note and Mortgage, to the
extent permitted by applicable law.
Section 3.20 Reserve Fund.
(a) On or before the Closing Date, the Trustee shall establish a Reserve
Fund on behalf of the Holders of the Certificates. The Reserve Fund must be
an Eligible Account. The Reserve Fund shall be entitled "Reserve Fund, ▇▇▇▇▇
Fargo Bank, National Association as Trustee for the benefit of holders of
Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC, Asset-Backed Certificates, Series
2004-BO1". The Trustee shall demand payment of all money payable by the
Counterparty under the Yield Maintenance Agreements. The Trustee shall
deposit in the Reserve Fund all payments received by it from the Counterparty
pursuant to the Yield Maintenance Agreements. On each Distribution Date the
Trustee shall remit amounts received from the Counterparty, if any, to the
Holders of the Class A, Class M and Class CE Certificates in the manner
provided in clause (b) below. In addition, on each Distribution Date as to
which there is a Basis Risk Shortfall Carry Forward Amount payable to any of
the Class A and/or Class M Certificates, the Trustee shall deposit the
amounts distributable pursuant to clauses (C) and (D) of Section 5.04(a)(4)
into the Reserve Fund and the Trustee has been directed by the Class CE
Certificateholder to distribute such amounts to the Holders of the Class A
and/or Class M Certificates in the amounts and priorities set forth in
clauses (C) and (D) of Section 5.04(a)(4). Any amount paid to the Holders of
Class A and/or Class M Certificates pursuant to the preceding sentence in
respect of Basis Risk Shortfall Carry Forward Amount shall be treated as
distributed to the Class CE Certificateholder in respect of the Class CE
Certificates and paid by the Class CE Certificateholder to the Holders of the
Class A and/or Class M Certificates. Any payments to the Holders of the
Class A and/or Class M Certificates in respect of Basis Risk Shortfall Carry
Forward Amount, whether pursuant to the second preceding sentence or pursuant
to subsection (b) below, shall not be payments with respect to a "regular
interest" in a REMIC within the meaning of Code Section 860(G)(a)(1).
(b) Amounts received by the Trustee from the Counterparty under the Yield
Maintenance Agreements shall be distributed on each Distribution Date in the
following manner and order of priority:
(i) first, (A) from amounts received under the Yield Maintenance Agreement
related to the Class I-A Certificates, to the Class I-A
Certificates, pro rata based on the amount of any Basis Risk
Shortfall Carry Forward Amount for such Classes of Certificates
for such Distribution Date, (B) from amounts received under the
Yield Maintenance Agreement related to the Class II-A-1
Certificates, to the Class II-A-1 Certificates, the amount of any
Basis Risk Shortfall Carry Forward Amount for such Class for such
Distribution Date, (C) from amounts received under the Yield
Maintenance Agreement related to the Class II-A-2 Certificates,
to the Class II-A-2 Certificates, the amount of any Basis Risk
Shortfall Carry Forward Amount for such Class for such
Distribution Date and (D) from amounts received under the Yield
Maintenance Agreement related to the Class M Certificates,
sequentially to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9A and Class
M-9B Certificates, in that order, the amount of any Basis Risk
Shortfall Carry Forward Amount for such Classes of Certificates
for such Distribution Date;
(ii) second, from any remaining amounts received under the non-related Yield
Maintenance Agreements, to the Class I-A, Class II-A-1 and Class
II-A-2 Certificates, as applicable, pro rata, based on the Basis
Risk Shortfall Carry Forward Amounts for the Class I-A, Class
II-A-1 and Class II-A-2 Certificates, as applicable, for such
Distribution Date, the aggregate amount of any Basis Risk
Shortfall Carry Forward Amount for such Classes to the extent not
covered in clause (i) above;
(iii) third, from any remaining amounts received under the non-related Yield
Maintenance Agreement(s), to the Class M Certificates, the
aggregate amount of any Basis Risk Shortfall Carry Forward Amount
for such Classes to the extent not covered in clause (i) above,
which amounts so allocated shall be paid in the order of priority
in clause (i)(D) above; and
(iv) fourth, any remaining amounts received under the Yield Maintenance
Agreements, to the Class CE Certificates.
(c) The Reserve Fund is an "outside reserve fund" within the meaning of
Treasury Regulation §1.860G-2(h) and shall be an asset of the Trust Fund but
not an asset of any REMIC. The Trustee on behalf of the Trust shall be the
nominal owner of the Reserve Fund. The Class CE Certificateholder shall be
the beneficial owner of the Reserve Fund, subject to the power of the Trustee
to transfer amounts under Section 5.04. Amounts in the Reserve Fund shall,
at the written direction of the Class CE Certificateholder, be invested in
Permitted Investments that mature no later than the Business Day prior to the
next succeeding Distribution Date (or the Distribution Date, if such
investment is an obligation of or is managed or advised by the Trustee). In
the absence of written direction, amounts in the Reserve Fund shall not be
invested. All net income and gain from such investments shall be distributed
to the Class CE Certificateholder, not as a distribution in respect of any
interest in any REMIC, on such Distribution Date. All amounts earned on
amounts on deposit in the Reserve Fund shall be taxable to the Class CE
Certificateholder. Any losses on such investments shall be deposited in the
Reserve Fund by the Class CE Certificateholder out of its own funds
immediately as realized.
Section 3.21 Advancing Facility.
The Servicer is hereby authorized to enter into any facility (an
"Advance Facility") with any Person (any such Person, an "Advance Facility
Counterparty"), without the consent of any party to this Agreement, which
provides that the Servicer may pledge or sell its rights (the "Advance
Reimbursement Rights") to receive reimbursement of any advances made by the
Servicer in respect of Advances pursuant to this Agreement, Servicing
Advances pursuant to this Agreement, or amounts in respect of taxes and
premiums advanced pursuant to Section 3.08(c) ("Tax/Premium Amounts")
pursuant to credit facilities, repurchase facilities, or similar facilities
providing liquidity for the funding of Advances, Servicing Advances or
Tax/Premium Amounts, as applicable. Notwithstanding the existence of any
Advance Facility, the Servicer shall remain obligated pursuant to this
Agreement to make Advances, Servicing Advances and Tax/Premium Amounts
pursuant to and as required by this Agreement, and shall not be relieved of
such obligations by virtue of such Advance Facility.
If the Servicer enters into an Advance Facility, the Servicer shall
promptly give written notice to the Trustee, which shall include the identity
of the Advance Facility Counterparty, and for so long as an Advance Facility
Counterparty remains entitled to receive reimbursement for any Advances,
including Nonrecoverable Advances related thereto ("Monthly Advance
Reimbursement Amounts"), Servicing Advances, including Nonrecoverable
Advances related thereto ("Servicing Advance Reimbursement Amounts") and/or
Tax/Premium Amounts ("Tax/Premium Reimbursement Amounts" and, together with
Monthly Advance Reimbursement Amounts and Servicing Advance Reimbursement
Amounts, "Advance Reimbursement Amounts") (in each case to the extent that
such type of Advance Reimbursement Amount is included in the Advance
Facility), as applicable, then the Servicer shall identify such Advance
Reimbursement Amounts as received, consistently with the reimbursement rights
set forth in Section 3.10, and shall remit such Advance Reimbursement Amounts
in accordance with the documentation establishing the Advance Facility to
such Advance Facility Counterparty or to a trustee, agent or custodian (an
"Advance Facility Trustee") designated by such Advance Facility
Counterparty.
Notwithstanding the foregoing, if so required pursuant to the terms of
the Advance Facility, the Servicer may withdraw from the Protected Account
(subject to Section 4.02) and shall pay to the Advance Facility Counterparty
or the Advance Facility Trustee the Advance Reimbursement Amounts identified
pursuant to the preceding sentence. The Trustee shall have no obligation
with respect to the calculation or payment of any Advance Reimbursement
Amount nor, as a result of the existence of any Advance Facility shall the
Trustee have any obligation to track, monitor or administer such Advance
Facility.
Advance Reimbursement Amounts shall consist solely of amounts in
respect of Advances, Servicing Advances and/or Tax/Premium Amounts made with
respect to the Mortgage Loans for which the Servicer would be permitted to
reimburse itself in accordance with this Agreement. Advance Reimbursement
Amounts that the Servicer is entitled to be paid shall not be included in
Available Distribution Amounts or distributed to Certificateholders. An
Advance Facility Counterparty whose obligations are limited to the making of
Advances, Servicing Advances and/or Tax/Premium Amounts will not be deemed to
be a Subservicer under this Agreement or be required to meet the criteria for
qualification as a Subservicer under this Agreement.
Advance Reimbursement Amounts allocated to reimburse Advances,
Servicing Advances or Tax/Premium Amounts made with respect to any particular
Mortgage Loan shall be allocated to the reimbursement of the unreimbursed
Advances, Servicing Advances or Tax/Premium Amounts, as the case may be, made
with respect to that Mortgage Loan on a "first-in, first out" ("FIFO") basis,
such that the Advance Reimbursement Amounts shall be applied to reimburse the
Advance, Servicing Advance or Tax/Premium Amount, as the case may be, for
that Mortgage Loan that was disbursed earliest in time first, and to
reimburse the Advance, Servicing Advance or Tax/Premium Amount, as the case
may be, for that Mortgage Loan that was disbursed latest in time last.
Liquidation Proceeds with respect to a Mortgage Loan shall be applied in the
following order: first, to reimburse Servicing Advances outstanding with
respect to that Mortgage Loan, second, to reimburse Advances outstanding with
respect to that Mortgage Loan and third, to reimburse Tax/Premium Amounts
outstanding with respect to that Mortgage Loan. The Servicer shall provide
to the related Advancing Facility Counterparty or Advance Facility Trustee
loan-level information with respect to each Advance, Servicing Advance or
Tax/Premium Amount remitted to such Advance Facility Counterparty or Advance
Facility Trustee, to enable the Advance Facility Counterparty or Advance
Facility Trustee to make the FIFO allocation of each such Advance, Servicing
Advance or Tax/Premium Amount with respect to each Mortgage Loan.
The Servicer shall indemnify the Trustee and the Trust Fund for any
cost, liabilty or expense incurred by either of them relating to any Advance
Facility, including, without limitation, any claim, pending or threatened, by
any Advance Facility Counterparty or Advance Facility Trustee.
ARTICLE IV
ACCOUNTS
Section 4.01 Collection of Mortgage Loan Payments; Protected Account.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans to the extent
such procedures shall be consistent with this Agreement and the terms and
provisions of any related Required Insurance Policy, and follow such
collection procedures as it would employ in its good faith business judgment
and which are normal and usual in its general mortgage servicing activities.
Consistent with the foregoing, the Servicer may in its discretion (i) waive
any late payment charge and (ii) extend the due dates for payments due on a
Mortgage Note for a period not greater than 180 days. In the event of any
such arrangement, the Servicer shall make Advances on the related Mortgage
Loan during the scheduled period in accordance with the amortization schedule
of such Mortgage Loan without modification thereof by reason of such
arrangements, and shall be entitled to reimbursement therefor in accordance
with Section 5.01. The Servicer shall not be required to institute or join
in litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law. In addition,
if (x) a Mortgage Loan is in default or default is imminent or (y) the
Servicer delivers to the Trustee a certification addressed to the Trustee,
based on the advice of counsel or certified public accountants, in either
case, that have a national reputation with respect to taxation of REMICs,
that a modification of such Mortgage Loan will not result in the imposition
of taxes on or disqualify any of REMIC I, REMIC II or REMIC III, the Servicer
may, (A) amend the related Mortgage Note to reduce the Mortgage Rate
applicable thereto, provided that such reduced Mortgage Rate shall in no
event be lower than 5.00% with respect to any Mortgage Loan and (B) amend any
Mortgage Note to extend to the maturity thereof.
Notwithstanding the foregoing, the Servicer shall not permit any
modification with respect to any Mortgage Loan that would both constitute a
sale or exchange of such Mortgage Loan within the meaning of Section 1001 of
the Code and any proposed, temporary or final regulations promulgated
thereunder (other than in connection with a proposed conveyance or assumption
of such Mortgage Loan that is treated as a Principal Prepayment in Full
pursuant to Section 3.13(d) hereof) and cause either REMIC formed under this
Agreement to fail to qualify as a REMIC under the Code. In addition,
notwithstanding any state or federal law to the contrary, the Servicer shall
not impose a prepayment premium in any instance when the mortgage debt is
accelerated as the result of the borrower's default in making the loan
payments. Upon request, the Trustee shall execute and deliver to the Servicer
any powers of attorney and other documents, furnished by the Servicer to the
Trustee, necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans. The Trustee shall not be liable for any
action taken by the Servicer or any subservicer pursuant to such powers of
attorney. In connection with servicing and administering the Mortgage Loans,
the Servicer and any Affiliate of the Servicer (i) may perform services such
as appraisals and brokerage services that are not customarily provided by
servicers of mortgage loans, and shall be entitled to reasonable compensation
therefor in accordance with Section 3.10 and (ii) may, at its own discretion
and on behalf of the Trust Fund, obtain credit information in the form of a
"credit score" from a credit repository.
(b) The Servicer shall establish and maintain a Protected Account (which
shall at all times be an Eligible Account) with a depository institution in
the name of the Servicer for the benefit of the Trustee on behalf of the
Certificateholders and designated "GMAC Mortgage Corporation, as Servicer,
for the benefit of ▇▇▇▇▇ Fargo Bank, National Association, in trust for
registered holders of Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC,
Asset-Backed Certificates Series 2004-BO1". The Servicer shall deposit or
cause to be deposited into the Protected Account within two Business Days of
receipt, except as otherwise specifically provided herein, the following
payments and collections remitted by subservicers or received by it in
respect of the Mortgage Loans subsequent to the applicable Cut-off Date
(other than in respect of principal and interest due on the Mortgage Loans on
or before the applicable Cut-off Date) and the following amounts required to
be deposited hereunder:
(i) all payments on account of principal, including Principal Prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans net of the
Servicing Fee permitted under Section 3.10 and LPMI Fees, if any;
(iii) all Liquidation Proceeds, Subsequent Recoveries and Insurance Proceeds,
other than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Servicer pursuant to Section
4.01(c) in connection with any losses on Permitted Investments;
(v) any amounts required to be deposited by the Servicer pursuant to
Section 3.05; and
(vi) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Protected Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of
Prepayment Charges, late payment charges or assumption fees, if collected,
need not be remitted by the Servicer. In the event that the Servicer shall
remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 4.02, it may at any time withdraw or direct
the institution maintaining the Protected Account, to withdraw such amount
from the Protected Account, any provision herein to the contrary
notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the institution maintaining the
Protected Account, that describes the amounts deposited in error in the
Protected Account. The Servicer shall maintain adequate records with respect
to all withdrawals made pursuant to this Section. All funds deposited in the
Protected Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 4.02.
(c) The Servicer shall invest the funds in the Protected Account in
Permitted Investments which shall mature not later than the Business Day
prior to the Remittance Date and shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in the name of
the Trustee, for the benefit of the Certificateholders. All income and gain
net of any losses realized from any such investment shall be for the benefit
of the Servicer as servicing compensation and shall be remitted to it monthly
as provided herein. The amount of any losses incurred in the Protected
Account in respect of any such investments shall be deposited by the Servicer
into the Protected Account, out of the Servicer's own funds.
(d) The Servicer shall give at least 30 days advance notice to the Trustee,
the Seller, each Rating Agency and the Depositor of any proposed change of
location of the Protected Account prior to any change thereof.
Section 4.02 Permitted Withdrawals From the Protected Account.
(a) The Servicer may from time to time make withdrawals from the Protected
Account for the following purposes:
(i) to pay itself (to the extent not previously paid to or withheld by the
Servicer), as servicing compensation in accordance with Section 3.10,
that portion of any payment of interest that equals the Servicing Fee
for the period with respect to which such interest payment was made,
and, as additional servicing compensation, those other amounts set
forth in Section 3.10;
(ii) to reimburse the Servicer for Advances (other than any Simple Interest
Shortfall Advance) made by it with respect to the Mortgage Loans,
provided, however, that the Servicer's right of reimbursement pursuant
to this subclause (ii) shall be limited to amounts received on
particular Mortgage Loan(s) (including, for this purpose, Liquidation
Proceeds, Insurance Proceeds and Subsequent Recoveries) that represent
late recoveries of payments of interest on such particular Mortgage
Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the Servicer for any previously made portion of a
Servicing Advance or an Advance (other than any Simple Interest
Shortfall Advance) made by the Servicer that, in the good faith
judgment of the Servicer, is a Nonrecoverable Advance, to the extent
not reimbursed pursuant to clause (ii) or clause (v);
(iv) to reimburse the Servicer from Insurance Proceeds for Insured Expenses
covered by the related Insurance Policy;
(v) to pay the Servicer any unpaid Servicing Fees and to reimburse it for
any unreimbursed Servicing Advances, provided, however, that the
Servicer's right to reimbursement for Servicing Advances pursuant to
this subclause (v) with respect to any Mortgage Loan shall be limited
to amounts received on particular Mortgage Loan(s) (including, for this
purpose, Liquidation Proceeds, Insurance Proceeds, Subsequent
Recoveries and purchase and repurchase proceeds) that represent late
recoveries of the payments for which such Servicing Advances were made;
(vi) to pay to the Seller, the Depositor or itself, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof
that has been purchased pursuant to Section 2.02, 2.03 or 3.18(a) of
this Agreement, all amounts received thereon and not taken into account
in determining the related Stated Principal Balance of such repurchased
Mortgage Loan;
(vii) to pay to itself any Recovery Fee or any other amounts due pursuant to
Section 3.18(b) of this Agreement;
(viii) to pay any expenses recoverable by the Servicer pursuant to
Section 7.04 of this Agreement;
(ix) to withdraw pursuant to Section 4.01 any amount deposited in the
Protected Account and not required to be deposited therein;
(x) beginning in December 2004, to pay to the Seller any Seller Arrearages
that are payable hereunder in accordance with the definition of Seller
Arrearages; and
(xi) to clear and terminate the Protected Account upon termination of this
Agreement pursuant to Section 10.01 hereof.
In addition, no later than 1:00 p.m. Eastern time on the Distribution
Account Deposit Date, the Servicer shall withdraw from the Protected Account
and remit to the Trustee the amount of Interest Funds for each Loan Group
(without taking into account any reduction in the amount of Interest Funds
attributable to the application of clause (c) of the definition thereof
contained in Article I of this Agreement) and Principal Funds for each Loan
Group collected, to the extent on deposit, and the Trustee shall deposit such
amount in the Distribution Account. In addition, on or before the
Distribution Account Deposit Date, the Servicer shall remit to the Trustee
for deposit in the Distribution Account any Advances or any payments of
Compensating Interest required to be made by the Servicer with respect to the
Mortgage Loans. Notwithstanding the definition of Prepayment Period, the
Servicer (in its sole discretion) may remit to the Trustee for deposit in the
Distribution Account in any month, any Principal Prepayments in full received
by the Servicer on or before the 20th day of that month for distribution to
the Certificateholders on the Distribution Date in that month.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal
from the Protected Account pursuant to subclauses (i), (ii), (iv), (v), (vi),
(vii), (viii) and (x) above. Prior to making any withdrawal from the
Protected Account pursuant to subclause (iii), the Servicer shall deliver to
the Trustee an Officer's Certificate of a Servicing Officer indicating the
amount of any previous Advance or Servicing Advance determined by the
Servicer to be a Nonrecoverable Advance and identifying the related Mortgage
Loan(s), and their respective portions of such Nonrecoverable Advance.
In addition, the Seller will deposit in the Distribution Account on the
Closing Date, an amount equal to $2,758,420.14, which amount will be
distributed by the Trustee to the Certificateholders on the Distribution Date
occurring in November 2004, as Principal Funds and Interest Funds in the
amounts of $2,746,521.35 and $11,898.79, respectively.
Section 4.03 Collection of Taxes; Assessments and Similar Items; Escrow
Accounts.
With respect to each Mortgage Loan, to the extent required by the
related Mortgage Note, the Servicer shall establish and maintain one or more
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Servicer) for the payment
of taxes, assessments, hazard insurance premiums or comparable items for the
account of the Mortgagors. Nothing herein shall require the Servicer to
compel a Mortgagor to establish an Escrow Account in violation of applicable
law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to
reimburse the Servicer out of related collections for any payments made with
respect to each Mortgage Loan pursuant to Section 3.01 (with respect to taxes
and assessments and insurance premiums) and Section 3.05 (with respect to
hazard insurance), to refund to any Mortgagors for any Mortgage Loans any
sums as may be determined to be overages, to pay interest, if required by law
or the terms of the related Mortgage or Mortgage Note, to such Mortgagors on
balances in the Escrow Account or to clear and terminate the Escrow Account
at the termination of this Agreement in accordance with Section 10.01
thereof. The Escrow Account shall not be a part of the Trust Fund.
Section 4.04 Distribution Account.
(a) The Trustee shall establish and maintain in the name of the Trustee,
for the benefit of the Certificateholders, 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 in accordance with the terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute an Eligible Account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee 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 (whether made directly, or indirectly
through a liquidator or receiver of the Trustee). The amount at any time
credited to the Distribution Account may be invested in the name of the
Trustee, in such Permitted Investments, or deposited in demand deposits with
such depository institutions, in accordance with the written instructions of
the 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 Date if the obligor for such Permitted Investment is,
or such investment is managed or advanced by, the Trustee or, if such obligor
is any other Person, the Business Day preceding such Distribution Date. In
the absence of written direction, amounts in the Distribution Account shall
not be invested. 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 Servicer. The Trustee 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 Servicer shall
deposit the amount of the loss in the Distribution Account not later than the
applicable Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders. With respect to the Distribution
Account and the funds deposited therein, the Trustee shall take such action
as may be necessary to ensure that the Certificateholders shall be entitled
to the priorities afforded to such a trust account (in addition to a claim
against the estate of the Trustee) as provided by 12 U.S.C. § 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 make or cause to be made such withdrawals or transfers
from the Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee;
(ii) to reimburse the Trustee for expenses, costs and liabilities incurred
by or reimbursable to it pursuant to this Agreement;
(iii) to pay investment income to the Servicer;
(iv) to remove amounts deposited in error; and
(v) to clear and terminate the Distribution Account pursuant to Section
10.01.
(b) On each Distribution Date, the Trustee shall distribute Interest Funds
and Principal Funds to the extent of funds in the Distribution Account for
each Loan Group to the holders of the Certificates in accordance with Section
5.04.
ARTICLE V
DISTRIBUTIONS AND ADVANCES
Section 5.01 Advances.
On or before 1:00 P.M. New York City time on each Distribution Account
Deposit Date, the Servicer shall either (i) deposit in the Distribution
Account from its own funds, or funds received therefor from any subservicers,
an amount equal to the Advances to be made by the Servicer in respect of the
related Distribution Date, which shall be in an aggregate amount equal to the
excess of (a) the amount of interest accrued during the related Due Period
with respect to each Outstanding Mortgage Loan on the Stated Principal
Balance of each Mortgage Loan immediately prior to such Distribution Date
(adjusted to the Mortgage Rate less the Servicing Fee Rate) over (b) the
amount of interest on each Outstanding Mortgage Loan received by the Servicer
and included in Interest Funds for the related Distribution Date (adjusted
to the Mortgage Rate less the Servicing Fee Rate), less the amount of any
related Servicing Modifications, Debt Service Reductions or reductions in the
amount of interest collectable from the Mortgagor pursuant to the Relief Act;
provided that no Advance shall be made if it would be a Nonrecoverable
Advance, or (ii) withdraw from amounts on deposit in the Protected Account
and deposit in the Distribution Account all or a portion of the Amount Held
for Future Distribution in discharge of any such Advance, or (iii) make
advances in the form of any combination of (i) and (ii) aggregating the
amount of such Advance. Advances shall be calculated on a 30/360 basis for
any Actuarial Loan and on a actual/365 day basis for any Simple Interest Loan.
Any portion of the Amount Held for Future Distribution so used shall be
replaced by the Servicer by deposit in the Distribution Account on or before
11:00 A.M. New York time on any future Distribution Account Deposit Date to
the extent that funds attributable to the Mortgage Loans that are available
in the Protected Account for deposit in the Distribution Account on such
Distribution Account Deposit Date shall be less than payments to
Certificateholders required to be made on the following Distribution Date.
The Servicer shall be entitled to use any Advance made by a subservicer as
described in Section 5.01 that has been deposited in the Protected Account on
or before such Distribution Account Deposit Date as part of the Advance made
by the Servicer pursuant to this Section 5.01. The amount of any
reimbursement pursuant to Section 4.02(a) in respect of outstanding Advances
on any Distribution Date shall be allocated to specific Scheduled Payments
due but delinquent for previous Due Periods, which allocation shall be made,
to the extent practicable, to Scheduled Payments which have been delinquent
for the longest period of time. Such allocations shall be conclusive for
purposes of reimbursement to the Servicer from recoveries on related Mortgage
Loans pursuant to Section 4.02.
The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Company and the Trustee.
If the Servicer determines as of the Business Day preceding any
Distribution Account Deposit Date that it will be unable to deposit in the
Distribution Account an amount equal to the Advance required to be made for
the immediately succeeding Distribution Date, it shall give notice to the
Trustee of its inability to advance (such notice may be given by telecopy),
not later than 3:00 P.M., New York time, on such Business Day, specifying the
portion of such amount that it will be unable to deposit. Not later than
3:00 P.M., New York time, on the Distribution Account Deposit Date the
Trustee shall, unless by 12:00 Noon, New York time, on such day the Trustee
shall have been notified in writing (by telecopy) that the Servicer shall
have directly or indirectly deposited in the Distribution Account such
portion of the amount of the Advance as to which the Servicer shall have
given notice pursuant to the preceding sentence, the Trustee shall, pursuant
to Section 8.01, (a) terminate all of the rights and obligations of the
Servicer under this Agreement in accordance with Section 8.01 and (b) assume
the rights and obligations of the Servicer hereunder, including the
obligation to deposit in the Distribution Account an amount equal to the
Advance for the immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this
Section 5.01 into the Distribution Account.
Section 5.02 Compensating Interest Payments.
Notwithstanding any other provision herein, the amount of the Servicing
Fee that the Servicer shall be entitled to receive for its activities
hereunder for the period ending on each Distribution Date shall be reduced
(but not below zero) by an amount equal to Compensating Interest (if any) for
such Distribution Date. In making such reduction, the Servicer will not
withdraw from the Protected Account any such amount representing all or a
portion of the Servicing Fee to which it is entitled pursuant to 4.02.
Section 5.03 REMIC Distributions.
On each Distribution Date the Trustee shall be deemed to have allocated
distributions to the REMIC I Regular Interests and REMIC II Regular Interests
in accordance with Section 5.06 hereof.
Section 5.04 Distributions.
(a) On each Distribution Date, an amount equal to the Interest Funds and
Principal Funds for each Loan Group for such Distribution Date shall be
withdrawn by the Trustee from the Distribution Account to the extent of funds
available therefor and distributed in the following order of priority:
(1) Interest Funds shall be distributed in the following manner and order
of priority:
(A) From Interest Funds in respect of:
(i) Loan Group I, to the Class I-A-1, Class I-A-2 and Class
I-A-3 Certificates, the Current Interest and any Interest Carry Forward
Amount for each such Class, pro rata in accordance with the amount of
accrued interest due thereon; and
(ii) Loan Group II, to the Class II-A-1 Certificates and the Class II-A-2
Certificates, the Current Interest and any Interest Carry Forward
Amount for each such Class; pro rata in accordance with the amount of
accrued interest due thereon.
(B) From remaining Interest Funds in respect of the non-related Loan Group,
to the Class I-A Certificates and Class II-A Certificates, the remaining
Current Interest, if any, and the remaining Interest Carry Forward Amount, if
any, for each such Class, pro rata in accordance with the amount of accrued
interest due thereon; and
(C) From remaining Interest Funds in respect of both Loan Groups,
sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9A and Class M-9B Certificates, in
that order, the Current Interest for each such Class.
Any Excess Spread to the extent necessary to meet a level of
overcollateralization equal to the Overcollateralization Target Amount will
be the Extra Principal Distribution Amount and will be included as part of
the Principal Distribution Amount. Any Remaining Excess Spread together with
any Overcollateralization Release Amount will be applied as Excess Cashflow
and distributed pursuant to clauses (4)(A) through (G) below.
On any Distribution Date, any Relief Act Interest Shortfalls and any
Prepayment Interest Shortfalls to the extent not covered by Compensating
Interest will be allocated as set forth in the definition of "Current
Interest" herein.
(2) The Principal Distribution Amount, shall be distributed in the
following manner and order of priority:
(A) For each Distribution Date (i) prior to the Stepdown Date or (ii) on
which a Trigger Event is in effect:
(i) To the Class A Certificates, the Principal Distribution Amount for such
Distribution Date to be distributed as follows:
(1) the Group I Principal Distribution Amount for such
Distribution Date, to the Class I-A-1, Class I-A-2 and
Class I-A-3 Certificates, sequentially, in that order, in
each case until the Certificate Principal Balance of such
Class is reduced to zero; and
(2) the Group II Principal Distribution Amount for such
Distribution Date, to the Class II-A-1 Certificates and the
Class II-A-2 Certificates, on a pro rata basis, based on
the respective Certificate Principal Balances thereof,
until the Certificate Principal Balance of such Class is
reduced to zero;
(ii) To the Class M-1 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
(iii) To the Class M-2 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
(iv) To the Class M-3 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
(v) To the Class M-4 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
(vi) To the Class M-5 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
(vii) To the Class M-6 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
(viii) To the Class M-7 Certificates, any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the remaining Principal Distribution Amount,
until the Certificate Principal Balance of such Class is reduced
to zero;
(ix) To the Class M-8 Certificates, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, until the
Certificate Principal Balance of such Class is reduced to zero;
and
(x) Sequentially, to the Class M-9A Certificates and Class M-9B
Certificates, in that order, any remaining Principal Distribution
Amount in respect of both Loan Groups for such Distribution Date,
the remaining Principal Distribution Amount, in each case until
the Certificate Principal Balance of such Class is reduced to
zero.
(B) For each Distribution Date on or after the Stepdown Date,
so long as a Trigger Event is not in effect:
(i) To the Class A Certificates, the Principal Distribution Amount for such
Distribution Date to be distributed as follows:
(1) from the Group I Principal Distribution Amount for
such Distribution Date, to the Class I-A-1, Class I-A-2 and
Class I-A-3 Certificates, in that order, the Class I-A
Principal Distribution Amount for such Distribution Date,
in each case until the Certificate Principal Balance of
such Class is reduced to zero; and
(2) from the Group II Principal Distribution Amount for
such Distribution Date, to the Class II-A-1 Certificates
and Class II-A-2 Certificates, pro rata, based on the
respective Certificate Principal Balances thereof, the
Class II-A Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance
of such Class is reduced to zero;
(ii) To the Class M-1 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-1 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(iii) To the Class M-2 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-2 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(iv) To the Class M-3 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-3 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(v) To the Class M-4 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-4 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(vi) To the Class M-5 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-5 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(vii) To the Class M-6 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-6 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(viii) To the Class M-7 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-7 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero;
(ix) To the Class M-8 Certificates, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-8 Principal Distribution Amount
for such Distribution Date, until the Certificate Principal
Balance of such Class is reduced to zero; and
(x) Sequentially, to the Class M-9A Certificates and Class M-9B
Certificates, in that order, from any remaining Principal
Distribution Amount in respect of both Loan Groups for such
Distribution Date, the Class M-9 Principal Distribution Amount,
in each case until the Certificate Principal Balance of such
Class is reduced to zero.
(3) Notwithstanding the provisions of clauses (2)(A) and (B) above,
if on any Distribution Date the Class A Certificates related to a Loan Group
are no longer outstanding, the portion of the Principal Distribution Amount
or the applicable Class A Principal Distribution Amount, as applicable,
otherwise allocable to such Class A Certificates will be allocated among the
remaining group of Class A Certificates in the same manner and order of
priority described above.
(4) Any Excess Cashflow shall be distributed in the following manner
and order of priority:
(A) To the Class A Certificates, (a) first, any remaining Interest Carry
Forward Amount for such Classes, pro rata, in accordance with the
Interest Carry Forward Amount due with respect to each such Class, to
the extent not fully paid pursuant to clauses (1) (A) and (B) above and
(b) second, any Unpaid Realized Loss Amount for such Classes for such
Distribution Date, pro rata, in accordance with the Applied Realized
Loss Amount allocated to each such Class;
(B) From any remaining Excess Cashflow, sequentially, to the Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class
M-8, Class M-9A and Class M-9B Certificates, in that order, an amount
equal to the Interest Carry Forward Amount for each such Class for such
Distribution Date;
(C) From any remaining Excess Cashflow otherwise distributable to the Class
CE Certificates, to the Reserve Fund to pay to the Class I-A
Certificates and Class II-A Certificates, any Basis Risk Shortfall
Carry Forward Amount for each such Class for such Distribution Date, on
a pro rata basis, based on the amount of the Basis Risk Shortfall Carry
Forward Amount for each such Class, and in each case to the extent not
covered by the related Yield Maintenance Agreement;
(D) From any remaining Excess Cashflow otherwise distributable to the Class
CE Certificates, to the Reserve Fund to pay to the Class ▇-▇, ▇▇▇▇▇
▇-▇, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8,
Class M-9A and Class M-9B Certificates, sequentially in that order, any
Basis Risk Shortfall Carry Forward Amount for each such Class for such
Distribution Date, if any, in each case to the extent not covered by
the related Yield Maintenance Agreement;
(E) From any remaining Excess Cashflow, to the Class A Certificates, on a
pro rata basis, based on the entitlement of each such Class, and then
sequentially to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class
M-5, Class M-6, Class M-7, Class M-8, Class M-9A and Class M-9B
Certificates, in that order, the amount of Relief Act Shortfalls and
any Prepayment Interest Shortfalls allocated to such Classes of
Certificates, to the extent not previously reimbursed;
(F) From any remaining Excess Cashflow, to the Class CE Certificates, an
amount equal to the Class CE Distribution Amount reduced by amounts
distributed in clauses (C) and (D) above; and
(G) any remaining amounts to each of the Class R-1, Class R-2 and Class R-3
Certificates, based on the related REMIC in which such amounts remain.
In addition, notwithstanding the foregoing, on any Distribution Date
after the Distribution Date on which the Certificate Principal Balance of a
Class of Offered Certificates has been reduced to zero, that Class of Offered
Certificates will be retired and will no longer be entitled to distributions,
including distributions in respect of Prepayment Interest Shortfalls or Basis
Risk Shortfall Carry Forward Amounts.
(b) In addition to the foregoing distributions, with respect to any
Subsequent Recoveries, the Servicer shall deposit such funds into the
Protected Account pursuant to Section 4.01(b)(iii). If, after taking into
account such Subsequent Recoveries, the amount of a Realized Loss is reduced,
the amount of such Subsequent Recoveries will be applied to increase the
Certificate Principal Balance of the Class of Certificates with the highest
payment priority to which Realized Losses have been allocated, but not by
more than the amount of Realized Losses previously allocated to that Class of
Certificates pursuant to Section 5.04A. The amount of any remaining
Subsequent Recoveries will be applied to increase the Certificate Principal
Balance of the Class of Certificates with the next highest payment priority,
up to the amount of such Realized Losses previously allocated to that Class
of Certificates pursuant to Section 5.04A, and so on. Holders of such
Certificates will not be entitled to any payment in respect of Current
Interest on the amount of such increases for any Interest Accrual Period
preceding the Distribution Date on which such increase occurs. Any such
increases shall be applied to the Certificate Principal Balance of each
Certificate of such Class in accordance with its respective Percentage
Interest.
(c) Subject to Section 10.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a
bank or other entity having appropriate facilities therefor, if such Holder
has so notified the Trustee at least 5 Business Days prior to the related
Record Date, or, if not, by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, but subject to Section 10.02 hereof
respecting the final distribution, distributions with respect to Certificates
registered in the name of a Depository shall be made to such Depository in
immediately available funds.
(d) On or before 5:00 p.m. Eastern time on the third Business Day
immediately preceding each Distribution Date, the Servicer shall deliver a
report to the Trustee in electronic form (or by such other means as the
Servicer and the Trustee may agree from time to time) containing such data
and information, as agreed to by the Servicer and the Trustee such as to
permit the Trustee to prepare the Monthly Statement to Certificateholders and
to make the required distributions for the related Distribution Date.
Section 5.04A Allocation of Realized Losses.
All Realized Losses on the Mortgage Loans shall be allocated by the
Trustee on each Distribution Date as follows: first, to Excess Spread;
second, to the reduction of the Overcollateralization Amount; third, to the
Class M-9A Certificates and Class M-9B Certificates, on a pro rata basis,
until the Certificate Principal Balances thereof have been reduced to zero;
fourth, to the Class M-8 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fifth, to the Class M-7
Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; sixth, to the Class M-6 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; seventh, to the Class M-5
Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; eighth, to the Class M-4 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; ninth, to the Class M-3
Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; tenth, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; eleventh, to the Class
M-1 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; twelfth, to related Class or Classes of Class A
Certificates, on a pro rata basis, until the Certificate Principal Balances
thereof have been reduced to zero; and thirteenth, to the unrelated Class or
Classes of Class A Certificates, on a pro rata basis, until the Certificate
Principal Balances thereof have been reduced to zero; provided that no
Realized Loss will be applied to reduce the Certificate Prinicpal Balance of
any Certificate to the extent that the aggregate Certificate Principal
Balance of all Classes after such reduction would be less than the aggregate
Stated Principal Balance of all Mortgage Loans as of such Distribution Date.
Notwithstanding the foregoing, any Realized Losses otherwise allocable to the
Class II-A-1 Certificates will first be allocated to the Class II-A-2
Certificates until the Certificate Principal Balance thereof has been reduced
to zero and thereafter, Realized Losses will be allocated to the Class II-A-1
Certificates in accordance with the twelfth and thirteenth clauses in the
preceding sentence. Any reduction to the Certificate Principal Balance of a
certificate is an Applied Realized Loss Amount. All Realized Losses to be
allocated to all Classes on any Distribution Date shall be so allocated after
the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance or Certificate Notional
Balance of any Class of Certificates shall be to the Certificate Principal
Balance or Certificate Notional Balance of such Class immediately prior to
the relevant Distribution Date, before reduction thereof by any Realized
Losses, in each case to be allocated to such Class of Certificates, on such
Distribution Date.
(e) Any allocation of Realized Losses to a Class of Certificates (other
than the Class CE Certficates) on any Distribution Date shall be made by
reducing the Certificate Principal Balance thereof by the amount so
allocated; any allocation of Realized Losses to a Class CE Certificates shall
be made by reducing the amount otherwise payable in respect thereof pursuant
to clause (F) of Section 5.04(a)(4).
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a
pro rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances or Certificate Notional Balance prior to giving effect to
distributions to be made on such Distribution Date. All Realized Losses and
all other losses allocated to a Class of Certificates hereunder will be
allocated among the Certificates of such Class in proportion to the
Percentage Interests evidenced thereby.
(f) Realized Losses shall be allocated among the REMIC I Regular Interests,
REMIC II Regular Interests and REMIC III Regular Interests as specified in
the definitions of REMIC I Realized Losses, REMIC II Realized Losses and
REMIC III Realized Losses, respectively.
Section 5.05 Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare and
make available to each Holder of Certificates, the Servicer and the Depositor
a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each Class
allocable to principal, separately identifying (A) the aggregate amount
of any Principal Prepayments included therein, (B) the aggregate of all
scheduled payments of principal included therein and (C) the Extra
Principal Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each Class allocable to
interest and the portion thereof, if any, provided by the Yield
Maintenance Agreements;
(iii) the Interest Carry Forward Amount and any Basis Risk Shortfall Carry
Forward Amount for each Class of Certificates;
(iv) the Certificate Principal Balance or Certificate Notional Balance of
each Class after giving effect (i) to all distributions allocable to
principal on such Distribution Date and (ii) the allocation of any
Applied Realized Loss Amounts for such Distribution Date;
(v) for each Loan Group, the aggregate of the Stated Principal Balances of
(A) all of the Mortgage Loans in such Loan Group, (B) the first lien
Mortgage Loans in such Loan Group, (C) the second or more junior lien
Mortgage Loans in such Loan Group, and (D) the Adjustable Rate Mortgage
Loans in such Loan Group, for the following Distribution Date;
(vi) the related amount of the Servicing Fee paid to or retained by the
Servicer for the related Due Period;
(vii) the Pass-Through Rate for each Class of Offered Certificates with
respect to the current Accrual Period, and, if applicable, whether such
Pass-Through Rate was limited by the applicable Net Rate Cap;
(viii) the amount of Advances included in the distribution on such
Distribution Date;
(ix) the cumulative amount of Applied Realized Loss Amounts to date;
(x) the number and aggregate Stated Principal Balances of Mortgage Loans in
each Loan Group (A) Delinquent (exclusive of Mortgage Loans in
foreclosure and bankruptcy) (1) 31 to 60 days, (2) 61 to 90 days, (3)
91 or 119 days and (4) 120 or more days, (B) in foreclosure and
delinquent (1) 31 to 60 days, (2) 61 to 90 days, (3) 91 or 119 days and
(4) 120 or more days and (C) in bankruptcy and Delinquent (1) 31 to 60
days, (2) 61 to 90 days, (3) 91 or 119 days and (4) 120 or more days,
in each case as of the close of business on the last day of the
calendar month preceding such Distribution Date and separately
identifying such information for the (1) first lien Mortgage Loans, (2)
second lien Mortgage Loans, and (3) Adjustable Rate Mortgage Loans, in
each such Loan Group;
(xi) with respect to any Mortgage Loan that was liquidated during the
preceding calendar month, the loan number and Stated Principal Balance
of, and Realized Loss on, such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date;
(xii) the total number and principal balance of any real estate owned or REO
Properties as of the close of business on the Determination Date
preceding such Distribution Date;
(xiii) the three month rolling average of the percent equivalent of a
fraction, the numerator of which is the aggregate stated Principal
Balance of the Mortgage Loans in each Loan Group that are 60 days or
more Delinquent or are in bankruptcy or foreclosure or are REO
Properties, and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans in such Loan Group as of
the last day of such Distribution Date and separately identifying such
information for the (1) first lien Mortgage Loans, (2) second lien
Mortgage Loans, and (3) Adjustable Rate Mortgage Loans, in each such
Loan Group;
(xiv) the Realized Losses during the related Prepayment Period and the
cumulative Realized Losses through the end of the preceding month; and
(xv) whether a Trigger Event exists.
In addition to the information described above, the Servicer will make
available to any Holder of the Class CE Certificates any additional
information reasonably requested by such holder and available to the
Servicer.
The Trustee may make the foregoing Monthly Statement (and, at its
option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via the
Trustee's internet website. The Trustee's internet website shall initially
be located at "▇▇▇.▇▇▇▇▇▇▇.▇▇▇". Assistance in using the website can be
obtained by calling the Trustee's customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee may change the way Monthly
Statements are distributed in order to make such distributions more
convenient or more accessible to the above parties.
(b) The Trustee's responsibility for making the above information available
to the Certificateholders is limited to the availability, timeliness and
accuracy of the information derived from the Servicer and the Counterparty.
The Trustee will make available a copy of each statement provided pursuant to
this Section 5.05 to each Rating Agency.
(c) Within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished upon request to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i) and (a)(ii) of this
Section 5.05 aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Residual Certificates the applicable Form 1066
and each applicable Form 1066Q and shall respond promptly to written requests
made not more frequently than quarterly by any Holder of a Residual
Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows on the Closing
Date on each Class of regular and residual interests created hereunder
and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of the end
of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on
the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows
described above;
(iv) The original issue discount (or, in the case of the Mortgage Loans,
market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with
each constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage Loans or
the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of a REMIC with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a REMIC; and
(vii) Any taxes (including penalties and interest) imposed on the REMIC,
including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or
local income or franchise taxes.
Section 5.06 REMIC Designations and REMIC Distributions.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC III
shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of
such REMIC elections. The assets of REMIC I shall include the Mortgage Loans
and all interest owing in respect of and principal due thereon, the
Distribution Account, the Protected Account, any REO Property, any proceeds
of the foregoing and any other assets subject to this Agreement (other than
the Reserve Fund and the Yield Maintenance Agreements). The REMIC I Regular
Interests shall constitute the assets of REMIC II. The REMIC II Regular
Interests shall constitute the assets of REMIC III.
(b) On each Distribution Date, the Trustee shall cause the REMIC I
Distribution Amount to be distributed by REMIC I to REMIC II on account of
the REMIC I Regular Interests or withdrawn from the Distribution Account and
distributed to the holders of the Class R-1 Certificates, as the case may be,
in the amounts and with the priorities set forth in the definition of REMIC I
Distribution Amount.
(c) On each Distribution Date, the Trustee shall cause the REMIC II
Distribution Amount to be distributed by REMIC II to REMIC III on account of
the REMIC II Regular Interests or withdrawn from the Distribution Account and
distributed to the holders of the Class R-2 Certificates, as the case may be,
in the amounts and with the priorities set forth in the definition of REMIC
II Distribution Amount.
(d) Notwithstanding the deemed distributions on the REMIC I Regular
Interests and the REMIC II Regular Interests described in Section 5.03 and
this Section 5.06, distributions of funds from the Distribution Account shall
be made only in accordance with Section 5.04.
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto as
Exhibits A-1 through A-5. The Certificates shall be issuable in registered
form, in the minimum dollar denominations, integral dollar multiples in
excess thereof (except that one Certificate of each Class may be issued in a
different amount which must be in excess of the applicable minimum dollar
denomination) and aggregate dollar denominations as set forth in the
following table:
Class Minimum Integral Original
Denomination Multiple in Certificate
Excess of Minimum Principal
Balance
I-A-1 $25,000 $1.00 $571,593,000
I-A-2 $25,000 $1.00 $113,708,000
I-A-3 $25,000 $1.00 $82,737,000
II-A-1 $25,000 $1.00 $305,365,000
II-A-2 $25,000 $1.00 $33,930,000
M-1 $25,000 $1.00 $63,910,000
M-2 $25,000 $1.00 $19,509,000
M-3 $25,000 $1.00 $18,837,000
M-4 $25,000 $1.00 $16,146,000
M-5 $25,000 $1.00 $18,164,000
M-6 $25,000 $1.00 $17,491,000
M-7 $25,000 $1.00 $13,455,000
M-8 $25,000 $1.00 $13,454,000
M-9A $25,000 $1.00 $9,082,000
M-9B $25,000 $1.00 $9,082,000
CE 10% 1% $1,345,482,950.00*
▇-▇ ▇▇▇% ▇/▇ ▇/▇
R-2 100% N/A N/A
R-3 100% N/A N/A
*Notional
Amount
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication
and delivery. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate the countersignature of the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly countersigned and
delivered hereunder. All Certificates shall be dated the date of their
countersignature. On the Closing Date, the Trustee shall authenticate the
Certificates to be issued at the written direction of the Depositor, or any
affiliate thereof.
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The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 6.02 Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 6.09 hereof, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c)
below and 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. Upon surrender for
registration of Transfer of any Certificate, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates of the same Class and of like aggregate Percentage
Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate, and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of Transfer or exchange
shall be accompanied by a written instrument of Transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his attorney duly
authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but 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 may be required.
All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance
with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless such Transfer
is made pursuant to an effective registration statement under the Securities
Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an
exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder
desiring to effect such Transfer and such Certificateholder's prospective
transferee shall each certify to the Trustee in writing the facts surrounding
the Transfer by (x)(i) the delivery to the Trustee by the Certificateholder
desiring to effect such transfer of a certificate substantially in the form
set forth in Exhibit E (the "Transferor Certificate") and (ii) the delivery
by the Certificateholder's prospective transferee of (A) a letter in
substantially the form of Exhibit F (the "Investment Letter") if the
prospective transferee is an Institutional Accredited Investor or (B) a
letter in substantially the form of Exhibit G (the "Rule 144A and Related
Matters Certificate") if the prospective transferee is a QIB or (y) there
shall be delivered to the Trustee an Opinion of Counsel addressed to the
Trustee that such Transfer may be made pursuant to an exemption from the
Securities Act, which Opinion of Counsel shall not be an expense of the
Depositor, the Seller, the Servicer or the Trustee. The Depositor shall
provide to any Holder of a Private Certificate and any prospective transferee
designated by any such Holder, information regarding the related Certificates
and the Mortgage Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for
Transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A.
The Trustee and the Servicer shall cooperate with the Depositor in providing
the Rule 144A information referenced in the preceding sentence, including
providing to the Depositor such information regarding the Certificates, the
Mortgage Loans and other matters regarding the Trust Fund as the Depositor
shall reasonably request to meet its obligation under the preceding
sentence. Each Holder of a Private Certificate desiring to effect such
Transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Seller and the Servicer against any liability that may result
if the Transfer is not so exempt or is not made in accordance with such
federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless
either (i) the Trustee and the Servicer shall have received a representation
from the transferee of such Certificate acceptable to and in form and
substance satisfactory to the Trustee and the Servicer, to the effect that
such transferee is not an employee benefit plan subject to Section 406 of
ERISA and/or a plan subject to Section 4975 of the Code, or a Person acting
on behalf of any such plan or using the assets of any such plan, or (ii) in
the case of any such ERISA Restricted Certificate presented for registration
in the name of an employee benefit plan subject to ERISA, or a plan subject
to Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on
behalf of any such plan, the Trustee shall have received an Opinion of
Counsel for the benefit of the Trustee and the Servicer and on which they may
rely, satisfactory to the Trustee, to the effect that the purchase and
holding of such ERISA Restricted Certificate will not constitute or result in
the assets of the Trust being deemed to be "plan assets" under ERISA or the
Code, will not result in any prohibited transactions under ERISA or Section
4975 of the Code and will not subject the Trustee, the Servicer or the
Depositor to any obligation in addition to those expressly undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee,
the Servicer or the Depositor. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA Restricted Certificate to or on
behalf of an employee benefit plan subject to Section 406 of ERISA and/or a
plan subject to Section 4975 of the Code without the delivery of the Opinion
of Counsel as described above shall be void and of no effect; provided that
the restriction set forth in this sentence shall not be applicable if there
has been delivered to the Trustee an Opinion of Counsel meeting the
requirements of clause (ii) of the first sentence of this paragraph. Neither
the Trustee nor the Servicer shall be required to monitor, determine or
inquire as to compliance with the transfer restrictions with respect to any
ERISA Restricted Certificate that is a Book-Entry Certificate, and neither
the Trustee nor the Servicer shall have any liability for transfers of any
such Book-Entry Certificates made through the book-entry facilities of any
Depository or between or among participants of the Depository or Certificate
Owners made in violation of the transfer restrictions set forth herein.
Neither the Trustee nor the Servicer shall be under any liability to any
Person for any registration of transfer of any ERISA Restricted Certificate
or Private Certificate that is in fact not permitted by this Section 6.02(b)
or for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement. The Trustee shall be entitled, but not obligated, to recover
from any Holder of any ERISA Restricted Certificate that was in fact an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code or a Person acting on behalf of any such plan at the
time it became a Holder or, at such subsequent time as it became such a plan
or Person acting on behalf of such a plan, all payments made on such ERISA
Restricted Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to the
last preceding Holder of such Certificate that is not such a plan or Person
acting on behalf of a plan.
(c) Each beneficial owner of a Class M 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 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, ▇▇▇▇▇'▇ or Fitch and will obtain a representation
from any transferee that such transferee is an accredited investor so long as
it is required to obtain a representation regarding compliance with the
Securities Act 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) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Residual
Certificate shall be a Permitted Transferee and shall promptly notify
the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Residual Certificate may be registered on
the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Residual Certificate unless, in addition
to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit D.
(iii) Each Person holding or acquiring any Ownership Interest in a Residual
Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Residual Certificate and (C)
not to Transfer its Ownership Interest in a Residual Certificate or to
cause the Transfer of an Ownership Interest in a Residual Certificate
to any other Person if it has actual knowledge that such Person is not
a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in a
Residual Certificate in violation of the provisions of this Section
6.02(c) shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported transferee shall become a
Holder of a Residual Certificate in violation of the provisions of this
Section 6.02(d), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Residual Certificate. The Trustee
shall be under no liability to any Person for any registration of
Transfer of a Residual Certificate that is in fact not permitted by
Section 6.02(b) and this Section 6.02(d) or for making any payments due
on such Certificate to the Holder thereof or taking any other action
with respect to such Holder under the provisions of this Agreement so
long as the Transfer was registered after receipt of the related
Transfer Affidavit. The Trustee shall be entitled but not obligated to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Residual Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Servicer shall make available within 60 days of written request
from the Trustee, all information necessary to compute any tax imposed
under Section 860E(e) of the Code as a result of a Transfer of an
Ownership Interest in a Residual Certificate to any Holder who is not a
Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 6.02(d) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel addressed to
the Trustee, which Opinion of Counsel shall not be an expense of the Trustee,
the Seller or the Servicer to the effect that the elimination of such
restrictions will not cause REMIC I, REMIC II or REMIC III, as applicable, to
fail to qualify as a REMIC at any time that the Certificates are outstanding
or result in the imposition of any tax on the Trust Fund, a Certificateholder
or another Person. Each Person holding or acquiring any ownership Interest
in a Residual Certificate hereby consents to any amendment of this Agreement
that, based on an Opinion of Counsel addressed to the Trustee and furnished
to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Residual Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a
Residual Certificate that is held by a Person that is not a Permitted
Transferee to a Holder that is a Permitted Transferee.
(e) The preparation and delivery of all certificates and opinions referred
to above in this Section 6.02 shall not be an expense of the Trust Fund, the
Trustee, the Depositor, the Seller or the Servicer.
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof and (b) there is
delivered to the Trustee such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and Percentage Interest. In connection with
the issuance of any new Certificate under this Section 6.03, 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 replacement Certificate issued pursuant to this Section 6.03
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. All Certificates surrendered to the
Trustee under the terms of this Section 6.03 shall be canceled and destroyed
by the Trustee in accordance with its standard procedures without liability
on its part.
Section 6.04 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and neither the Trustee nor any agent of the
Trustee shall be affected by any notice to the contrary.
Section 6.05 Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or the Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt
of such request, provide the Depositor, the Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The
Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Trustee shall not be held accountable by reason
of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 6.06 Book-Entry Certificates.
The Regular Certificates (other than the Class CE Certificates), upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to the
Depository by or on behalf of the Depositor. Such Certificates shall
initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner of such Certificates will
receive a definitive certificate representing such Certificate Owner's
interest in such Certificates, except as provided in Section 6.08. Unless
and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Certificate Owners of such
Certificates pursuant to Section 6.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor and the Trustee may deal with the Depository and the
Depository Participants for all purposes (including the making of
distributions) as the authorized representative of the respective Certificate
Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by
the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such Certificates
shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and
until Definitive Certificates are issued pursuant to Section 6.08, the
Depository will make book-entry transfers among the Depository Participants
and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by
Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite
percentage of principal amount of such Class of Certificates.
Section 6.07 Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of a Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
Section 6.08 Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depositor or the Depository advises the Trustee that
the Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor or
(b) the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository, then the Trustee shall notify all Certificate Owners of such
Certificates, through the Depository, of the occurrence of any such event and
of the availability of Definitive Certificates to applicable Certificate
Owners requesting the same. The Depositor shall provide the Trustee with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trustee of any such
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall countersign and deliver
such Definitive Certificates. Neither the Depositor nor the Trustee shall be
liable for any delay in delivery of such instructions and each may
conclusively rely on, and shall be protected in relying on, such instructions.
In addition, if an Event of Default has occurred and is continuing,
each Certificate Owner materially adversely affected thereby may at its
option request a Definitive Certificate evidencing such Certificate Owner's
Voting Rights in the related Class of Certificates. In order to make such
request, such Certificate Owner shall, subject to the rules and procedures of
the Depository, provide the Depository or the related Depository Participant
with directions for the Trustee to exchange or cause the exchange of the
Certificate Owner's interest in such Class of Certificates for an equivalent
Voting Right in fully registered definitive form. Upon receipt by the
Trustee of instructions from the Depository directing the Trustee to effect
such exchange (such instructions to contain information regarding the Class
of Certificates and the Certificate Principal Balance being exchanged, the
Depository Participant account to be debited with the decrease, the
registered holder of and delivery instructions for the definitive
Certificate, and any other information reasonably required by the Trustee),
(i) the Trustee shall instruct the Depository to reduce the related
Depository Participant's account by the aggregate Certificate Principal
Balance of the definitive Certificate, (ii) the Trustee shall execute,
authenticate and deliver, in accordance with the registration and delivery
instructions provided by the Depository, a definitive Certificate evidencing
such Certificate Owner's Voting Rights in such Class of Certificates and
(iii) the Trustee shall execute and authenticate a new Book-Entry Certificate
reflecting the reduction in the Certificate Principal Balance of such Class
of Certificates by the amount of the definitive Certificates.
Section 6.09 Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies at the Corporate Trust Office where
Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its Corporate Trust Office, as the office
for such purposes. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or
agency.
ARTICLE VII
THE DEPOSITOR AND THE SERVICER
Section 7.01 Liabilities of the Depositor and the Servicer. Each of the
Depositor and the 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 Depositor or the Servicer.
(a) Each of the Depositor and the 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 Depositor or the Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation
to which the Depositor or the Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Servicer, shall be the
successor of the Depositor or the 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; provided, however,
that the successor or surviving Person to the Servicer shall be qualified to
service mortgage loans on behalf of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac; and provided
further that each Rating Agency's ratings, if any, of the Certificates in
effect immediately prior to such merger or consolidation will not be
qualified, reduced or withdrawn as a result thereof (as evidenced by a letter
to such effect from each Rating Agency).
Section 7.03 Indemnification of the Trustee and the Servicer.
(a) The 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, including any powers of attorney
delivered pursuant to this Agreement, the Custodial Agreement or the
Certificates (i) related to the 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 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 Servicer and the
Seller written notice thereof promptly after a Responsible Officer of the
Trustee shall have with respect to such claim or legal action actual
knowledge thereof; provided, however that the failure to give such notice
shall not relieve the Servicer of its indemnification obligations hereunder.
This indemnity shall survive the resignation or removal of the Trustee or
Servicer and the termination of this Agreement.
(b) The Seller will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise paid or covered
pursuant to Subsection (a) above.
Section 7.04 Limitations on Liability of the Depositor, the Servicer and
Others. Subject to the obligation of the Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor and the Servicer shall be under any
liability to the Indemnified Persons, 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 Depositor, the
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 Depositor, the Servicer and any director, officer, employee or
agent of the Depositor and the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
(c) The Depositor, the Servicer, the Trustee, the Custodian and any
director, officer, employee or agent of the Depositor, the Servicer, the
Trustee, 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 Custodial Agreement or the Certificates,
other than (i) in the case of the Servicer, (x) any such loss, liability or
expense related to the 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 (y) any such loss,
liability or expense incurred by reason of the 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, (ii) in the case of the Trustee, any such loss, liability or
expense incurred by reason of the Trustee's willful misfeasance, bad faith or
negligence in the performance of its duties hereunder, or by reason of its
reckless disregard of obligations and duties hereunder and (iii) in the case
of the Custodian, any such loss, liability or expense incurred by reason of
the Custodian's willful misfeasance, bad faith or negligence in the
performance of its duties under the Custodial Agreement, or by reason of its
reckless disregard of obligations and duties thereunder.
(d) Neither the Depositor nor the Servicer shall 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 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
Servicer shall be entitled to be reimbursed therefor out of the Protected
Account as provided by Section 4.02. Nothing in this Subsection 7.04(d)
shall affect the Servicer's obligation to service and administer the
Mortgage Loans pursuant to Article III.
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement,
the 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 written notice to the Trustee if it has notice of such
potential liabilities.
Section 7.05 Servicer Not to Resign. Except as provided in
Section 7.07, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) with the prior consent of the Trustee (which
consents shall not be unreasonably withheld) or (ii) 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 Servicer shall be evidenced by an Opinion of Counsel,
addressed to and delivered to, the Trustee. No such resignation by the
Servicer shall become effective until the Trustee or a successor to the
Servicer reasonably satisfactory to the Trustee shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
8.02 hereof. The Trustee shall notify the Rating Agencies of the resignation
of the Servicer.
Section 7.06 Successor Servicer. In connection with the appointment of
any successor Servicer or the assumption of the duties of the Servicer, the
Trustee may make such arrangements for the compensation of such successor
Servicer out of payments on the Mortgage Loans as the Trustee and such
successor Servicer shall agree. If the successor Servicer does not agree
that such market value is a fair price, such successor Servicer shall obtain
two quotations of market value from third parties actively engaged in the
servicing of single-family mortgage loans. In no event shall the
compensation of any successor Servicer exceed that permitted the Servicer
hereunder without the consent of all of the Certificateholders.
Section 7.07 Sale and Assignment of Servicing. The Servicer may sell
and assign its rights and delegate its duties and obligations in its entirety
as Servicer under this Agreement; 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 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 Servicer under this Agreement, any custodial agreement from
and after the effective date of such agreement; (ii) each Rating Agency shall
be given prior written notice of the identity of the proposed successor to
the Servicer and each Rating Agency's rating of the Certificates 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 Servicer
and the Trustee; and (iii) the Servicer assigning and selling the servicing
shall deliver to the Trustee an Officer's Certificate and an Opinion of
Counsel addressed to the Trustee, 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. No such
assignment or delegation shall affect any liability of the Servicer arising
prior to the effective date thereof.
ARTICLE VIII
DEFAULT; TERMINATION OF SERVICER
Section 8.01 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to remit to the Trustee any amounts
received or collected by the Servicer in respect of the Mortgage Loans
and required to be remitted by it hereunder (other than any Advance),
which failure shall continue unremedied for a period of 5 days after
the date upon which written notice of such failure shall have been
given to the Servicer by the Trustee or the Depositor, or to the
Trustee and the Servicer by the Holders of Certificates evidencing not
less than 25% of the Voting Rights evidenced by the Certificates;
(ii) any failure by the Servicer to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement or any breach of a representation
or warranty by the Servicer, which failure or breach shall continue
unremedied for a period of 60 days (or 10 days, in the case of a
failure or breach in connection with Sections 3.13 and 3.14 hereof)
with respect after the date on which written notice of such failure
shall have been given to Servicer by the Trustee or the Depositor, or
to the Trustee and the Servicer by the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the
Certificates;
(iii) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days;
(iv) the Servicer shall consent to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Servicer or all or substantially all of the property of the Servicer;
(v) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of, or
commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(vi) the Servicer assigns or delegates its duties or rights under this
Agreement in contravention of the provisions permitting such assignment
or delegation under Sections 3.03, 7.05 or 7.07; or
(vii) The Servicer fails to deposit, or cause to be deposited, in the
Distribution Account any Advance (other than a Nonrecoverable Advance)
by 12:00 Noon, New York City time, on the Distribution Account Deposit
Date.
If an Event of Default described in clauses (i) through (vi) above
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, and at the direction
of the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates, the Trustee shall, by notice in writing
to the Servicer (with a copy to each Rating Agency), and if an Event of
Default described in clause (vii) above shall occur, the Trustee shall, by
notice in writing to the Servicer (with a copy to each Rating Agency),
terminate all of the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, other
than its rights as a Certificateholder hereunder. On or after the receipt by
the Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall
pass to and be vested in the Trustee, or any successor appointed pursuant to
Section 8.02 (a "Successor Servicer"). Such Successor Servicer shall
thereupon if such Successor Servicer is a successor to the Servicer, make any
Advance required by Article V, subject, in the case of the Trustee, to
Section 8.02. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the terminated 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 any Mortgage Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such
termination shall affect any obligation of the Servicer to pay amounts owed
pursuant to Article VII or Article IX. The Servicer agrees to cooperate with
the Trustee in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to the
Trustee or its designee for administration by it of all cash amounts which
shall at the time be credited to the Protected Account or thereafter be
received with respect to the Mortgage Loans and the recordation of
Assignments of Mortgages to the Trustee if the Servicer (and not MERS) is the
mortgagee of a Mortgage Loan. No such termination shall release the Servicer
for any liability that it would otherwise have hereunder for any act or
omission prior to the effective time of such termination. The Trustee shall
promptly notify the Rating Agencies of the occurrence of an Event of Default
known to the Trustee.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan that was due prior to
the notice terminating the Servicer's rights and obligations as Servicer
hereunder and received after such notice, that portion thereof to which the
Servicer would have been entitled pursuant to Sections 4.02 and to receive
any other amounts payable to the Servicer hereunder the entitlement to which
arose prior to the termination of its activities hereunder.
Notwithstanding the foregoing, if an Event of Default described in
clause (vii) of this Section 8.01 shall occur, the Trustee shall, by notice
in writing to the Servicer, which may be delivered by telecopy, immediately
terminate all of the rights and obligations of the Servicer thereafter
arising under this Agreement, but without prejudice to any rights it may have
as a Certificateholder or to reimbursement of 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 Servicer, including the obligation to make any Advance
the nonpayment of which was an Event of Default described in clause (vii) of
this Section 8.01. Any such action taken by the Trustee must be prior to the
distribution on the relevant Distribution Date.
Section 8.02 Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 8.01 hereof the Trustee shall automatically become the
successor to the Servicer with respect to the transactions set forth or
provided for herein and after a transition period (not to exceed 90 days),
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof; provided,
however that, pursuant to Article V hereof, the Trustee in its capacity as
successor Servicer shall be responsible for making any Advances required to
be made by the Servicer immediately upon the termination of the Servicer and
any such Advance shall be made on the Distribution Date on which such Advance
was required to be made by the predecessor Servicer. Effective on the date
of such notice of termination, as compensation therefor, the Trustee shall be
entitled to all compensation, reimbursement of expenses and indemnification
that the Servicer would have been entitled to if it had continued to act
hereunder, provided, however, that the Trustee shall not be (i) liable for
any acts or omissions of the Servicer, (ii) obligated to make Advances if it
is prohibited from doing so under applicable law, (iii) responsible for
expenses of the Servicer pursuant to Section 2.03 or (iv) obligated to
deposit losses on any Permitted Investment directed by the Servicer.
Notwithstanding the foregoing, the Trustee may, if it shall be unwilling to
so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Article V or if it is otherwise unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution the appointment of which does not
adversely affect the then current rating of the Certificates by each Rating
Agency as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Any Successor Servicer shall (i) be an institution that is a
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac approved seller/servicer in good standing, that
has a net worth of at least $15,000,000, (ii) be acceptable to the Trustee
(which consent shall not be unreasonably withheld) and (iii) be willing to
act as successor servicer of any Mortgage Loans under this Agreement, and
shall have executed and delivered to the Depositor and the Trustee an
agreement accepting such delegation and assignment, that contains an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer (other than any liabilities of
the Servicer hereof incurred prior to termination of the Servicer under
Section 8.01 or as otherwise set forth herein), with like effect as if
originally named as a party to this Agreement, provided that each Rating
Agency shall have acknowledged in writing that its rating of the Certificates
in effect immediately prior to such assignment and delegation will not be
qualified or reduced as a result of such assignment and delegation. If the
Trustee assumes the duties and responsibilities of the Servicer in accordance
with this Section 8.02, the Trustee shall not resign as Servicer until a
Successor Servicer has been appointed and has accepted such appointment.
Pending appointment of a successor to the Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans or otherwise as it and such
successor shall agree; provided that no such compensation unless agreed to by
the Certificateholders shall be in excess of that permitted the Servicer
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other Successor Servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the
Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
The costs and expenses of the Trustee in connection with the
termination of the Servicer, appointment of a Successor Servicer and, if
applicable, any transfer of servicing, including, without limitation, all
costs and expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee to correct any errors or insufficiencies in
the servicing data or otherwise to enable the Trustee or the Successor
Servicer to service the related Mortgage Loans properly and effectively, to
the extent not paid by the terminated Servicer, shall be payable to the
Trustee pursuant to Section 9.05. Any successor to the Servicer as successor
servicer under any Subservicing Agreement shall, if required by applicable
law, give notice to the applicable Mortgagors of such change of servicer and
shall, during the term of its service as successor servicer maintain in force
the policy or policies that the Servicer is required to maintain pursuant to
Section 3.08.
Section 8.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders
and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder actually known to a Responsible Officer of the
Trustee, unless such Event of Default shall have been cured or waived.
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 hereunder known to the
Trustee. The Holders of Certificates evidencing not less than 51% of the
Voting Rights may, on behalf of all Certificateholders, waive any default by
the 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 of any required distribution on the Certificates. 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.
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01 Duties of Trustee.
(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,
undertakes to perform such duties and only such duties as are specifically
set forth in this Agreement as duties of the Trustee. 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 the same
degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of such Person's 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 pursuant to any provision of this
Agreement, the Trustee shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee
shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer or the Counterparty; provided, further, that the
Trustee shall not be responsible for the accuracy or verification of any
calculation provided to it pursuant to this Agreement or any Yield
Maintenance 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 5.04 and 10.01 herein.
(d) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the curing or
waiver of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of 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
and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be liable in its individual capacity for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be 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 not less than
25% of the aggregate Voting Rights of the Certificates (or such other
percentage as specifically set forth herein), 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 exercising any
trust or other power conferred upon the Trustee 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 shall have actual knowledge
thereof. In the absence of such knowledge, 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 in a
non-appealable judgment that the Trustee's 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 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 has been advised of the likelihood of
such loss or damage and regardless of the form of action; and
(vii) None of the Servicer, the Seller, the Depositor, the Custodian, any
Special Servicer 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.
The Trustee shall not 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 to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer.
(e) All funds received by the Trustee and required to be deposited in the
Distribution Account pursuant to this Agreement will be promptly so deposited
by the Trustee.
Section 9.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 10.01:
(i) The Trustee may rely and shall be protected in acting or refraining
from acting in reliance on any resolution or certificate of the Seller
or the Servicer, any certificates 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 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) The Trustee shall not 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) The Trustee shall not 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) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by Holders of Certificates evidencing not less than 25% of the
aggregate Voting Rights of the Certificates and provided that the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee reasonably assured to
the Trustee by the security afforded to it by the terms of this
Agreement. The Trustee 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 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 paying agent to perform any paying agent functions under
this Agreement without the express written consent of the Servicer,
which consents will not be unreasonably withheld. The Trustee shall
not be liable or responsible for the misconduct or negligence of any of
the Trustee's agents or attorneys or paying agent appointed hereunder
by the Trustee with due care and, when required, with the consent of
the Servicer;
(vii) Should the Trustee deem the nature of any action required on its part
to be unclear, the Trustee may require prior to such action that it be
provided by the Depositor with reasonable further instructions; the
right of the Trustee to perform any discretionary act enumerated in
this Agreement shall not be construed as a duty, and the Trustee shall
not be accountable for other than its negligence or willful misconduct
in the performance of any such act;
(viii) The Trustee shall not 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
(ix) The Trustee shall not have any duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Mortgage Loan by any Person pursuant to this
Agreement, or the eligibility of any Mortgage Loan for purposes of this
Agreement.
(b) The Trustee is hereby directed by the Depositor to execute and deliver
the Yield Maintenance Agreements. Amounts payable by the Trust on the
Closing Date pursuant to the Yield Maintenance Agreements shall be paid by
the Depositor or its designee. The Trustee in its individual capacity shall
have no responsibility for any of the undertakings, agreements or
representations with respect to the Yield Maintenance Agreement, including,
without limitation, for making any payments thereunder.
Section 9.03 Trustee 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 the Trustee shall not have any
responsibility for their correctness. The Trustee makes no representation as
to the validity or sufficiency of the Certificates (other than the signature
and countersignature of the Trustee on the Certificates), any Yield
Maintenance Agreement, the Custodial Agreement, any Special Servicing
Agreement or of any Mortgage Loan except as expressly provided in Sections
2.02 and 2.06 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 Section 2.02 of this Agreement. 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. The Trustee shall not 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. Subject to Section 2.06, the
Trustee shall not be responsible for the legality or validity of this
Agreement, any Yield Maintenance Agreement, the Custodial Agreement, any
Special Servicing 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. The Trustee shall not
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. The Trustee shall not be
responsible for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.
Section 9.04 Trustee May Own Certificates.
The Trustee 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 the Trustee and may otherwise
deal with the parties hereto.
Section 9.05 Trustee's Fees and Expenses.
The Trustee will be entitled to recover from the Distribution Account
pursuant to Section 4.05, the Trustee Fee, all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee in
connection with any Event of Default (or anything related thereto, including
any determination that an Event of Default does or does not exist), any
breach of this Agreement or any claim or legal action (including any pending
or threatened claim or legal action) incurred or made by the Trustee in the
administration of the trusts hereunder or under any Yield Maintenance
Agreement, the Custodial Agreement or any Special Servicing Agreement
(including the reasonable compensation, expenses and disbursements of its
counsel) except any such expense, disbursement or advance as may arise from
the Trustee's negligence or intentional misconduct or which is the
responsibility of the Certificateholders hereunder. If funds in the
Distribution Account are insufficient therefor, the Trustee shall recover
such expenses, disbursements or advances from the Depositor and the Depositor
hereby agrees to pay such expenses, disbursements or advances. 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.
In addition, if more than one Special Servicer is appointed pursuant to
Section 3.18, the Trustee shall be entitled to additional compensation as
mutually agreed to between the Majority ▇▇ ▇▇▇▇▇▇ and the Trustee. Such
additional compensation shall be payable to the Trustee from the Majority ▇▇
▇▇▇▇▇▇ only, and shall not be an obligation of the Trust Fund, the Servicer,
the Depostor or the Seller.
Section 9.06 Eligibility Requirements for Trustee.
The Trustee and any successor Trustee 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 a 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 $50,000,000, subject to supervision or examination by federal or
state authority and rated "BBB" or higher by Fitch with respect to their
long-term rating and rated "BBB" or higher by Standard & Poor's 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 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 (which
consent shall not be unreasonably withheld). The Trustee shall not be an
Affiliate of the Servicer. 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 shall cease to be eligible in accordance with the provisions of this
Section 9.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.08.
Section 9.07 Insurance.
The Trustee, at its 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"); provided,
that such insurance may be provided through self-insurance so long as the
Trustee is rated "A" or better by S&P and "A1" or better by Moody's. 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 as to the Trustee's compliance
with this Section 9.07 shall be furnished to any Certificateholder upon
reasonable written request.
Section 9.08 Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the Trust
hereby created by giving written notice thereof to the Depositor, the Seller
and the Servicer, with a copy to the Rating Agencies. Upon receiving such
notice of resignation, the Depositor shall promptly appoint a successor
trustee by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning Trustee and the successor
trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 hereof and shall fail to resign after
written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund is located, (B) the imposition of such
tax would be avoided by the appointment of a different trustee and (C) the
Trustee fails to indemnify the Trust Fund against such tax, then the
Depositor or the Seller may remove the Trustee and appoint a successor
trustee by written instrument, in multiple copies, a copy of which instrument
shall be delivered to the Trustee, the Servicer and the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of each Class
of Certificates may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in multiple copies, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered by the successor trustee to the
Servicer, the Trustee so removed and the successor trustee so appointed.
Notice of any removal of the Trustee shall be given to each Rating Agency by
the Trustee or successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 9.08
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 9.09 hereof.
Section 9.09 Successor Trustee.
Any successor trustee appointed as provided in Section 9.08 hereof
shall execute, acknowledge and deliver to the Depositor, to its predecessor
trustee, the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein.
No successor trustee shall accept appointment as provided in this
Section 9.09 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 9.07 hereof and its
appointment shall not adversely affect the then current rating of the
Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 9.09, the successor trustee shall mail notice of the succession
of such trustee hereunder to all Holders of Certificates. If the successor
trustee fails to mail such notice within ten days after acceptance of
appointment, the Depositor shall cause such notice to be mailed at the
expense of the Trust Fund.
Section 9.10 Merger or Consolidation of Trustee.
Any corporation, state bank or national banking association into which
the Trustee may be merged or converted or with which it may be consolidated
or any corporation, state bank or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation, state bank or national banking association
succeeding to substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 9.06 hereof
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 9.11 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing any Mortgage Note may
at the time be located, the Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one
or more Persons approved by the Trustee to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust Fund or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 9.11, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. If the Servicer shall not have joined in such appointment within
15 days after the receipt by it of a request to do so, or in the case an
Event of Default shall have occurred and be continuing, the Trustee alone
shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 9.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed upon
the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Servicer, shall be
conferred or imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it being understood that
such separate trustee or co-trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed (whether a Trustee hereunder or as a Successor
Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Fund or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of any
act or omission of any other trustee hereunder; and\
(iii) The Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this 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 and a copy thereof given to the Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 9.12 Federal Information Returns and Reports to
Certificateholders; REMIC Administration.
(a) It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that each REMIC formed
hereunder qualifies as, a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. For federal income
tax purposes, the taxable year of each REMIC formed hereunder shall be a
calendar year and the Trustee shall maintain or cause the maintenance of the
books of each such REMIC on the accrual method of accounting.
(b) The Trustee 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
formed hereunder, 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 mortgaged property that is abandoned or foreclosed,
receipt of mortgage interests in kind in a trade or business, a cancellation
of indebtedness, interest, original issue discount and market discount or
premium (using a constant prepayment assumption of 30% CPR). The Trustee will
apply for an Employee Identification Number from the Internal Revenue Service
under Form SS-4 or any other acceptable method for all tax entities. In
connection with the foregoing, the Trustee 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 formed
hereunder (the "REMIC Reporting Agent"). The Trustee shall make elections to
treat each REMIC formed hereunder 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 Trustee. 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 largest percentage interest in
the Class R-1 Certificates is hereby designated as the "Tax Matters Person"
(within the meaning of Treasury Regulation § 1.860F-4(d)) for REMIC I, the
Holder of the largest percentage interest in the Class R-2 Certificates is
hereby designated as the "Tax Matters Person" for REMIC II and the Holder of
the largest percentage interest in the Class R-3 Certificates is hereby
designated as the "Tax Matters Person" for REMIC III. The Trustee 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
Trustee as agent and attorney in fact for the purpose of acting as Tax
Matters Person for each REMIC formed hereunder during such time as the
Trustee 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 Trustee from acting as
agent for the Tax Matters Person, the Trustee 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 the largest percentage interest in 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.
The Trustee, as agent on behalf of the Trust Fund, shall do or refrain
from doing, as applicable, the following: (a) the Trustee shall, to the
extent under its control, conduct the affairs of the Trust Fund at all times
that any Certificates are outstanding so as to maintain the status of each
REMIC formed hereunder as a REMIC under the REMIC Provisions; (b) the Trustee
shall not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of any REMIC
formed hereunder; (c) the Trustee shall pay, from the sources specified this
Section 9.12, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on any REMIC formed
hereunder prior to the termination of the Trust Fund when and as the same
shall be due and payable (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings); (d)
the Trustee shall maintain records relating to each REMIC formed hereunder
including but not limited to the income, expenses, assets and liabilities of
each such REMIC and adjusted basis of the Trust Fund property determined at
such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information and any state tax
returns required by Section 9.12(d) below (e) the Trustee shall, for
federal income tax purposes, maintain books and records with
respect to the REMICs on a calendar year and on an accrual basis; (f) the
Trustee shall not enter into any arrangement not otherwise provided for in
this Agreement by which the REMICs will receive a fee or other compensation
for services nor permit the REMICs to receive any income from assets other
than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code; and (l)
as and when necessary and appropriate, the Trustee, at the expense of the
Trust Fund, shall represent the Trust Fund in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of any
REMIC formed hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust Fund, and otherwise act on behalf of each REMIC formed
hereunder in relation to any tax matter involving any such REMIC.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the
Trustee requests in writing and reasonably determines to be relevant for tax
purposes to the valuations and offering prices of the Certificates, including,
without limitation, the price, yield, prepayment assumption and projected cash
flows of the Certificates and the Mortgage Loans. Thereafter, the Depositor shall
provide, or cause the Servicer or any other appropriate party to provide, to
the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth herein. The
Depositor hereby indemnifies the Trustee for any losses, liabilities,
damages, claims or expenses of the Trustee arising from any errors or
miscalculations of the Trustee that result from any failure of the Depositor
to provide, or to cause to be provided, accurate information or data to the
Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of
any of REMIC I, REMIC II or REMIC III as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the Trust Fund as
defined in Section 860G(c) of the Code, on any contribution to any of REMIC
I, REMIC II or REMIC III after the Startup Day pursuant to Section 860G(d) of
the Code, or any other tax is imposed, including, without limitation, any
federal, state or local tax or minimum tax imposed upon any of REMIC I, REMIC
II or REMIC III, and is not paid as otherwise provided for herein, such tax
shall be paid by (i) the Trustee, if any such other tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) any party hereto (other than the Trustee) to the extent any
such other tax arises out of or results from a breach by such other party of
any of its obligations under this Agreement or (iii) in all other cases, or
in the event that any liable party hereto fails to honor its obligations
under the preceding clauses (i) or (ii), any such tax will be paid first with
amounts otherwise to be distributed to the Residual Certificateholders, and
second with amounts otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class
M-9A Certificates and Class M-9B Certificates (pro rata based on their then
outstanding Certificate Principal Balances prior to giving effect to
distributions to be made on such Distribution Date), second, to the Class M-8
Certificates, third, to the Class M-7 Certificates, fourth, to the Class M-6
Certificates, fifth, to the Class M-5 Certificates, sixth, to the Class M-4
Certificates, seventh to the Class M-3 Certificates, eighth to the Class M-2
Certificates, ninth to the Class M-1 Certificates and tenth to the Class A
Certificates (pro rata based on the amounts to be distributed).
Notwithstanding anything to the contrary contained herein, to the extent that
such tax is payable by the Holder of any Certificates, the Trustee is hereby
authorized to retain on any Distribution Date, from the Holders of the
Residual Certificates (and, if necessary, second, from the Holders of the
other Certificates in the priority specified in the preceding sentence),
funds otherwise distributable to such Holders in an amount sufficient to pay
such tax. The Trustee shall promptly notify in writing the party liable for
any such tax of the amount thereof and the due date for the payment thereof.
The Trustee agrees that, in the event it should obtain any information
necessary for the other party to perform its obligations pursuant to this
Section 9.12, it will promptly notify and provide such information to such
other party.
(c) The Trustee 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
6.02(d), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described
in 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 6.02(d) (or which is deemed by
statute to be an entity with a disqualified member).
(d) The Trustee 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 formed hereunder or the Trust Fund.
(e) Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount on the
Mortgage Loans, that the Trustee reasonably believes are applicable under the
Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trustee withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee shall, together
with its monthly report to such Certificateholders, indicate such amount
withheld.
(f) The Trustee agrees 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 or the Depositor as a
result of a breach of the Trustee's covenants set forth in this Section 9.12.
ARTICLE X
TERMINATION
Section 10.01 Termination upon Liquidation or Repurchase of all Mortgage
Loans.
Subject to Section 10.03, the obligations and responsibilities of the
Depositor, the Servicer, the Seller and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the
purchase by the Majority ▇▇ ▇▇▇▇▇▇ of all of the Mortgage Loans (and REO
Properties) remaining in the Trust Fund at a price (the "Mortgage Loan
Purchase Price") equal to the sum of (i) 100% of the Stated Principal Balance
of each Mortgage Loan (other than in respect of REO Property), (ii) accrued
interest thereon at the applicable Mortgage Rate to, but not including, the
first day of the month of such purchase, (iii) the appraised value of any REO
Property in the Trust Fund (up to the Stated Principal Balance of the related
Mortgage Loan), such appraisal to be conducted by an appraiser mutually
agreed upon by the Servicer and the Trustee, (iv) unreimbursed out-of pocket
costs of the Servicer, including unreimbursed Servicing Advances made on the
Mortgage Loans prior to the exercise of such repurchase right and (v) any
unreimbursed costs and expenses of the Trustee payable pursuant to Section
9.05 and (b) the later of (i) the maturity or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (ii) the distribution
to Certificateholders of all amounts required to be distributed to them
pursuant to this Agreement, as applicable. In no event shall the trusts
created hereby continue beyond the earlier of (i) 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. ▇▇▇▇▇, living on
the date hereof and (ii) the Latest Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties pursuant
to clause in the preceding paragraph shall be conditioned upon the Stated
Principal Balance of all of the Mortgage Loans in the Trust Fund, at the time
of any such repurchase, aggregating 10% or less of the aggregate Cut-off Date
Principal Balance of all of the Mortgage Loans.
Section 10.02 Final Distribution on the Certificates.
If on any Determination Date, (i) the Servicer determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust
Fund other than the funds in the Protected Account, the Servicer shall direct
the Trustee to send a final distribution notice promptly to each
Certificateholder or (ii) the Trustee determines that a Class of Certificates
shall be retired after a final distribution on such Class, the Trustee shall
notify the Certificateholders within five (5) Business Days after such
Determination Date that the final distribution in retirement of such Class of
Certificates is scheduled to be made on the immediately following
Distribution Date. Any final distribution made pursuant to the immediately
preceding sentence will be made only upon presentation and surrender of the
related Certificates at the Corporate Trust Office of the Trustee. If the
Servicer elects to terminate the Trust Fund pursuant to Section 10.01, at
least 20 days prior to the date notice is to be mailed to the
Certificateholders, the Servicer shall notify the Depositor and the Trustee
of the date the Servicer intends to terminate the Trust Fund. The Servicer
shall remit the Mortgage Loan Purchase Price to the Trustee on the Business
Day prior to the Distribution Date for such Optional Termination by the
Servicer.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their
Certificates for payment of the final distribution and cancellation, shall be
given promptly by the Trustee by letter to Certificateholders mailed not
later than two Business Days after the Determination Date in the month of
such final distribution. Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated,
(b) the amount of such final distribution, (c) the location of the office or
agency at which such presentation and surrender must be made and (d) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such
notice to each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Servicer shall cause all funds
in the Protected Account to be remitted to the Trustee for deposit in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee or the
Custodian shall promptly release to the Majority ▇▇ ▇▇▇▇▇▇ the Mortgage Files
for the Mortgage Loans and the Trustee shall execute and deliver any
documents prepared and delivered to it which are necessary to transfer any
REO Property.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Distribution Account in the order
and priority set forth in Section 5.04 hereof on the final Distribution Date
and in proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date 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 all the applicable Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for
cancellation, the Residual Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund that remain subject hereto.
Section 10.03 Additional Termination Requirements.
(a) Upon exercise by the Servicer of its purchase option as provided in
Section 10.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee have been supplied with
an Opinion of Counsel addressed to the Trustee, at the expense of the
Servicer, to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 10.03 will not (i) result in the imposition of
taxes on "prohibited transactions" of a REMIC, or (ii) cause a REMIC to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(1) The Servicer shall establish a 90-day liquidation period and
notify the Trustee thereof, and the Trustee shall in turn specify the first
day of such period in a statement attached to the tax return for each of
REMIC I, REMIC II and REMIC III pursuant to Treasury Regulation Section
1.860F-1. The Servicer shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel obtained at the expense of the Servicer;
(2) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Trustee shall sell
all of the assets of REMIC I, REMIC II and REMIC III for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates all cash
on hand (other than cash retained to meet claims), and REMIC I shall
terminate at that time.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the adoption of a 90-day liquidation period for REMIC I, REMIC II
and REMIC III, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and sign
such a plan of complete liquidation upon the written request of the Servicer,
and the receipt of the Opinion of Counsel referred to in Section 10.03(a)(1)
and to take such other action in connection therewith as may be reasonably
requested by the Servicer.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment.
This Agreement may be amended from time to time by parties hereto
without the consent of any of the Certificateholders to cure any ambiguity,
to correct or supplement any provisions herein (including to give effect to
the expectations of investors), to change the manner in which the Protected
Account is maintained or to make such other provisions with respect to
matters or questions arising under this Agreement as shall not be
inconsistent with any other provisions herein if such action shall not, as
evidenced by an Opinion of Counsel addressed to the Trustee, which opinion
shall be an expense of the party requesting such amendment but in any case
shall not be an expense of the Trustee, adversely affect in any material
respect the interests of any Certificateholder; provided that any such
amendment shall be deemed not to adversely affect in any material respect the
interests of the Certificateholders and no such Opinion of Counsel shall be
required if the Person requesting such amendment obtains a letter from each
Rating Agency stating that such amendment would not result in the downgrading
or withdrawal of the respective ratings then assigned to the Certificates.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the
qualification of each of REMIC I, REMIC II and REMIC III as a REMIC under the
Code or to avoid or minimize the risk of the imposition of any tax on any of
REMIC I, REMIC II or REMIC III pursuant to the Code that would be a claim
against any of REMIC I, REMIC II or REMIC III at any time prior to the final
redemption of the Certificates, provided that the Trustee has been provided
an Opinion of Counsel addressed to the Trustee, which opinion shall be an
expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee or the Trust Fund, to the effect that such action is
necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the parties
hereto with the consent of the Holders of each Class of Certificates affected
thereby evidencing over 50% of the Voting Rights of 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 Holders of Certificates; provided that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) cause any of REMIC I, REMIC
II or REMIC III to cease to qualify as a REMIC or (iii) reduce the aforesaid
percentages of Certificates of each Class the Holders of which are required
to consent to any such amendment without the consent of the Holders of all
Certificates of such Class then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have
first received an Opinion of Counsel addressed to the Trustee, which opinion
shall be an expense of the party requesting such amendment but in any case
shall not be an expense of the Trustee, to the effect that such amendment
will not (other than an amendment pursuant to clause (ii) of, and in
accordance with, the preceding paragraph) cause the imposition of any tax on
REMIC I, REMIC II or REMIC III or the Certificateholders or cause REMIC I,
REMIC II or REMIC III to cease to qualify as a REMIC at any time that any
Certificates are outstanding. Further, nothing in this Agreement shall
require the Trustee to enter into an amendment without receiving an Opinion
of Counsel, satisfactory to the Trustee that (i) such amendment is permitted
and is not prohibited by this Agreement and that all requirements for
amending this Agreement (including any consent of the applicable
Certificateholders) have been complied with.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. 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.
Section 11.02 Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of
the Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere. The Servicer shall effect such recordation at
the Trust's expense 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.
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 11.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAWS).
Section 11.04 Intention of Parties.
It is the express intent of the parties hereto that the conveyance of
(i) the Conveyed Assets by the Seller to the Depositor and (ii) the Trust
Fund by the Depositor to the Trustee be, and be construed as, an absolute
sale thereof to the Depositor or the Trustee, as applicable. It is, further,
not the intention of the parties that such conveyance be deemed a pledge
thereof by the Seller to the Depositor, or by the Depositor to the Trustee.
However, in the event that, notwithstanding the intent of the parties, such
assets are held to be the property of the Seller or the Depositor, as
applicable, or if for any other reason the Mortgage Loan Purchase Agreement
or this Agreement is held or deemed to create a security interest in such
assets, then (i) the Mortgage Loan Purchase Agreement and this Agreement
shall each be deemed to be a security agreement within the meaning of the
Uniform Commercial Code of the State of New York, (ii) the conveyance of the
Conveyed Assets provided for in the Mortgage Loan Purchase Agreement shall be
deemed to be an assignment and a grant by the Seller to the Depositor of a
security interest in the Conveyed Assets, whether now owned or hereafter
acquired, and (iii) the conveyance of the Trust Fund provided for in this
Agreement from the Depositor to the Trustee shall be deemed to be an
assignment and a grant by the Depositor to the Trustee for the benefit of the
Certificateholders of a security interest in all of the assets that
constitute the Trust Fund (including the Depositor's interest in the Conveyed
Assets), whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest
in the assets of the Trust Fund, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of the Agreement.
Section 11.05 Notices.
(a) Trustee shall use its best efforts to promptly provide notice to each
Rating Agency with respect to each of the following of which a Responsible
Officer of the Trustee has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Servicer or the Trustee and the
appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to Sections
2.02, 2.03, 3.18 and 10.01; and
(v) The final payment to Certificateholders.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered at or mailed by
registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed to (i) in the
case of the Depositor, Bear ▇▇▇▇▇▇▇ Asset Backed Securities I LLC, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Counsel; (ii) in
the case of the Seller or the Servicer, EMC Mortgage Corporation, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇ or such other
address as may be hereafter furnished to the other parties hereto by the
Servicer in writing; (iii) in the case of the Trustee, at each Corporate
Trust Office or such other address as the Trustee may hereafter furnish to
the other parties hereto; and (iv) in the case of the Rating Agencies, (x)
▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Home Equity Monitoring and (y) Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Surveillance
Group. Any notice delivered to the Seller, the Servicer, 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, whether or not the Certificateholder
receives such notice.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 7.02, this Agreement may not be assigned by the
Servicer, the Seller or the Depositor.
Section 11.08 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of
the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed
so as to constitute the Certificateholders from time to time as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than
25% of the Voting Rights evidenced by the Certificates shall also have made
written request to 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, expenses, and
liabilities to be incurred therein or thereby, and 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; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 11.08, each and every Certificateholder or the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 11.09.....Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Depositor, the Trustee during the Servicer's normal
business hours, to examine all the books of account, records, reports and
other papers of the Servicer relating to the Mortgage Loans, to make copies
and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the Depositor, the Trustee and to
discuss its affairs, finances and accounts relating to such Mortgage Loans
with its officers, employees and independent public accountants (and by this
provision the Servicer hereby authorizes such accountants to discuss with
such representative such affairs, finances and accounts), all at such
reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Depositor, the Trustee
of any right under this Section 11.09 shall be borne by the party requesting
such inspection, subject to such party's right to reimbursement hereunder (in
the case of the Trustee, pursuant to Section 9.05 hereof).
Section 11.10.....Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof
by the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
* * *
IN WITNESS WHEREOF, the Depositor, the Servicer, the Seller and the
Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES I
LLC,
as Depositor
By:
______________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
EMC MORTGAGE CORPORATION,
as Seller
By:
______________________________________
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President
GMAC MORTGAGE CORPORATION,
as Servicer
By:
______________________________________
Name:
Title: Executive Vice President
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
as Trustee
By:
______________________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 26th day of October, 2004, before me, a notary public in and
for said State, appeared ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., personally known to me on the
basis of satisfactory evidence to be an authorized representative of Bear
▇▇▇▇▇▇▇ Asset Backed Securities I LLC, one of the companies that executed the
within instrument, and also known to me to be the person who executed it on
behalf of such limited liability company and acknowledged to me that such
limited liability company 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]
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this 26th day of October, 2004, before me, a notary public in and
for said State, appeared ▇▇▇ ▇▇▇▇▇▇▇▇, personally known to me on the basis of
satisfactory evidence to be an authorized representative of EMC Mortgage
Corporation, one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of such
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]
STATE OF [________] )
) ss.:
COUNTY OF [______] )
On this 26th day of October, 2004, before me, a notary public in and
for said State, appeared ,
personally known to me on the basis of satisfactory evidence to be an
authorized representative of ▇▇▇▇▇ Fargo Bank, National Association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of such 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]
2
STATE OF [________] )
) ss.:
COUNTY OF [______] )
On this 26th day of October, 2004, before me, a notary public in and
for said State, appeared ,
personally known to me on the basis of satisfactory evidence to be an
authorized representative of GMAC Mortgage Corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of such 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]
Appendix 1
CALCULATION OF REMIC I Y PRINCIPAL REDUCTION AMOUNTS
REMIC I Y Principal Reduction Amounts: For any Distribution Date the amounts
by which the principal balances of the REMIC I Regular Interests Y-1 and Y-2,
respectively, will be reduced on such distribution date by the allocation of
Realized Losses and the distribution of principal, determined as follows:
First for each of Loan Group I and Loan Group II determine the weighted
average pass-through rate for that Loan Group for distributions of interest
that will be made on the next succeeding Distribution Date (the "Group
Interest Rate"). The Principal Reduction Amount for each of the REMIC I Y
Regular Interests will be determined pursuant to the "Generic solution for
the REMIC I Y Principal Reduction Amounts" set forth below (the "Generic
Solution") by making identifications among the actual Loan Groups and their
related REMIC I Y and REMIC I Z Regular Interests and weighted average
pass-through rates and the Loan Groups named in the Generic Solution and
their related REMIC I Y and REMIC I Z Regular Interests as follows:
A. Determine which Loan Group has the lower Group Interest Rate. That Loan
Group will be identified with Group AA and the REMIC I Y and REMIC I Z
Regular Interests related to that Loan Group will be respectively identified
with the REMIC I YAA and REMIC I ZAA Regular Interests. The Group Interest
Rate for that Loan Group will be identified with J%. If the two Loan Groups
have the same Group Interest Rate pick one for this purpose, subject to the
restriction that each Loan Group may be picked only once in the course of any
such selections pursuant to paragraphs A and B of this definition.
B. Determine which Loan Group has the higher Group Interest Rate. That Loan
Group will be identified with Group BB and the REMIC I Y and REMIC I Z
Regular Interests related to that Loan Group will be respectively identified
with the REMIC I YBB and REMIC I ZBB Regular Interests. The Group Interest
Rate for that Loan Group will be identified with K%. If the two Loan Groups
have the same Group Interest Rate the Loan Group not selected pursuant to
paragraph A, above, will be selected for purposes of this paragraph B.
Second, apply the Generic Solution set forth below to determine the REMIC I Y
Principal Reduction Amounts for the Distribution Date using the
identifications made above.
Generic Solution for the REMIC I Y Principal Reduction Amounts: For any
Distribution Date, the amounts by which the principal balances of the REMIC I
YAA and REMIC I YBB Regular Interests respectively will be reduced on such
Distribution Date by the allocation of Realized Losses and the distribution
of principal, determined as follows:
J% and K% represent the interest rates on Loan Group AA and Loan Group BB
respectively. J%<K%.
For purposes of the succeeding formulas the following symbols shall have the
meanings set forth below:
PJB = the Group AA Subordinate Balance after the allocation of Realized
Losses and distributions of principal on such Distribution Date.
PKB = the Group BB Subordinate Balance after the allocation of Realized
Losses and distributions of principal on such Distribution Date.
R = the Class CB Pass Through Rate = (J%PJB + K%PKB)/(PJB + PKB)
Yj = the REMIC I YAA Uncertificated Principal Balance after distributions on
the prior Distribution Date.
Yk = the REMIC I YBB Uncertificated Principal Balance after distributions on
the prior Distribution Date.
ΔYj = the REMIC I YAA Principal Reduction Amount.
ΔYk = the REMIC I YBB Principal Reduction Amount.
Zj = the REMIC I ZAA Uncertificated Principal Balance after distributions on
the prior Distribution Date.
Zk = the REMIC I ZBB Uncertificated Principal Balance after distributions on
the prior Distribution Date.
ΔZj = the REMIC I ZAA Principal Reduction Amount.
ΔZk = the REMIC I ZBB Principal Reduction Amount.
Pj = the aggregate Uncertificated Principal Balance of the REMIC I YAA and
REMIC I ZAA Regular Interests after distributions on the prior
Distribution Date, which is equal to the aggregate principal balance of
the Mortgage Loans in Loan Group AA reduced by the Group AA Class P
principal balance, if any, and the Class R Principal Balance, if
applicable.
Pk = the aggregate Uncertificated Principal Balance of the REMIC I YBB and
REMIC I ZBB Regular Interests after distributions on the prior
Distribution Date, which is equal to the aggregate principal balance of
the Mortgage Loans in Loan Group BB reduced by the Group BB Class P
principal balance, if any and Class R Principal Balance, if applicable.
ΔPj = the aggregate principal reduction resulting on such Distribution
Date on the Mortgage Loans in Loan Group AA as a result of principal
distributions (exclusive of any amounts distributed pursuant to clauses
(c)(i) or (c)(ii) of the definition of REMIC I Distribution Amount) to
be made and realized losses to be allocated on such Distribution Date,
reduced by the portion, if any, of such reduction allocable to any
Group AA Class P Certificates or the Class R Certificates, if
applicable, which is equal to the aggregate of the REMIC I YAA and
REMIC I ZAA Principal Reduction Amounts.
ΔPk= the aggregate principal reduction resulting on such Distribution
Date on the Mortgage Loans in Loan Group BB as a result of principal
distributions (exclusive of any amounts distributed pursuant to clauses
(c)(i) or (c)(ii) of the definition of REMIC I Distribution Amount) to
be made and realized losses to be allocated on such Distribution Date,
reduced by the portion, if any, of such reduction allocable to any
Group BB Class P Certificates or the Class R Certificates, if
applicable, which is equal to the aggregate of the REMIC I YBB and
REMIC I ZBB Principal Reduction Amounts.
α = .0005
γ = (R - J%)/(K% - R). γ is a non-negative number unless its
denominator is zero, in which event it is undefined.
If γ is zero, ΔYk = Yk and ΔYj = (Yj/Pj)ΔPj.
If γ is undefined, ΔYj = Yj, ΔYk = (Yk/Pk)ΔPk.
In the remaining situations, ΔYk and ΔYj shall be defined as
follows:
1. If Yk - α(Pk - ΔPk) => 0, Yj- α(Pj - ΔPj) => 0,
and γ (Pj - ΔPj) < (Pk - ΔPk),
ΔYk = Yk - αγ (Pj - ΔPj) and
ΔYj = Yj - α(Pj - ΔPj).
2. If Yk - α(Pk - ΔPk) => 0, Yj - α(Pj - ΔPj) =>
0, and γ (Pj - ΔPj) => (Pk - ΔPk),
ΔYk = Yk - α(Pk - ΔPk) and
ΔYj = Yj - (α/γ)(Pk - ΔPk).
3. If Yk - α(Pk - ΔPk) < 0, Yj - α(Pj - ΔPj) => 0,
and Yj - α(Pj - ΔPj) => Yj - (Yk/γ),
ΔYk = Yk - αγ (Pj - ΔPj) and
ΔYj = Yj - α(Pj - ΔPj).
4. If Yk - α(Pk - ΔPk) < 0, Yj - (Yk/γ) => 0, and
Yj - α(Pj - ΔPj) <= Yj - (Yk/γ), ΔYk = 0 and
ΔYj = Yj - (Yk/γ).
5. If Yj - α(Pj - ΔPj) < 0, Yj - (Yk/γ) < 0, and
Yk - α(Pk - ΔPk) <= Yk - (γYj),
ΔYk = Yk - (γYj) and ΔYj = 0.
6. If Yj - α(Pj - ΔPj) < 0, Yk - α(Pk - ΔPk) => 0,
and Yk - α(Pk - ΔPk) => Yk - (γYj),
ΔYk = Yk - α(Pk - ΔPk) and
ΔYj = Yj - (α/γ)(Pk - ΔPk).
The purpose of the foregoing definitional provisions together with the
related provisions allocating Realized Losses and defining the REMIC I Y and
REMIC I Z Principal Distribution Amounts is to accomplish the following goals
in the following order of priority:
1. Making the ratio of Yk to Yj equal to γ after taking account of
the allocation Realized Losses and the distributions that will be made
through end of the Distribution Date to which such provisions relate
and assuring that the Principal Reduction Amount for each of the REMIC
I YAA, REMIC I YBB, REMIC I ZAA and REMIC I ZBB Regular Interests is
greater than or equal to zero for such Distribution Date;
2. Making (i) the REMIC I YAA Uncertificated Principal Balance less than
or equal to 0.0005 of the sum of the REMIC I YAA and REMIC I ZAA
Uncertificated Principal Balances and (ii) the REMIC I YBB
Uncertificated Principal Balance less than or equal to 0.0005 of the
sum of the REMIC I YBB and REMIC I ZBB Uncertificated Principal
Balances in each case after giving effect to allocations of Realized
Losses and distributions to be made through the end of the Distribution
Date to which such provisions relate; and
3. Making the larger of (a) the fraction whose numerator is Yk and whose
denominator is the sum of Yk and Zk and (b) the fraction whose
numerator is Yj and whose denominator is the sum of Yj, and Zj as large
as possible while remaining less than or equal to 0.0005.
In the event of a failure of the foregoing portion of the definition of
REMIC I Y Principal Reduction Amount to accomplish both of goals 1 and 2
above, the amounts thereof should be adjusted to so as to accomplish such
goals within the requirement that each REMIC I Y Principal Reduction Amount
must be less than or equal to the sum of (a) the Principal Realized Losses to
be allocated on the related Distribution Date for the related Pool remaining
after the allocation of such Realized Losses to the related Class P
Certificates and (b) the remainder of the Available Distribution Amount for
the related Pool or after reduction thereof by the distributions to be made
on such Distribution Date (i) to the related Class P Certificates, (ii) to
the related Class X Certificates and (iii) in respect of interest on the
related REMIC I Y and REMIC I Z Regular Interests, or, if both of such goals
cannot be accomplished within such requirement, such adjustment as is
necessary shall be made to accomplish goal 1 within such requirement. In the
event of any conflict among the provisions of the definition of the REMIC I Y
Principal Reduction Amounts, such conflict shall be resolved on the basis of
the goals and their priorities set forth above within the requirement set
forth in the preceding sentence.
Method of calculating initial balance of the REMIC I Y and REMIC I Z Regular
Interests:
To calculate the initial balances for the REMIC I YAA, REMIC I
YBB, REMIC I ZAA and REMIC I ZBB Regular Interests, first calculate the Group
AA and Group BB Subordinate Amounts as of the Cut Off Date. Then calculate R
according to the definition above. Calculate γ according to the
definition above. Calculate Pj and Pk as the Group AA Initial Balance
reduced by the Class AA-P Initial Balance and the Class R-1 Initial Balance
(if applicable) and the Group BB Initial Balance reduced by the Class BB-P
Initial Balance and the Class R-1 Initial Balance (if applicable),
respectively.
If 0.0005 γ Pj <= 0.0005 Pk, Yj = 0.0005 Pj and
Yk = 0.0005 γ Pj .
If 0.0005 ▇ ▇▇ ▇ ▇.▇▇▇▇ ▇▇, ▇▇ ▇ ▇.▇▇▇▇ ▇▇,
▇▇ = 0.0005 Pk /γ .
Then Zj = ▇▇ - ▇▇ and Zk = Pk - Yk.