EXHIBIT 1
BEAR XXXXXXX ASSET BACKED SECURITIES I LLC,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Master Servicer
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2005
______________________________________
BEAR XXXXXXX ASSET BACKED SECURITIES TRUST 2005-1
ASSET-BACKED CERTIFICATES, SERIES 2005-1
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
Section 1.01. Defined Terms............................................................................2
ARTICLE II. CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Trust Fund................................................................34
Section 2.02. Acceptance by Trustee of the Mortgage Loans.............................................37
Section 2.03. Representations, Warranties and Covenants of the Master Servicer and the Seller.........39
Section 2.04. Representations and Warranties of the Depositor.........................................50
Section 2.05. Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases.........52
Section 2.06. Authentication and Delivery of Certificates.............................................52
Section 2.07. Covenants of the Master Servicer........................................................52
Section 2.08. Lost Mortgage Notes Indemnity...........................................................53
ARTICLE III. ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer to Service the Mortgage Loans.......................................54
Section 3.02. REMIC-Related Covenants.................................................................55
Section 3.03. Collection of Mortgage Loan Payments....................................................55
Section 3.04. Successor Master Servicer and Subservicing Agreements...................................56
Section 3.05. [Reserved]..............................................................................56
Section 3.06. Due-on-Sale Clauses; Assumption Agreements..............................................57
Section 3.07. Release of Mortgage Files...............................................................58
Section 3.08. Documents, Records and Funds in Possession of the Master Servicer To Be Held for
Trustee.................................................................................59
Section 3.09. Maintenance of Hazard Insurance.........................................................59
Section 3.10. Presentment of Claims and Collection of Proceeds........................................60
Section 3.11. Maintenance of the Primary Mortgage Insurance Policies..................................61
Section 3.12. Possession of Certain Insurance Policies and Documents..................................61
Section 3.13. Realization Upon Defaulted Mortgage Loans...............................................61
Section 3.14. Servicing Compensation..................................................................64
Section 3.15. [Reserved]..............................................................................64
Section 3.16. Annual Officer's Certificate as to Compliance...........................................64
Section 3.17. Annual Independent Accountant's Servicing Report........................................65
Section 3.18. Reports Filed with Securities and Exchange Commission...................................65
Section 3.19. Collection of Taxes, Assessments and Similar Items; Escrow Accounts.....................66
Section 3.20. Access to Certain Documentation and Information Regarding the Mortgage Loans............67
(i)
Section 3.21. Optional Purchase of Defaulted Mortgage Loans...........................................67
Section 3.22. Subservicing............................................................................67
Section 3.23. Books and Records.......................................................................68
ARTICLE IV. ACCOUNTS
Section 4.01. [Reserved]..............................................................................70
Section 4.02. Master Servicer Collection Account......................................................70
Section 4.03. Permitted Withdrawals and Transfers from the Master Servicer Collection Account.........71
Section 4.04. Distribution Account....................................................................73
Section 4.05. Permitted Withdrawals and Transfers from the Distribution Account.......................74
Section 4.06. Yield Maintenance Account and Yield Maintenance Agreement...............................74
Section 4.07. Basis Risk Reserve Fund.................................................................77
ARTICLE V. DISTRIBUTIONS AND ADVANCES
Section 5.01. Advances................................................................................79
Section 5.02. Compensating Interest Payments..........................................................80
Section 5.03. REMIC Distributions.....................................................................80
Section 5.04. Distributions...........................................................................80
Section 5.04A. Allocation of Realized Losses and Subsequent Recoveries.................................84
Section 5.04B. Allocation of Deferred Interest.........................................................84
Section 5.05. Monthly Statements to Certificateholders................................................85
Section 5.06. REMIC Designations and Allocations......................................................88
ARTICLE VI. THE CERTIFICATES
Section 6.01. The Certificates........................................................................90
Section 6.02. Certificate Register; Registration of Transfer and Exchange of Certificates.............91
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.......................................95
Section 6.04. Persons Deemed Owners...................................................................95
Section 6.05. Access to List of Certificateholders' Names and Addresses...............................95
Section 6.06. Book-Entry Certificates.................................................................95
Section 6.07. Notices to Depository...................................................................96
Section 6.08. Definitive Certificates.................................................................97
Section 6.09. Maintenance of Office or Agency.........................................................97
ARTICLE VII. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 7.01. Respective Liabilities of the Depositor, the Master Servicer and the Seller.............98
Section 7.02. Merger or Consolidation of the Depositor, the Master Servicer or the Seller.............98
Section 7.03. Indemnification of the Trustee, the Master Servicer and Others..........................98
Section 7.04. Limitation on Liability of the Depositor, the Seller, the Master Servicer and
Others..................................................................................99
(ii)
Section 7.05. Limitation on Resignation of the Master Servicer.......................................100
Section 7.06. Errors and Omissions Insurance; Fidelity Bonds.........................................100
ARTICLE VIII. DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01. Events of Default......................................................................102
Section 8.02. Trustee to Act; Appointment of Successor...............................................103
Section 8.03. Notification to Certificateholders.....................................................105
ARTICLE IX. CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee......................................................................106
Section 9.02. Certain Matters Affecting the Trustee..................................................107
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans..................................109
Section 9.04. Trustee May Own Certificates...........................................................110
Section 9.05. Trustee's Fees and Expenses............................................................110
Section 9.06. Eligibility Requirements for Trustee...................................................110
Section 9.07. Insurance..............................................................................111
Section 9.08. Resignation and Removal of Trustee.....................................................111
Section 9.09. Successor Trustee......................................................................112
Section 9.10. Merger or Consolidation of Trustee.....................................................112
Section 9.11. Appointment of Co-Trustee or Separate Trustee..........................................112
Section 9.12. Tax Matters............................................................................113
ARTICLE X. TERMINATION
Section 10.01. Termination upon Liquidation or Repurchase of all Mortgage Loans.......................117
Section 10.02. Final Distribution on the Certificates.................................................117
Section 10.03. Additional Termination Requirements....................................................119
ARTICLE XI. MISCELLANEOUS PROVISIONS
Section 11.01. Amendment..............................................................................120
Section 11.02. Recordation of Agreement; Counterparts.................................................121
Section 11.03. Governing Law..........................................................................121
Section 11.04. Intention of Parties...................................................................122
Section 11.05. Notices................................................................................122
Section 11.06. Severability of Provisions.............................................................123
Section 11.07. Assignment.............................................................................123
Section 11.08. Limitation on Rights of Certificateholders.............................................124
Section 11.09. Inspection and Audit Rights............................................................124
Section 11.10. Certificates Nonassessable and Fully Paid..............................................125
(iii)
Exhibits
Exhibit A-1.......Form of Class A Certificates
Exhibit A-2.......Form of Class M-1 Certificates
Exhibit A-3.......Form of Class M-2 Certificates
Exhibit A-4.......Form of Class M-3 Certificates
Exhibit A-5.......Form of Class M-4 Certificates
Exhibit A-6.......Form of Class M-5 Certificates
Exhibit A-7.......Form of Class M-6 Certificates
Exhibit A-8.......Form of Class M-7 Certificates
Exhibit A-9.......Form of Class B-IO Certificates
Exhibit A-10......Form of Class R-I Certificates
Exhibit A-11......Form of Class R-II Certificates
Exhibit B.........Mortgage Loan Schedule
Exhibit C-1.......Initial Certification of Trustee
Exhibit C-2.......Interim Certification of Trustee
Exhibit C-3.......Final Certification of Trustee
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 Investment Letter
Exhibit H.........Form of Request for Release
Exhibit I.........DTC Letter of Representations
Exhibit J.........Schedule of Mortgage Loans with Lost Notes
(iv)
POOLING AND SERVICING AGREEMENT, dated as of January 1, 2005, among
BEAR XXXXXXX 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") and as master servicer
(in such capacity, the "Master Servicer"), and XXXXX FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The parties to this Agreement hereby create a common law trust pursuant
to the laws of the State of New York. The Depositor is the owner of the Trust
Fund that is hereby conveyed to the Trustee in return for the Certificates. As
provided herein, the Trustee shall make two separate real estate mortgage
investment conduit (each a "REMIC") elections with respect to the Trust Fund for
Federal income tax purposes.
The Trust Fund shall be named, and may be referred to as, the "Bear
Xxxxxxx Asset Backed Securities Trust 2005-1." The Certificates issued hereunder
may be referred to as "Asset-Backed Certificates Series 2005-1" (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 Master 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 any Mortgage Loan, those
customary mortgage servicing practices of prudent mortgage servicing
institutions that master service mortgage loans of the same type and quality as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, to the extent applicable to the Master Servicer or to the Trustee (in
its capacity, if at all, as Successor Master Servicer).
Account: The Master Servicer Collection Account, the Distribution
Account and the Yield Maintenance Account.
Accrual Period: With respect to the Certificates and any Distribution
Date, the period from and including the immediately preceding Distribution Date
(or, in the case of the first Distribution Date, the Closing Date) to but
excluding such Distribution Date. All calculations of interest on the
Certificates (including any applicable Interest Rate Cap) will be made on the
basis of the actual number of days elapsed in the related Accrual Period and in
a 360-day year.
Advance: The aggregate of the advances required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section 5.01,
the amount of any such advances being equal to the aggregate of payments of
interest and (other than with respect to Simple Interest Loans) principal (net
of the Master Servicing Fees) on the Mortgage Loans that were due during the
related Due Period and not received as of the close of business on the related
Determination Date less the aggregate amount of any such delinquent payments
that the Master Servicer has determined would constitute a Nonrecoverable
Advance were an advance to be made with respect thereto. For purposes of this
definition, an REO Property shall continue to be a Mortgage Loan with an
amortization schedule and periodic adjustments to the related Mortgage Rate
thereon, if applicable, in accordance with the related Mortgage Note until it
becomes a Liquidated Loan.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Allocated Realized Loss Amount: With respect to any Distribution Date
and each Class of Certificates, other than the Class B-IO Certificates and the
Residual 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 this Agreement,
which shall, on any such Distribution Date with respect to the Class M-7
Certificates, the Class M-6 Certificates, the Class M-5 Certificates, the Class
M-4 Certificates, the Class M-3 Certificates, the Class M-2 Certificates, the
Class M-1 Certificates and the Class A Certificates, in that order, so long as
their respective Certificate Principal Balances have not been reduced to zero,
equal the amount, if any, by which, (i) the aggregate Certificate Principal
Balance of all of the Certificates
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(after all distributions of principal on such Distribution Date) exceeds (ii)
the aggregate Stated Principal Balance of all of the Mortgage Loans as of the
last day of the related Due Period.
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Master Servicer Collection 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 and Subsequent Recoveries received in respect of such Mortgage Loans
after the last day of the related Prepayment Period.
Applicable Written Notice: For purposes of Section 8.01, written notice
to the Master Servicer by the Trustee or the Depositor, or to the Trustee and
the Master Servicer by the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates.
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 at the time of such refinancing or, with respect
to any other Mortgage Loan, 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 or in certain instances, an appraisal procured in
connection with its sale to the Depositor.
Balloon Loan: A Mortgage Loan, identified as such on the Mortgage Loan
Schedule, where the related Mortgage Note provides for lowered payments of
principal over the life of such Mortgage Loan and a larger payment of principal
than is usual at its stated maturity.
Bankruptcy Code: Title 11 of the United States Code.
Basis Risk Reserve Fund: The reserve fund established and maintained by
the Trustee pursuant to Section 4.07.
Basis Risk Shortfall: As of any Distribution Date and for any Class of
Certificates (other than the Class B-IO Certificates and the Residual
Certificates), the excess of (i) the amount of the Interest Distribution Amount
that such Class would have been entitled to receive on such Distribution Date
had the applicable Pass-Through Rate been calculated based upon One-Month LIBOR
plus the applicable Certificate Margin for the related Accrual Period, over (ii)
the sum of interest for such Class calculated at the Interest Rate Cap for such
Distribution Date and any amount paid to such Class under the Yield Maintenance
Agreement for such Distribution Date.
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Basis Risk Carry Forward Amount: As of any Distribution Date and for
any Class of Certificates (other than the Class B-IO Certificates and the
Residual Certificates), the sum of: (i) if on such Distribution Date the
applicable Pass-Through Rate for such Class is based upon the Interest Rate Cap,
then the applicable Basis Risk Shortfall, and (ii) the Basis Risk Shortfall for
all previous Distribution Dates not previously paid (including interest accrued
thereon at the applicable Pass-Through Rate for the applicable Accrual Period
with respect to each such prior Distribution Date), together with interest
thereon at a rate equal to the applicable Pass-Through Rate for such
Distribution Date.
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 B-IO
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, the State
of Minnesota or the State of Texas, or, if different, the city in which a
Corporate Trust Office of the Trustee or the principal office of the Master
Servicer is located are authorized or obligated by law or executive order to be
closed.
Cede: Cede & Co., or its successors in interest.
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-11.
Certificate Margin: Reference to any of the Class A Margin, Class M-1
Margin, Class M-2 Margin, Class M-3 Margin, Class M-4 Margin, Class M-5 Margin,
Class M-6 Margin or Class M-7 Margin.
Certificate Notional Balance: As to the Class B-IO Certificates and any
Distribution Date, the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period.
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 B-IO Certificate and any Residual Certificate) and as of any Distribution
Date, the Initial Certificate Principal Balance of such Certificate, reduced by
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 Allocated Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
5.04A, and increased by any Subsequent Recoveries allocated to such Certificate
on previous Distribution Dates pursuant to Section 5.04A. References herein to
the Certificate Principal Balance of a Class of Certificates (other than the
Class B-IO Certificates and the Residual Certificates) shall mean the
Certificate Principal Balances of all Certificates in such Class.
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).
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Class: All Certificates bearing the same Class designation as set forth
in Section 6.01 hereof.
Class A Certificates: The Class A Certificates.
Class A Certificate: Any Certificate designated as a "Class A
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A Certificates as set forth herein.
Class A Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 0.350% per annum and (ii) thereafter, 0.700% per
annum.
Class A Pass-Through Rate: For the first Distribution Date, 2.940% per
annum, and on any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class A Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class A Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any, of (i) the Certificate Principal Balance of
the Class A Certificates immediately prior to such Distribution Date, over (ii)
the lesser of (a) 55.30% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) and (b) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) minus the Overcollateralization Floor.
Class B-IO Certificate: Any Certificate designated as a "Class B-IO
Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B-IO Certificates herein.
Class B-IO Distribution Amount: With respect to any Distribution Date,
the amount allocable to the Class B-IO Certificates as provided in Section
5.06(c), note 3, for such Distribution Date and all prior Distribution Dates,
less the aggregate of all amounts distributed or deemed distributed with respect
to the Class B-IO Certificates on prior Distribution Dates.
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.
Class M-1 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 0.700% per annum and (ii) thereafter, 1.050% per
annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 3.290%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-1 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
5
Class M-1 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such Distribution
Date) and the Class M-1 Certificates immediately prior to such Distribution
Date, over (ii) the lesser of (a) 74.40% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the related Prepayment
Period) and (b) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after reduction for Realized Losses
incurred during the related Prepayment Period) minus the Overcollateralization
Floor.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein.
Class M-2 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 1.400% per annum and (ii) thereafter, 2.100% per
annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 3.990%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-2 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such Distribution
Date), the Class M-1 Certificates (after taking into account distributions of
the Class M-1 Principal Distribution Amount for such Distribution Date) and the
Class M-2 Certificates immediately prior to such Distribution Date, over (ii)
the lesser of (a) 83.80% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) and (b) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) minus the Overcollateralization Floor.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
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 M-3 Certificates as set forth herein.
Class M-3 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 1.600% per annum and (ii) thereafter, 2.400% per
annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 4.190%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-3 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class M-3 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A
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Certificates (after taking into account distributions of the Class A Principal
Distribution Amount for such Distribution Date), the Class M-1 Certificates
(after taking into account distributions of the Class M-1 Principal Distribution
Amount for such Distribution Date), the Class M-2 Certificates (after taking
into account distributions of the Class M-2 Principal Distribution Amount for
such Distribution Date) and the Class M-3 Certificates immediately prior to such
Distribution Date, over (ii) the lesser of (a) 86.00% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after reduction for Realized Losses incurred during the related
Prepayment Period) and (b) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) minus the
Overcollateralization Floor.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-4 Certificates as set forth herein.
Class M-4 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 2.200% per annum and (ii) thereafter, 3.300% per
annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 4.790%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-4 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class M-4 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such Distribution
Date), the Class M-1 Certificates (after taking into account distributions of
the Class M-1 Principal Distribution Amount for such Distribution Date), the
Class M-2 Certificates (after taking into account distributions of the Class M-2
Principal Distribution Amount for such Distribution Date), the Class M-3
Certificates (after taking into account distributions of the Class M-3 Principal
Distribution Amount for such Distribution Date) and the Class M-4 Certificates
immediately prior to such Distribution Date, over (ii) the lesser of (a) 88.00%
of the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after reduction for Realized Losses incurred
during the related Prepayment Period) and (b) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after reduction for Realized Losses incurred during the related Prepayment
Period) minus the Overcollateralization Floor.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-5 Certificates as set forth herein.
Class M-5 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 3.000% per annum and (ii) thereafter, 4.500% per
annum.
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Class M-5 Pass-Through Rate: For the first Distribution Date, 5.590%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-5 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class M-5 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such Distribution
Date), the Class M-1 Certificates (after taking into account distributions of
the Class M-1 Principal Distribution Amount for such Distribution Date), the
Class M-2 Certificates (after taking into account distributions of the Class M-2
Principal Distribution Amount for such Distribution Date), the Class M-3
Certificates (after taking into account distributions of the Class M-3 Principal
Distribution Amount for such Distribution Date), the Class M-4 Certificates
(after taking into account distributions of the Class M-4 Principal Distribution
Amount for such Distribution Date) and the Class M-5 Certificates immediately
prior to such Distribution Date, over (ii) the lesser of (a) 89.50% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) and (b) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) minus the
Overcollateralization Floor.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-6 Certificates as set forth herein.
Class M-6 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 3.500% per annum and (ii) thereafter, 5.250% per
annum.
Class M-6 Pass-Through Rate: For the first Distribution Date, 6.090%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-6 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class M-6 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such Distribution
Date), the Class M-1 Certificates (after taking into account distributions of
the Class M-1 Principal Distribution Amount for such Distribution Date), the
Class M-2 Certificates (after taking into account distributions of the Class M-2
Principal Distribution Amount for such Distribution Date), the Class M-3
Certificates (after taking into account distributions of the Class M-3 Principal
Distribution Amount for such Distribution Date), the Class M-4 Certificates
(after taking into account distributions of the Class M-4 Principal Distribution
Amount for such Distribution Date), the Class M-5 Certificates (after taking
into account distributions of the Class M-5 Principal Distribution Amount for
such Distribution Date) and the Class M-6 Certificates immediately prior to such
Distribution Date, over (ii) the lesser of (a) 91.80% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of
8
the related Due Period (after reduction for Realized Losses incurred during the
related Prepayment Period) and (b) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) minus the
Overcollateralization Floor.
Class M-7 Certificate: Any Certificate designated as a "Class M-7
Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-7 Certificates as set forth herein.
Class M-7 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 3.500% per annum and (ii) thereafter, 5.250% per
annum.
Class M-7 Pass-Through Rate: For the first Distribution Date, 6.090%
per annum, and for any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class M-7 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class M-7 Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any of (i) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates (after taking into account
distributions of the Class A Principal Distribution Amount for such Distribution
Date), the Class M-1 Certificates (after taking into account distributions of
the Class M-1 Principal Distribution Amount for such Distribution Date), the
Class M-2 Certificates (after taking into account distributions of the Class M-2
Principal Distribution Amount for such Distribution Date), the Class M-3
Certificates (after taking into account distributions of the Class M-3 Principal
Distribution Amount for such Distribution Date), the Class M-4 Certificates
(after taking into account distributions of the Class M-4 Principal Distribution
Amount for such Distribution Date), the Class M-5 Certificates (after taking
into account distributions of the Class M-5 Principal Distribution Amount for
such Distribution Date), the Class M-6 Certificates (after taking into account
distributions of the Class M-6 Principal Distribution Amount for such
Distribution Date) and the Class M-7 Certificates immediately prior to such
Distribution Date, over (ii) the lesser of (a) 96.30% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after reduction for Realized Losses incurred during the related
Prepayment Period) and (b) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after reduction for
Realized Losses incurred during the related Prepayment Period) minus the
Overcollateralization Floor.
Class R-I Certificate: Any Certificate designated as a "Class R-I
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-10 hereto, and evidencing ownership of the residual interest in REMIC I and
representing the right to the Percentage Interest of distributions provided for
the Class R-I Certificate as set forth herein.
Class R-II Certificate: Any Certificate designated as a "Class R-II
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-11 hereto, and evidencing ownership of the residual interest in REMIC II and
representing the right to the Percentage Interest of distributions provided for
the Class R-II Certificate as set forth herein.
9
Closing Date: February 16, 2005.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Combined Loan-to-Value Ratio: The fraction, expressed as a percentage,
the numerator of which is the sum of (x) the original principal balance of the
related Mortgage Loan at the date of origination and (y) the outstanding
principal balance at the date of origination of the Mortgage Loan of any senior
mortgage loan, and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount, not to exceed the Master Servicing Fee, to be
applied by the Master Servicer to the payment of the interest portion of a
Prepayment Interest Shortfall on such Mortgage Loan pursuant to Section 5.02
hereof.
Corporate Trust Office: The Trustee's corporate trust office for
purpose of presentment and surrender of the Certificates for the final
distribution thereon and for transfers and exchanges is located at Xxxxx Xxxxxx
xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: BSABS 2005-1, and
for all other purposes is located at X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000 (or,
for overnight deliveries, 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000),
Attention: BSABS 2005-1, or at such other address as the Trustee may designate
from time to time in writing to the other parties to this Agreement.
Custodial Agreement: An agreement, dated as of the Closing Date, among
the Depositor, the Master Servicer, the Trustee and the Custodian.
Custodian: Xxxxx Fargo Bank, National Association, or any successor
custodian appointed pursuant to the provisions hereof and of the Custodial
Agreement.
Cut-off Date: January 1, 2005.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments with respect to such Mortgage Loan
received prior to the Cut-off Date and, except with respect to any Simple
Interest Loans, scheduled payments of principal due on or before the Cut-off
Date, whether or not received but without giving effect to any installments of
principal received in respect of Due Dates after the Cut-off Date. The aggregate
Cut-off Date Principal Balance of the Mortgage Loans is $394,649,130.
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 with respect to each Distribution Date after the Stepdown Date, if
the three-month rolling average of the percent equivalent of a fraction, the
numerator of which is the aggregate Stated Principal
10
Balance of the Mortgage Loans that are 61 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 as of the
last day of the related Due Period, equals or exceeds 36.00% of the Senior
Enhancement Percentage for such Distribution Date.
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. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate (other than the Residual
Certificates), the amount set forth on the face thereof as the "Initial
Principal Balance of this Certificate" or "Initial Principal Balance (Notional)
of this Certificate."
Depositor: Bear Xxxxxxx Asset Backed Securities I LLC, a Delaware
limited liability company, or its successor in interest.
Depository: The initial Depository shall be DTC, the nominee of which
is Cede, 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 between the Depositor and the initial Depository,
dated February 16, 2005, 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 and designated "Xxxxx Fargo Bank,
National Association, in trust for registered holders of Bear Xxxxxxx Asset
Backed Securities Trust 2005-1, Asset-Backed Certificates, Series 2005-1,
Distribution Account." 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: As to any Distribution Date, on or
before 1:00 p.m. Eastern time on the Business Day immediately preceding such
Distribution Date.
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Distribution Date: The 25th day of each calendar month coinciding with,
and after, the initial issuance of the Certificates, or if such 25th day is not
a Business Day, the next succeeding Business Day, commencing in February 2005.
DTC: The Depository Trust Company, or its successors in interest.
Due Date: As to any Mortgage Loan (other than a Simple Interest Loan),
the date in each month on which the related Scheduled Payment is due, as set
forth in the related Mortgage Note, and with respect to any Simple Interest
Loans, the last day of the immediately preceding Prepayment Period, if the
Scheduled Payment relating to such Simple Interest Loan is due during such
Prepayment Period.
Due Period: With respect to any Distribution Date and any Mortgage Loan
(other than a Simple Interest Loan), the period commencing on the second day of
the calendar month preceding the calendar month in which such Distribution Date
occurs and ending at the close of business on the first day of the calendar
month in which such Distribution Date occurs, and with respect to any Simple
Interest Loans, the related Prepayment Period.
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, but only if S&P is not a Rating Agency) are rated by each
Rating Agency in one of its two highest long-term and its highest short-term
ratings, respectively, (or, if S&P is a Rating Agency, in its highest long-term
and one of its two highest short-term ratings, 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. 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.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Restricted Certificate: Each Class of Certificates other than the
Class A Certificates.
Event of Default: As defined in Section 8.01 hereof.
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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
the Interest Distribution Amount on the Offered Certificates and the Class M-7
Certificates, and the Interest Carry Forward Amounts on the Offered Certificates
and the Class M-7 Certificates, in each case for such Distribution Date.
Excess Yield Maintenance Amount: With respect to any Distribution Date,
the excess, if any, of (a) the amount received under the Yield Maintenance
Agreement for such Distribution Date, over (b) the Interest Distribution Amount
that the Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class
M-6 and Class M-7 Certificates would have been entitled to receive on such
Distribution Date had the applicable Pass-Through Rate on such Class of
Certificates been calculated at One-Month LIBOR on such Distribution Date plus
the applicable Certificate Margin for the related Accrual Period, to the extent
that such Interest Distribution Amount was not otherwise paid from Interest
Funds on such Distribution Date to such Class of Certificates.
Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (i) the Overcollateralization Deficiency Amount for such
Distribution Date and (ii) the Excess Spread for such Distribution Date.
Xxxxxx Xxx: Xxxxxx Xxx (also known as Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.
Fiscal Quarter: December 1 through the last day of February, March 1
through May 31, June 1 through August 31, or September 1 through November 30, as
applicable.
Fitch: Fitch Ratings.
Xxxxxxx Mac: Xxxxxxx Mac (also known as Federal Home Loan Mortgage
Corporation), or any successor thereto.
Gross Margin: With respect to each Mortgage Loan that bears an
adjustable rate of interest, the fixed percentage set forth in the related
Mortgage Note and indicated on the Mortgage Loan Schedule, which percentage is
added to the related Index on each Interest Adjustment Date to determine
(subject to rounding, the related Minimum Lifetime Mortgage Rate, the related
Maximum Lifetime Mortgage Rate and the related Periodic Rate Cap, each as
applicable) the related Mortgage Rate until the next succeeding Interest
Adjustment Date relating to such Mortgage Loan.
13
Indemnified Persons: The Trustee, the Master Servicer, the Seller, the
Custodian and the Depositor and their officers, directors, agents and employees
and, with respect to the Trustee, any separate co-trustee and its officers,
directors, agents and employees.
Index: With respect to each Mortgage Loan that bears an adjustable rate
of interest, the index set forth in the related Mortgage Note and indicated on
the Mortgage Loan Schedule, by reference to which the related Mortgage Rate will
be adjusted from time to time.
Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto,
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any such insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy, to the extent such proceeds are not applied to
the restoration or repair of the related Mortgaged Property or released to the
related Mortgagor in accordance with the procedures that the Master Servicer
would follow in servicing mortgage loans held for its own account, in each case
other than any amount included in such Insurance Proceeds representing the
reimbursement of the Master Servicer's costs and expenses incurred in connection
with presenting claims under the Insurance Policies relating to such Mortgaged
Property and exclusive of Subsequent Recoveries with respect to the related
Mortgage Loan.
Interest Adjustment Date: With respect to each Mortgage Loan that bears
an adjustable rate of interest, the date set forth in the related Mortgage Note
and indicated on the Mortgage Loan Schedule, on which the related Mortgage Rate
is subject to adjustment.
Interest Carry Forward Amount: As of any Distribution Date and with
respect to each Class of Certificates (other than the Class B-IO Certificates
and the Residual Certificates), the sum of (i) the excess of (a) the Interest
Distribution Amount for such Class with respect to prior Distribution Dates over
(b) the amount actually distributed to such Class with respect to interest on
such prior Distribution Dates and (ii) interest on such excess (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: With respect to each Certificate (other
than the Residual Certificates), for the first Accrual Period, February 14,
2005, and with respect to any Accrual Period thereafter, the second LIBOR
Business Day preceding the commencement of such Accrual Period.
Interest Distribution Amount: As of any Distribution Date, with respect
to Certificates of each Class of Certificates (other than the Class B-IO
Certificates and the Residual Certificates), the interest accrued at the
applicable Pass-Through Rate (including for such purpose any application of the
Interest Rate Cap) for the applicable Accrual Period on the Certificate
Principal Balance of such Class immediately prior to such Distribution Date,
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, and reduced by any Prepayment Interest Shortfall
14
(to the extent not covered by Compensating Interest) and any shortfalls
resulting from the application of the Relief Act or similar state laws, in each
case to the extent allocated to such Certificate as set forth herein.
Interest Funds: For any Distribution Date (i) the sum, without
duplication, of (a) all interest received and relating to the related
Distribution Date with respect to the Mortgage Loans, less the relating
Servicing Fee, the Master Servicing Fee and the Trustee Fee, (b) all Advances
relating to interest with respect to the Mortgage Loans made on or prior to the
related Master Servicer Advance Date, (c) all Compensating Interest with respect
to the Mortgage Loans and required to be remitted pursuant to this Agreement
with respect to such Distribution Date, (d) Liquidation Proceeds with respect to
the Mortgage Loans collected during the related Prepayment Period (to the extent
such Liquidation Proceeds relate to interest), (e) all amounts relating to
interest with respect to each Mortgage Loan repurchased by the Seller or the
Master Servicer pursuant to Sections 2.02, 2.03 and 3.21 and (f) all amounts in
respect of interest paid by the Master Servicer pursuant to Section 10.01, in
each case to the extent remitted by the Master Servicer to the Master Servicer
Collection Account pursuant to this Agreement minus (ii) all amounts relating to
interest on the Mortgage Loans that are used to reimburse the Trustee and the
Master Servicer for amounts due to such Persons hereunder that have not been
retained by or paid to such Person, as set forth in Section 4.03 and Section
4.05.
Interest Rate Cap: For any Distribution Date and the Certificates
(other than the Class B-IO Certificates and the Residual Certificates), the
weighted average of the Net Mortgage Rates of the Mortgage Loans as of the first
day of the related Due Period, in each case, adjusted to reflect the accrual of
interest based on the actual number of days elapsed in the related Accrual
Period divided by 360.
Latest Possible Maturity Date: The Distribution Date occurring in March
2035, which is the Distribution Date occurring 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 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 and REMIC II shall be the date
occurring 4 years after the Latest Possible Maturity Date.
LIBOR Business Day: Any day on which banks in the London, England and
New York City, U.S.A. are open and conducting transactions in foreign currency
and exchange.
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 Master Servicer has certified (in accordance
with Section 3.13) in the related Prepayment Period that it has received all
amounts it expects to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Subsequent Recoveries, 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
15
respect to an REO Property, less the sum of related unreimbursed Advances,
Servicing Fees and Servicing Advances and all expenses of liquidation relating
to the related Mortgage Loan, including property protection expenses and
foreclosure and sale costs, including court and reasonable attorneys fees.
Master Servicer: EMC in its capacity as master servicer hereunder, and
its successors and assigns.
Master Servicer Advance Date: As to any Distribution Date, on or before
1:00 p.m. Eastern time on the Business Day immediately preceding such
Distribution Date.
Master Servicer Certification: A written certification covering
servicing of the Mortgage Loans and signed by an officer of the Master Servicer
that complies with (i) the Xxxxxxxx-Xxxxx 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
Xxxxxxxx-Xxxxx 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
Xxxxxxxx-Xxxxx Act of 2002, which in any such case affects the form or substance
of the required certification and results in the required certification being,
in the reasonable judgment of the Master Servicer, materially more onerous than
the form of the required certification as of the Closing Date, the Master
Servicer Certification shall be as agreed to by the Master Servicer and the
Depositor following a negotiation in good faith to determine how to comply with
any such new requirements.
Master Servicer Collection Account: The separate Eligible Account
created and initially maintained by the Master Servicer pursuant to Section 4.02
with a depository institution in the name of the Trustee for the benefit of the
Certificateholders and designated "Xxxxx Fargo Bank, National Association, in
trust for registered holders of Bear Xxxxxxx Asset Backed Securities Trust
2005-1, Asset-Backed Certificates, Series 2005-1, Master Servicer Collection
Account." Funds in the Master Servicer Collection Account shall be held in trust
for the Certificateholders for the uses and purposes set forth in this
Agreement.
Master Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to 1/12th of the Master Servicing Fee Rate multiplied by
the Stated Principal Balance of such Mortgage Loan as of the close of business
on the first day of the month immediately preceding the month in which such
Distribution Date occurs or, in the event of any payment of interest that
accompanies a Principal Prepayment in full during the related Due Period made by
the related Mortgagor immediately prior to such prepayment, interest at the
Master Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan
for the period covered by such payment of interest.
Master Servicing Fee Rate: The Master Servicer will receive a monthly
master servicing fee on each Distribution Date equal to 0.50% per annum of the
aggregate principal balance of the Mortgage Loans as of the beginning of the
calendar month immediately preceding such
16
Distribution Date; provided, that with respect to any Mortgage Loan being
subserviced on the Closing Date, the Master Servicer will receive a monthly
master servicing fee, on each Distribution Date, equal to approximately 0.375%
per annum of the principal balance of the related Mortgage Loan as of the
beginning of the calendar month immediately preceding such Distribution Date.
Maximum Lifetime Mortgage Rate: As to each Mortgage Loan that bears an
adjustable rate of interest, the rate, if any, set forth in the related Mortgage
Note and indicated on the Mortgage Loan Schedule, that is the maximum level to
which the related Mortgage Rate can adjust in accordance with its terms,
regardless of the change in the applicable Index.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Lifetime Mortgage Rate: As to each Mortgage Loan that bears an
adjustable rate of interest, the rate, if any, set forth in the related Mortgage
Note and indicated on the Mortgage Loan Schedule, that is the minimum level to
which the related Mortgage Rate can adjust in accordance with its terms,
regardless of the change in the applicable Index.
MOM Loan: Any Mortgage Loan as to which, at origination thereof, MERS
acts as the mortgagee, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 5.05.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest, or creating a second or more
junior lien on or second or more junior priority ownership interest, as
applicable, 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 Trustee to be added to the Mortgage File pursuant to this 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. Any mortgage
loan that was intended by the parties hereto to be transferred to the Trust Fund
as indicated by such Mortgage Loan Schedule which is in fact not so transferred
for any reason including, without limitation, a breach of the representation
contained in Section
17
2.03(b)(vii) hereof, shall continue to be a Mortgage Loan hereunder until the
Purchase Price with respect thereto has been paid to the Trust Fund.
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 Master 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 is
attached hereto as Exhibit B and sets forth the following information with
respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgage Rate in effect as of the Cut-off Date;
(iii) the Master Servicing Fee Rate and the Servicing Fee
Rate;
(iv) the Net Mortgage Rate in effect as of the Cut-off Date;
(v) the stated maturity date;
(vi) the stated original principal balance;
(vii) the original term;
(viii) the remaining term;
(ix) the Scheduled Payment;
(x) the property type;
(xi) if it is a second or more junior lien on the related
Mortgaged Property;
(xii) if applicable, that such Mortgage Loan is a Balloon
Loan;
(xiii) whether interest accrues at a fixed rate, and
otherwise, the applicable Index (with respect to adjustable rate
Mortgage Loans);
(xiv) the Gross Margin, if applicable;
(xv) the intervals between Interest Adjustment Dates, if
applicable;
(xvi) the next succeeding Interest Adjustment Date, if
applicable;
(xvii) the Periodic Rate Cap, if applicable;
(xviii) the Minimum Lifetime Mortgage Rate, if applicable;
18
(xix) the Maximum Lifetime Mortgage Rate, if applicable;
(xx) the Combined Loan-to-Value Ratio as of the Cut-off Date;
(xxi) [Reserved];
(xxii) the Cut-off Date Principal Balance;
(xxiii) if applicable, that such Mortgage Loan is a Simple
Interest Loan;
(xxiv) if applicable, that such Mortgage Loan provides for
negative amortization; and
(xxv) the MIN with respect to each Mortgage Loan registered on
the MERS(R) System.
Such schedule shall also set forth the total of the amounts described under
(xxiv) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
indebtedness of a Mortgagor under the related Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Monthly Excess Cashflow: With respect to any Distribution Date, is
the excess of (x) the Interest Funds and Principal Funds for such Distribution
Date over (y) the sum of the Interest Distribution Amounts, Interest Carry
Forward Amounts and Principal Distribution Amounts for the Certificates for such
Distribution Date.
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 the Master Servicing Fee
Rate, the Servicing Fee Rate and the Trustee Fee Rate.
Nonrecoverable Advance: Any portion of an Advance or a Servicing
Advance previously made or proposed to be made by the Master Servicer or the
Trustee, as applicable, that, in the good faith judgment of the Master Servicer
or the Trustee, as applicable, will not or, in the case of a proposed advance,
would not, be ultimately recoverable by it from the related Mortgagor, related
Liquidation Proceeds or otherwise.
Offered Certificates: The Class A Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class
M-5 Certificates and the Class M-6 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
19
Vice President, the Treasurer, the Secretary, or one of the assistant treasurers
or assistant secretaries of the Depositor or the Master 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 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 2.59% 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, then One-Month LIBOR for such Accrual Period
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
Certificates bearing interest based on One-Month LIBOR, shall, in the absence of
manifest error, be conclusive and binding.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Master Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to the Opinions of Counsel
referenced in Section 7.05 and Section 11.01, or the interpretation or
application of the REMIC Provisions, such counsel must (i) in fact be
independent of the Depositor and the Master Servicer, (ii) not have any direct
financial interest in the Depositor or the Master Servicer or in any affiliate
of either, and (iii) not be connected with the Depositor or the Master 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 aggregate Cut-off Date Principal Balance of all of the Mortgage Loans.
Original Value: The value of the property underlying a Mortgage Loan
based on an appraisal.
Originator: Any of the entities which either originated or acquired a
Mortgage Loan and transferred such Mortgage Loan to the Seller.
OTS: The Office of Thrift Supervision.
20
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, and that did not become a Liquidated Loan,
prior to the end of the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, is the amount by which the Overcollateralization Target
Amount for such Distribution Date exceeds the Overcollateralized Amount for such
Distribution Date (after giving effect to distributions of principal on the
Certificates, other than distributions of any Extra Principal Distribution
Amount).
Overcollateralization Floor: For any date of determination, 0.50% of
the aggregate Cut-off Date Principal Balance of the Mortgage Loans.
Overcollateralization Release Amount: With respect to any Distribution
Date, the lesser of (i) the Principal Funds for such Distribution Date and (ii)
the excess, if any, of the Overcollateralized Amount for such Distribution Date
(assuming 100% of the Principal Funds for such Distribution Date is applied as a
principal payment on the related Certificates on such Distribution Date) over
the Overcollateralization Target Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to the Mortgage Loans
and any Distribution Date (i) prior to the Stepdown Date, an amount equal to
1.85% of the aggregate Cut-off Date Principal Balance of the Mortgage Loans and
(ii) on and after the Stepdown Date, provided a Trigger Event is not in effect,
the greater of (a) an amount equal to 3.70% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(b) the Overcollateralization Floor or (iii) on and after the Stepdown Date and
if a Trigger Event is in effect, the Overcollateralization Target Amount for the
immediately preceding Distribution Date.
Overcollateralized Amount: With respect to any Distribution Date, the
excess, if any, of (i) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period, over (ii) the sum of the
Certificate Principal Balances of the Offered Certificates and the Class M-7
Certificates on such Distribution Date (after taking into account the payment of
principal, other than any Extra Principal Distribution Amount, on such
Certificates).
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.
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Pass-Through Rate: With respect to each Class of Certificates, other
than the Class B-IO Certificates and the Residual Certificates, the applicable
interest rate for each such Class as set forth in Section 6.01, subject to the
Interest Rate Cap.
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 such Class.
Periodic Rate Cap: As to each Mortgage Loan that bears an adjustable
rate of interest, the rate, if any, set forth in the related Mortgage Note and
indicated on the Mortgage Loan Schedule, that is the maximum adjustment that can
be made to the related Mortgage Rate on each related Interest Adjustment Date in
accordance with its terms, regardless of the change in the applicable Index.
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 short-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;
(iii) [Reserved];
(iv) commercial or finance company paper which is then
receiving the highest short-term 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;
(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, provided that the commercial paper
and/or long term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company,
but only if S&P is not a Rating Agency) 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, if S&P is a Rating Agency, the
highest long-term and one of the two highest short-term ratings of 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;
(vi) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
22
(vii) 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;
(viii) 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;
(ix) 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 long term ratings of each Rating Agency (provided that, for
so long as S&P is a Rating Agency, such rating shall be the highest
commercial paper rating of S&P 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;
(x) interests in any money market fund (including any such
fund managed or advised by the Trustee, the Master Servicer 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 long term rating by each Rating Agency
rating such fund (and, so long as S&P is a Rating Agency, the long term
ratings must be either AAAm or AAAm-G) 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;
(xi) short term investment funds sponsored by any trust
company or national banking association incorporated under the laws of
the United States or any state thereof (including any such fund managed
or advised by the Trustee, the Master 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; and
(xii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each
Rating Agency 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
23
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 (including,
without limitation, any amounts collected by the Master Servicer but not yet
deposited in the Master Servicer Collection Account) may be invested in
investments (other than money market funds) treated as equity interests for
Federal income tax purposes, unless the Master Servicer shall receive an Opinion
of Counsel, at the expense of the Master 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, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization (as
defined below) 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 trust or and (vi) any other Person
so designated by the Trustee based upon an Opinion of Counsel (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 the Trust Fund 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 the Federal Home Loan
Mortgage Corporation, 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.
24
Prepayment Charge: Any prepayment premium, penalty or charge payable by
a Mortgagor in connection with any Principal Prepayment on the related 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, a
Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, Section
2.03, Section 3.21 or Section 10.01 hereof) or that became a Liquidated Loan
during the related Prepayment Period, 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
liquidation) or, in the case of a partial Principal Prepayment, on the amount of
such prepayment, or, in the case of a liquidation, the amount of such
Liquidation Proceeds, exceeds (ii) the amount of interest paid or collected in
connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date other than the First
Distribution Date, the period from the sixteenth day of the calendar month
preceding the calendar month in which such Distribution Date occurs through the
close of business on the fifteenth day of the calendar month in which such
Distribution Date occurs. As to the first Distribution Date, the period from the
Cut-off Date through the close of business on February 15, 2005.
Primary Mortgage Insurance Policy: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to the related 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 such Distribution Date plus (y)
any Extra Principal Distribution Amount for such Distribution Date minus (z) any
Overcollateralization Release Amount for such Distribution Date.
Principal Funds: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal (or with respect to any
Simple Interest Loans, actual principal) collected during the related Due Period
on the Mortgage Loans, (b) all Advances (except with respect to any Simple
Interest Loans) relating to principal made on or before the Master Servicer
Advance Date relating to such Distribution Date, (c) Principal Prepayments,
exclusive of Prepayment Charges, collected during the related Prepayment Period,
(d) the Stated Principal Balance of each Mortgage Loan that was repurchased by
the Seller pursuant to Sections 2.02, 2.03 or 3.21, (e) the aggregate of all
Substitution Adjustment Amounts for the related Determination Date delivered by
the Master Servicer in connection with the substitution of Mortgage Loans
pursuant to Section 2.03(c), (f) amounts in respect of principal paid by the
Master Servicer pursuant to Section 10.01 and (g) all Liquidation Proceeds on
the Mortgage Loans collected during the related Prepayment Period (to the extent
such Liquidation Proceeds relate to principal), plus all Subsequent Recoveries
on the Mortgage Loans received during the related Prepayment Period, in each
case to the extent remitted by the Master Servicer to the Master Servicer
Collection Account pursuant to this Agreement, minus (ii) all amounts relating
25
to principal or not allocable to either principal or interest on the Mortgage
Loans and that are used to reimburse the Trustee or the Master Servicer for
amounts due to such Person hereunder and that have not been retained by or
otherwise paid to such Person, as set forth in Sections 4.03 and 4.05.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased pursuant to Sections 2.02, 2.03, 3.20 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 such Mortgage
Loan on any date or dates in any month or months subsequent to the month of
prepayment, and all amounts constituting lost principal with respect to a
Mortgage Loan that is treated as a Principal Prepayment pursuant to Section
2.08. Partial Principal Prepayments shall be applied by the Master Servicer in
accordance with the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement, dated February 14,
2005, relating to the public offering of the Offered Certificates.
Protected Party: As defined in Section 7.04 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 Section 2.03 hereof or (y)
that the Master Servicer has a right to purchase pursuant to Section 3.21
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 plus (ii) accrued
interest thereon at the applicable Mortgage Rate through the first day of the
month in which such Purchase Price is to be distributed to Certificateholders
plus (iii) in the case of a repurchase of such Mortgage Loan resulting from
breach of a representation or warranty contained in Section 2.03(b)(vii)(G),
Section 2.03(b)(vii)(S) or Section 2.03(b)(vii)(X), any costs or damages
incurred by the Trust and the Trustee in connection with the violation by such
Mortgage Loans of any predatory lending or abusive lending law, reduced by (iv)
any portion of the Servicing Fee, Servicing Advances and Advances payable to the
purchaser of such Mortgage Loan.
Rating Agency: Each of S&P and Fitch. 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 Liquidated Loan, an amount (not
less than zero or more than the Stated Principal Balance of the Mortgage Loan)
as of the date of such liquidation, as reported by the Master Servicer to the
Trustee, equal to (i) the Stated Principal Balance of such Liquidated Loan as of
the date of such liquidation, minus (ii) the net Liquidation Proceeds, if any,
received in connection with such liquidation during the month in which such
liquidation occurs, to the extent applied as recoveries of principal of such
Liquidated Loan.
26
Realized Loss Event: A Realized Loss Event will be deemed to have
occurred if as of the last day of the related Due Period, for the Distribution
Dates in the months indicated below, the aggregate amount of Realized Losses on
the Mortgage Loans (reduced by the aggregate amount of Subsequent Recoveries on
the Mortgage Loans) from the Cut-off Date through the last day of the related
Due Period, as a percentage of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date, exceeds the following:
(i) 36 months through 47 months following the Closing Date,
4.00%;
(ii) 48 months through 59 months following the Closing Date,
6.25%;
(iii) 60 months through 71 months following the Closing Date,
8.00%; and
(iv) 72 months following the Closing Date, and each month
thereafter, 8.50%.
Record Date: With respect to the Class B-IO Certificates and the
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. With respect to any Distribution Date and the Certificates (other
than the Class B-IO Certificates and the Residual Certificates), so long as such
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.
Reference Bank Rate: With respect to any Accrual Period, 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 amounts approximately equal to the aggregate
Certificate Principal Balance of the Certificates (other than the Class B-IO
Certificates and the Residual Certificates) on such Interest Determination Date,
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 U.S.
dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the
Certificates which bear an adjustable rate of interest on such Interest
Determination Date.
Reference Banks: Barclays Bank PLC, Citibank, N.A. and Deutsche Bank
AG, provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee which are engaged
in transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, England, (ii) not
controlling, under the control of or under common control with the Depositor,
the Seller, the Master Servicer or any affiliate thereof and (iii) which have
been designated as such by the Trustee.
Regular Certificate: Any Certificate other than a Residual Certificate.
27
Relief Act: The Servicemembers Civil Relief Act.
Remaining Excess Spread: With respect to any Distribution Date, the
Excess Spread for such Distribution Date less any Extra Principal Distribution
Amount 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 Certificates: The REMIC I Regular Interests and the Class R-I
Certificate.
REMIC I Regular Interests: As defined in Section 5.06(b).
REMIC II: The segregated pool of assets described in Section 5.06(a).
REMIC II Certificates: The REMIC II Regular Interests and the Class
R-II Certificate.
REMIC II Regular Interests: As defined in Section 5.06(c).
REMIC Opinion: An Opinion of Counsel, to the effect that the proposed
action described therein would not, under the REMIC Provisions, (i) cause any of
REMIC I or REMIC II to fail to qualify as a REMIC while any regular interest in
any such REMIC is outstanding, (ii) result in a tax on prohibited transactions
or (iii) constitute a taxable contribution after the Startup Day.
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 Report: As defined in Section 5.04(c).
REO Property: A Mortgaged Property acquired by the Master 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 on such Mortgage Loan in the month of substitution, not in
excess of, and not less than 90% of, the Stated Principal Balance of the related
Deleted Mortgage Loan; (ii) have a Mortgage Rate not less than or more than 1%
per annum higher than the Mortgage Rate of the related Deleted Mortgage Loan;
(iii) have the same or higher credit quality characteristics than that of the
related Deleted Mortgage Loan; (iv) have a Combined Loan-to-Value Ratio no
higher than that of the related Deleted Mortgage Loan (and which satisfies the
requirements of Section 1.860G-2(a)(2) of the REMIC Provisions); (v) have a
remaining term to maturity no greater than (and not more than one year less
than) that of the
28
related Deleted Mortgage Loan; (vi) not permit conversion of the related
Mortgage Rate from a fixed rate to a variable rate; (vii) provide for a
Prepayment Charge on terms substantially similar to those of the Prepayment
Charge, if any, of the related Deleted Mortgage Loan; (viii) have the same lien
priority as the related Deleted Mortgage Loan; (ix) constitute the same
occupancy type as the related Deleted Mortgage Loan or be owner occupied; (x) be
current in payment of principal and interest as of the date of substitution;
(xi) have payment terms that do not vary in any material respect from the
payment terms of the related Deleted Mortgage Loan; (xii) if the related Deleted
Mortgage Loan bears an adjustable rate of interest, have a Gross Margin,
Periodic Rate Cap and Maximum Lifetime Mortgage Rate no less than those of the
related Deleted Mortgage Loan, have the same Index and interval between Interest
Adjustment Dates as that of, and a Minimum Lifetime Mortgage Rate no lower than
that of, such Deleted Mortgage Loan; and (xiii) comply with each representation
and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release to be submitted by the
Seller or the Master Servicer to the Trustee substantially in the form of
Exhibit H. Each Request for Release furnished to the Trustee by the Seller or
the Master Servicer shall be in duplicate and shall be executed by a Servicing
Officer (or, if furnished electronically to the Trustee, shall be deemed to have
been sent and executed by an officer or by a Servicing Officer) of the Seller or
the Master Servicer, as applicable.
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.
Residual Certificates: The Class R-I Certificates and Class R-II
Certificates.
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 transaction contemplated
hereby, 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 XxXxxx-Xxxx Companies, Inc.
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, in its capacity as seller of the Mortgage Loans to the
Depositor.
Senior Enhancement Percentage: As to each Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Certificate Principal Balance of the Subordinated Certificates and
(ii) the Overcollateralized Amount (in each case after taking into account the
distribution of the related Principal Distribution Amount, on such Distribution
Date) and the denominator of which is the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period.
29
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by the Master 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, with respect to a Mortgage Loan, and
including any expenses incurred in relation to any such proceedings that result
from a Mortgage Loan being registered in the MERS(R) System, (iii) the
management and liquidation of any REO Property (including, without limitation,
realtor's commissions) and (iv) compliance with any obligations under Section
3.09 hereof to cause insurance to be maintained.
Servicing Fee: As to any Mortgage Loan and a Distribution Date, an
amount equal to the product of (i) the Stated Principal Balance of such Mortgage
Loan as of the Due Date in the month preceding the month in which such
Distribution Date occurs and (ii) the applicable Servicing Fee Rate, or, in the
event of any payment of interest that accompanies a Principal Prepayment in full
during the related Due Period made by the related 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.
Servicing Fee Rate: As to any Mortgage Loan, a per annum rate
(including, as applicable, any additional servicing fees) as set forth in the
Mortgage Loan Schedule.
Servicing Officer: Any officer of the Master 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 Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
Simple Interest Loan: A Mortgage Loan that provides for daily accrual
of interest and is identified as such on the Mortgage Loan Schedule.
Startup Day: The startup day, within the meaning of Section 860G(a)(9)
of the Code, 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 Cut-off Date Principal Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
(or, with respect to any Simple Interest Loans, the principal portion of
payments actually received) from the related Mortgagor with respect to such
Mortgage Loan during each related Due Period ending prior to such Distribution
Date (and, other than with respect to any Simple Interest Loans, irrespective of
any delinquency in their payment), (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 Master Servicer as
recoveries of principal in accordance with Section 3.13 with respect to such
Mortgage Loan, that were received by the Master 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.
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Stepdown Date: The later to occur of (a) the Distribution Date
occurring in February 2008 and (b) the first Distribution Date on which the
aggregate Certificate Principal Balance of the Subordinated Certificates plus
the Overcollateralized Amount for such Distribution Date divided by the sum of
the Stated Principal Balance of the Mortgage Loans as of the last day of the
related Due Period is greater than or equal to 44.70%.
Subsequent Recovery: The recovery by the Master Servicer of any amount
(including the release of surplus funds held to cover expenses) in respect of a
Liquidated Loan after a Realized Loss has been allocated with respect to one or
more Classes of Certificates.
Subservicer: The meaning ascribed to such term pursuant to Section
3.22(a).
Subservicing Agreement: The meaning ascribed to such term pursuant to
Section 3.22(a).
Subordinated Certificates: The Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4, Class M-5, Class M-6 and Class
M-7 Certificates.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Successor Master 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 ss. 1.860F-4(d) and temporary
Treasury regulation ss. 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. 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 Affidavit: As defined in Section 6.02(c).
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Trigger Event: With respect to any Distribution Date on or after the
Stepdown Date, a Trigger Event exists if either a Delinquency Event or a
Realized Loss Event shall have occurred and be continuing.
Trust Fund: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest accruing and principal due (or in the case
of any Simple Interest Loan, received) with respect thereto after the Cut-off
Date to the extent not applied in computing the Cut-off Date Principal Balance
thereof; (ii) the Master Servicer Collection Account and the Distribution
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 foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loans; (v) rights under the Yield Maintenance Agreement and the Yield
Maintenance Account; and (vi) all proceeds of the foregoing, including
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proceeds of conversion, voluntary or involuntary, of any of the foregoing into
cash or other liquid property.
Trustee: Xxxxx 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 any Distribution Date, an amount equal to the
product of 1/12th of the Trustee Fee Rate and the aggregate Stated Principal
Balance of the Mortgage Loans as of the first day of the related Due Period.
Trustee Fee Rate: 0.01% per annum.
Unpaid Allocated Realized Loss Amount: As of any Distribution Date, and
each Class of Certificates, other than the Class B-IO Certificates and the
Residual Certificates, the excess of (i) the Allocated Realized Loss Amount with
respect to such Class of Certificates over (ii) the sum of all distributions on
such Class in reduction of the Allocated Realized Loss Amounts and any
Subsequent Recoveries allocated to such Class of Certificates, in each case, on
all previous Distribution Dates. Any amounts distributed to a Class of
Certificates in respect of any Unpaid Allocated Realized Loss Amount will not be
applied to reduce the Certificate Principal Balance of such Class of
Certificates.
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) 95% to the Certificates (other
than the Class B-IO Certificates and the Residual Certificates), (ii) 3% to the
Class B-IO Certificates and (iv) 1% to each Class of Residual Certificates, with
the allocation among the Certificates (other than the Class B-IO Certificates
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 Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee
for the benefit of the Class A Certificateholders, the Class M-1
Certificateholders, the Class M-2 Certificateholders, the Class M-3
Certificateholders, the Class M-4 Certificateholders, the Class M-5
Certificateholders, the Class M-6 Certificateholders and the Class M-7
Certificateholders and designated "Xxxxx Fargo Bank, National Association, in
trust for registered holders of Bear Xxxxxxx Asset Backed Securities Trust
2005-1, Asset-Backed Certificates, Series 2005-1, Yield Maintenance Account."
The Yield Maintenance Account shall not constitute an asset of any REMIC
hereunder.
Yield Maintenance Agreement: The Confirmation (which is also a Schedule
to the ISDA Form Master Agreement referred to below), Ref. No. FXNEC6751, dated
February 16, 2005, between the Yield Maintenance Provider and the Trust and the
1992 ISDA Master Agreement
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(Multicurrency - Cross Border) form (the "ISDA Form Master Agreement") deemed
entered into pursuant to such confirmation.
Yield Maintenance Provider: Bear Xxxxxxx Financial Products Inc., or
any successor in interest.
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ARTICLE II.
CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Trust Fund. The Seller hereby sells,
transfers, assigns, sets over and otherwise conveys 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 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 any such transfer and assignment, the Depositor has
delivered to or caused to be delivered to, and deposited with, the Trustee for
the benefit of the Certificateholders 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 in the following form: (A) "Pay to the order
of Xxxxx Fargo Bank, National Association, as Trustee for
certificateholders of Bear Xxxxxxx Asset Backed Securities Trust
2005-1, Asset-Backed Certificates, Series 2005-1, without recourse", or
(B) in the case of a loan registered on the MERS(R) System, in blank,
and in each case with all intervening endorsements, to the extent
available, and showing an unbroken chain of endorsements from the
related Originator to the Seller, or, if the original Mortgage Note is
unavailable to the Depositor, a photocopy thereof, if available,
together with a lost note affidavit,
(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 registered on the MERS(R)
System, 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 related Mortgaged Property is located) to the Trustee of the
Mortgage, in recordable form, with respect to each Mortgage Loan in the
name of "Xxxxx Fargo Bank, National Association, as Trustee for
certificateholders of Bear Xxxxxxx Asset Backed Securities Trust
2005-1, Asset-Backed Certificates, Series 2005-1", in recordable form
or in blank,
(iv) an original or a copy of all intervening assignments of
the related Mortgage, if any, to the extent available to the Seller,
with evidence of recording thereon,
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(v) the original lender's policy of title insurance or a
duplicate lender's policy of title insurance or, in the event such
original title policy has not been received from the related insurer,
such original or duplicate original lender's policy of title insurance
shall be delivered within one year of the Closing Date, 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 the assignment of the Mortgage to the Trustee will not
be required to be submitted for recording with respect to any Mortgage Loan: (a)
if such recordation is not required by the Rating Agencies or (b) if MERS is
identified on the related Mortgage or on a properly recorded assignment of the
related Mortgage as the mortgagee of record solely as nominee for the Seller and
its successors and assigns; or (c) an Opinion of Counsel has been provided to
the Trustee (with a copy to the Custodian) which states that recordation of such
assignment is not required to protect the interests of the Certificateholders in
the related Mortgage Loans;
and provided, further, however, that in lieu of the foregoing, the Depositor may
deliver, or cause to be delivered, the following documents, under the
circumstances set forth below: (x) if any Mortgage, assignment thereof to the
Trustee 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, or cause
to be delivered, a true copy thereof with a certification by the Master Servicer
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, or cause to be delivered, a lost note
affidavit (or a blanket lost note affidavit covering some or all of the Mortgage
Loans in Exhibit J) 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 Cut-off Date and prior to the Closing Date, the Depositor, in
lieu of delivering the above documents, may cause the Seller to, and the Seller
shall (i) deposit, or cause to be deposited, all amounts paid in respect of such
Mortgage Loans into the Master Servicer Collection Account or the Distribution
Account on or before the Distribution Account Deposit Date relating to the first
Distribution Date, or (ii) deliver to the Trustee on the Closing Date a
certification of an authorized officer of the Seller stating that the Seller
will deposit or cause to be deposited all such amounts on or before the
Distribution Account Deposit Date relating to the first Distribution Date, in
which case the Seller shall so deposit or cause to be deposited such amounts
into the Master Servicer Collection Account or the Distribution Account on or
before such Distribution Account Deposit Date.
In the case of the documents referred to in clause (x) above, the
Depositor shall deliver, or cause to be delivered, such documents to the Trustee
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. In the event that
the Seller, the Depositor or the Master Servicer gives written notice to the
Trustee (a) that recording of the assignment of the Mortgage to the Trustee is
required to protect the right, title and interest of the Trustee on behalf of
the Certificateholders in and to any Mortgage Loan, (b) a court
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recharacterises the sale of the Mortgage Loans as a financing, or (c) as a
result of any change in or amendment to the laws of a State in which recording
was not effected or any applicable political subdivision thereof, or any change
in official position regarding application or interpretation of such laws,
including a holding by a court of competent jurisdiction, such recording is so
required, the Seller shall submit or cause to be submitted for recording as
specified above or, should the Seller fail to perform such obligations, the
Trustee shall cause each such previously unrecorded assignment to be submitted
by the Custodian for recording as specified above at the expense of the Trust
pursuant to Section 9.05. In the event a Mortgage File is released to the Master
Servicer as a result of the Master Servicer's having completed a Request for
Release, the Trustee shall, if not so completed, complete, or cause the Trustee
to complete, the assignment of the related Mortgage in the manner specified in
clause (iii) above.
In connection with the assignment of any Mortgage Loans registered on
the MERS(R) System, the Seller further agrees that it will cause, at the
Seller's own expense, within 30 days after the Closing Date, the MERS(R) System
to indicate that such Mortgage Loans have been assigned by the 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 Trustee, (b)
the code in the field "Pool Field" which identifies the series of the
Certificates issued in connection with such Mortgage Loans and (c) a code that
provides the Trustee with access to such Mortgage Loans. The Seller further
agrees that it will not, and the Master 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.
Since the mortgage loans permitted to be purchased pursuant to this
Agreement are limited to (i) the Mortgage Loans purchased hereunder on the
Closing Date and (ii) any Replacement Mortgage Loans purchased hereafter
pursuant to the provisions of this Agreement, and the Seller has made the
representations and warranties contained herein with respect to all such
Mortgage Loans, including, a representation and warranty contained in Section
2.03(b)(vii)(S) of this Agreement, that, as of the Closing Date or date of
substitution, as applicable, no Mortgage Loan is (W) a "High-Cost Home Loan" as
defined in the New Jersey Home Ownership Security Act of 2002 (the "New Jersey
Act"), (X) a "High-Cost Home Loan" as defined in the New Mexico Home Loan
Protection Act (the "New Mexico Act"), (Y) a "High Cost Home Mortgage Loan" as
defined in the Massachusetts Predatory Home Loan Practices Act effective
November 7, 2004 (the "Massachusetts Act") or (Z) a "High-Cost Home Loan" as
defined by the Indiana High Cost Home Loan Law effective Jan 1, 2005 (the
"Indiana Act"), it is agreed and understood by the parties hereto that it is not
intended that any mortgage loan be purchased hereunder that is (1) a "High-Cost
Home Loan" as defined in the New Jersey Act, (2) a "High-Cost Home Loan" as
defined in the New Mexico Act, (3) a "High Cost Home Mortgage Loan" as defined
in the Massachusetts Act or (4) a "High-Cost Home Loan" as defined in the
Indiana Act.
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Section 2.02. Acceptance by Trustee of the Mortgage Loans.
(a) The Trustee acknowledges receipt, subject to its further
review and the exceptions the Trustee notes pursuant to the procedures described
below, of the documents (or certified copies thereof) delivered to the Trustee
or the Custodian pursuant to Section 2.01 and declares that it holds and will
continue to hold those documents, and any amendments, replacements or
supplements thereto, and all other assets of the Trust Fund delivered to the
Trustee, 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 acting on
its behalf, will deliver to the Seller, the Trustee and the Master Servicer an
initial certification, in the form annexed as Exhibit C-1 hereto, 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 in lieu thereof. No later than 90 days after the Closing Date, the
Trustee agrees, for the benefit of the Certificateholders, to review, or to have
the Custodian review on its behalf, each Mortgage File delivered to it or the
Custodian and to execute and deliver, or cause to be executed and delivered by
the Custodian, to the Seller, the Trustee and to the Master Servicer an interim
certification substantially in the form annexed as Exhibit C-2 hereto. In
conducting such review, the Trustee, or the Custodian as its agent, will
ascertain whether all required documents have been executed and received and
whether those documents relate, determined on the basis of the related 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 clauses (iv) and (vi) of the
fourth paragraph of Section 2.01, such obligations shall extend only to
documents actually delivered pursuant to such clauses). In performing any such
review, the Trustee, or the Custodian as its agent, may conclusively rely on the
purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If the Trustee, or the Custodian
as its agent, finds any document constituting part of the Mortgage File 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
shall include such information in the exception report attached to such interim
certification. The Seller shall, within 90 days from the date of such exception
report, correct or cure any such omission or 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, at the Seller's expense, to the effect that such omission or defect
does not materially or adversely affect the interests of Certificateholders in
such Mortgage Loan. If the Seller fails to correct or cure such omission or
defect or deliver such Opinion of Counsel 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 omission or defect relates solely to the inability of the Seller to deliver
the related Mortgage, the assignment thereof to the Trustee, 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
37
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
will review, for the benefit of the Certificateholders, or will have the
Custodian on its behalf review, the Mortgage Files and will execute and deliver
or cause to be executed and delivered to the Seller, the Trustee and the Master
Servicer, a final certification substantially in the form annexed as Exhibit C-3
hereto. In conducting such review, the Trustee, or the Custodian as its agent,
will ascertain whether each document required to be recorded has been returned
from the recording office with evidence of recording thereon and the Trustee 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 clauses
(iv) and (vi) of the fourth paragraph of Section 2.01, such obligations shall
extend only to documents actually delivered pursuant to such clauses). If the
Trustee, or the Custodian as its agent, finds any document with respect to a
Mortgage Loan has not been received, or to be unrelated, determined on the basis
of the related 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 acting on its behalf, shall note such defect in
the exception report attached to such final certification and shall promptly
notify the Seller. The Seller shall, within 90 days from the date of such
exception report, correct or cure any such omission or 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, at the Seller's expense, to the effect that such omission or
defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan. If the Seller is unable within such
period to correct or cure such omission or defect, or to substitute the related
Mortgage Loan with a Replacement Mortgage Loan or to deliver such Opinion of
Counsel, the Seller shall, 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 related Mortgage, the assignment thereof to the Trustee 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:
(i) all obligations of Xxxxx Fargo Bank, National Association,
as the Trustee with respect to the custody and review of the Mortgage Files
shall be performed by and be the responsibility of Xxxxx Fargo Bank, National
Association, as the Custodian pursuant to the Custodial Agreement;
(ii) Xxxxx Fargo Bank, National Association, as the Trustee
shall have no responsibility with respect to the custody or review of Mortgage
Files held by Xxxxx Fargo Bank, National Association, as the Custodian pursuant
to the Custodial Agreement;
38
(iii) Xxxxx Fargo Bank, National Association, as the Trustee
shall have no liability for the failure of Xxxxx Fargo Bank, National
Association, as the Custodian to perform the obligations of the Custodian under
the Custodial Agreement; and
(iv) Xxxxx Fargo Bank, National Association, as the Custodian
shall be liable for the failure of Xxxxx Fargo Bank, National Association, as
the Custodian to perform the obligations of the Custodian 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 Trustee for deposit in
the Distribution 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 Distribution Account and receipt of a
Request for Release, the Trustee, or the Custodian acting on its behalf, shall
release to the Seller the related Mortgage File and 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 related Mortgage Loan. Such purchase shall be
deemed to have occurred on the date on which the deposit into the Distribution
Account was made. The Trustee shall promptly 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 an omission or
defect in a constituent document exists shall be the sole remedy respecting such
omission or defect available to the Certificateholders or to the Trustee on
their behalf.
(d) The Seller shall deliver to the Trustee, or the Custodian
acting on its behalf, and the 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 as its agent, 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 such Replacement Mortgage Loan.
(e) Until all amounts distributable in respect of the
Certificates have been distributed in full and the Master Servicer has otherwise
fulfilled its respective obligations under this Agreement, the Trustee, or the
Custodian as its agent, shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions of this
Agreement.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller.
(a) The Master Servicer hereby represents and warrants to the
Depositor and 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 State of Delaware, 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
39
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.
(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, 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 the
Master Servicer, the servicing of the Mortgage Loans by the Master
Servicer 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 are in the ordinary course of business
of the Master Servicer and will not (A) result in a material breach of
any term or provision of its charter or by-laws or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material 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 material 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 Xxxxxx Xxx or Xxxxxxx 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 if any such
consent, approval, authorization or order is required, it has obtained
the same.
40
(b) The Seller hereby represents and warrants to the Depositor
and 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 this 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, 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 this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof 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) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material 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 material 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 Xxxxxx Mae or Xxxxxxx 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.
41
(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.
(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 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 Cut-off
Date (unless otherwise expressly provided) or, with respect to clauses
(G), (S) and (X) below, as of the Closing Date:
(A) The information set forth in the Mortgage Loan
Schedule on the Closing Date is complete, true and correct.
(B) No Mortgage Loan is delinquent 61 or more days;
and the Seller has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other
than the owner of the related Mortgaged Property subject to
the related Mortgage, directly or indirectly, for the payment
of any amount required under any Mortgage Loan.
(C) Except with respect to taxes, insurance and other
amounts previously advanced by the Master Servicer with
respect to any Mortgage Loan, to the best of Seller's
knowledge, there are no delinquent taxes, water charges, sewer
rents, assessments, insurance premiums, leasehold payments,
including assessments payable in future installments, or other
outstanding charges affecting the related Mortgaged Property.
(D) The terms of the related Mortgage Note and the
related Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments which
in the case of the Mortgage Loans are in the related Mortgage
File and have been or will be recorded, if necessary to
protect the interests of the Trustee, and which have been or
will be delivered to the Trustee, all in accordance with this
Agreement. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the
extent required by the related policy. No Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the
extent required by the policy, and which assumption agreement
in the case of the Mortgage Loans is part of the related
Mortgage File.
(E) The related Mortgage Note and the related
Mortgage are not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of such Mortgage
42
Note and such Mortgage, or the exercise of any right
thereunder, render the related Mortgage unenforceable, in
whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
(F) All buildings upon, or comprising part of, the
related Mortgaged Property are insured by an insurer
acceptable to Xxxxxx Mae and Xxxxxxx Mac against loss by fire,
hazards of extended coverage and such other hazards as are
customary in the area where such Mortgaged Property is
located, and such insurer is licensed to do business in the
state where such Mortgaged Property is located. All such
insurance policies contain a standard mortgagee clause naming
the related Originator, its successors and assigns as
mortgagee, and Seller has received no notice that all premiums
thereon have not been paid. If upon origination of such
Mortgage Loan, the related Mortgaged Property was, or was
subsequently deemed to be, in an area identified in the
Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has
been made available), which require under applicable law that
a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration (or
any successor thereto) be obtained, such flood insurance
policy is in effect and is with a generally acceptable carrier
in an amount representing coverage not less than the least of
(A) the Stated Principal Balance of the related Mortgage Loan
(together with, in the case of a Mortgage Loan that is not a
first priority lien, the outstanding principal balance of all
related liens that are prior to the applicable lien of such
Mortgage Loan), (B) the minimum amount required to compensate
for damage or loss on a replacement cost basis, or (C) the
maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973. The related Mortgage
obligates the related Mortgagor thereunder to maintain all
such insurance at such Mortgagor's cost and expense and, on
such Mortgagor's failure to do so, authorizes the holder of
the related Mortgage to maintain such insurance at such
Mortgagor's cost and expense and to obtain reimbursement
therefor from such Mortgagor.
(G) As to 13.68% of the Mortgage Loans by Cut-off
Date Principal Balance, that are classified and/or defined as
"high cost" loans at the time of origination, none of such
Mortgage Loans violated at such time 12 CFR Part 226.31, 12
CFR Part 226.32 or 12 CFR Part 226.34 of Regulation Z, the
regulation implementing the Truth-in-Lending Act, which
implements the Home Ownership and Equity Protection Act of
1994, as amended ("TILA"), or any state or local
anti-predatory law (including Mortgage Loans governed by the
Georgia Fair Lending Act, if such Mortgage Loan was originated
on or after October 1, 2002 through March 6, 2003). As to
13.68% of the Mortgage Loans by Cut-off Date Principal
Balance, none of such Mortgage Loans is a loan that is (1)
subject to 12 CFR Part 226.31, 12 CFR Part 226.32 or 12 CFR
Part 226.34 of Regulation Z, the regulation implementing TILA,
(2) classified and/or defined as a "high cost" loan under any
other state, federal or local law including, but not limited
to,
43
the States of Georgia, North Carolina and New York or (3)
subject to the Georgia Fair Lending Act, if such Mortgage Loan
was originated on or after October 1, 2002 through March 6,
2003. Each Mortgage Loan at the time it was made otherwise
complied in all material respects with any and all
requirements of any federal, state or local law including, but
not limited to, all predatory lending laws, usury, truth in
lending, real estate settlement procedures (including the Real
Estate Settlement Procedures Act of 1974, as amended),
consumer credit protection, equal credit opportunity or
disclosure laws applicable to such Mortgage Loan.
(H) The related Mortgage has not been satisfied,
canceled, subordinated, or rescinded, in whole or in part, and
the related Mortgaged Property has not been released from the
lien of the related Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release,
cancellation, subordination or rescission.
(I) The related Mortgage is a valid, existing and
enforceable first or second lien on the related Mortgaged
Property, including all improvements on such Mortgaged
Property, if any, subject only to (1) the lien of current real
property taxes and assessments not yet due and payable, (2)
covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the
date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the
lender's title insurance policy delivered to the related
Originator of such Mortgage Loan and which do not adversely
affect the Appraised Value of the related Mortgaged Property
and (3) in the case of a Mortgage that is a second priority
lien, the first lien on the related Mortgaged Property
identified in the related Mortgage File, and (4) other matters
to which like properties are commonly subject which do not
materially interfere with the benefits of the security
intended to be provided by the related Mortgage. The Seller
has full right to sell and assign the related Mortgage to the
Depositor.
(J) The related Mortgage Note and the related
Mortgage are genuine and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance
with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or reorganization or general
principles of equity.
(K) All parties to the related Mortgage Note and the
related Mortgage had the legal capacity to enter into the
Mortgage Loan transaction and to execute and deliver such
Mortgage Note and such Mortgage, and such Mortgage Note and
such Mortgage have been duly and properly executed by such
parties.
(L) The proceeds of such Mortgage Loan have been
fully disbursed and there is no requirement for future
advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied
with. All costs, fees and expenses incurred in making or
closing such Mortgage Loan and the
44
recording of the related Mortgage were paid, and the related
Mortgagor is not entitled to any refund of any amounts paid or
due under the related Mortgage Note or such Mortgage.
(M) Immediately prior to the conveyance of the
Mortgage Loans by the Seller to the Depositor hereunder, the
Seller was the sole owner and holder of the Mortgage Loans and
the related servicing rights; the related Originator or the
Seller or the Master Servicer was the custodian of the related
escrow account, if applicable; such Mortgage Loan had neither
been assigned nor pledged, and the Seller had good and
marketable title thereto, and had full right to transfer and
sell such Mortgage Loan and the related servicing rights to
the Depositor free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest, and had full right
and authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign such
Mortgage Loan and the related servicing rights to the
Depositor pursuant to the terms of this Agreement.
(N) All parties which have had any interest in the
related Mortgage, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the related Mortgaged Property is located, and
(2) organized under the laws of such state, qualified to do
business in such state, a federal savings and loan association
or national bank having principal offices in such state or not
deemed to be doing business in such state under applicable
law.
(O) Such Mortgage Loan is covered by an ALTA lender's
title insurance policy or equivalent form acceptable to the
Department of Housing and Urban Development, or any successor
thereto, and qualified to do business in the jurisdiction
where the related Mortgaged Property is located, insuring
(subject to the exceptions contained in clause (I) above) the
Seller (as assignee), its successors and assigns as to the
first or more junior priority lien of the related Mortgage in
the original principal amount of such Mortgage Loan and
against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of
the related Mortgage Note and/or related Mortgage providing
for adjustment in the related Mortgage Rate and monthly
payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against
encroachments by or upon the related Mortgaged Property or any
interest therein. With respect to each Mortgage Loan, the
Seller (as assignee) is the sole insured of such lender's
title insurance policy, and such lender's title insurance
policy is in full force and effect. No claims have been made
under such lender's title insurance policy, and no prior
holder of the related Mortgage, including the Seller in the
case of a Mortgage Loan, has done, by act or omission,
anything which would impair the coverage of such lender's
title insurance policy.
(P) Except as provided in clause (B), immediately
prior to the Cut-off Date, there was no default, breach,
violation or event of acceleration existing under the related
Mortgage or the related Mortgage Note and there was no event
45
which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration with
respect to such Mortgage Loan, and the Seller has not waived
any default, breach, violation or event of acceleration with
respect to such Mortgage Loan.
(Q) There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and
no rights are outstanding that under law could give rise to
such lien) affecting the related Mortgaged Property which are
or may be liens prior to or equal with the lien of the related
Mortgage.
(R) All improvements which were considered in any
appraisal which was used in determining the Appraised Value of
the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of such Mortgaged
Property, and no improvements on adjoining properties encroach
upon such Mortgaged Property.
(S) No Mortgage Loan is a "High-Cost Home Loan" as
defined in the New Jersey Act, a "High-Cost Home Loan" as
defined in the Indiana Act, a "High-Cost Home Loan" as defined
in the New Mexico Act or a "High Cost Home Mortgage Loan" as
defined in the Massachusetts Act.
(T) The origination, servicing and collection
practices with respect to each Mortgage Note and Mortgage
including, the establishment, maintenance and servicing of the
escrow accounts and escrow payments, if any, since
origination, have been conducted in all respects in accordance
with the terms of the related Mortgage Note and in compliance
with all applicable laws and regulations and, unless otherwise
required by law or Xxxxxx Xxx/Xxxxxxx Mac standard, in
accordance with the proper, prudent and customary practices in
the mortgage origination and servicing business. With respect
to the escrow accounts and escrow payments, if any, and a
Mortgage Loan, all such payments are in the possession or
under the control of the Seller and there exists no
deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All
Mortgage Rate adjustments have been made in strict compliance
with state and federal law and the terms of the related
Mortgage Note. Any interest required to be paid pursuant to
state and local law has been properly paid and credited.
(U) The related Mortgaged Property is free of
material damage and waste and there is no proceeding pending
for the total or partial condemnation thereof.
(V) The related Mortgage contains customary and
enforceable provisions to render the rights and remedies of
the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security
intended to be provided thereby, including, (1) in the case of
a Mortgage designated as a deed of trust, by trustee's sale,
and (2) otherwise by judicial foreclosure. There is no other
exemption available to the related Mortgagor
46
which would interfere with the right to sell the related
Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage. The related Mortgagor has not
notified the Seller, and the Seller has no knowledge, of any
relief requested or allowed to the related Mortgagor under the
Relief Act.
(W) The related Mortgage Note is not, and has not
been, secured by any collateral except the lien of the
applicable Mortgage.
(X) None of the Mortgage Loans is a "High Cost Loan"
or "Covered Loan" as defined in the current Standard & Poor's
LEVELS (R) Glossary, which is now Version 5.6 Revised,
Appendix E.
(Y) In the event the related Mortgage constitutes a
deed of trust, a trustee, duly qualified under applicable law
to serve as such, has been properly designated and currently
so serves and is named in the related Mortgage, and no fees or
expenses are or will become payable by the Certificateholders
to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the related Mortgagor.
(Z) No Mortgage Loan contains a permanent or
temporary "buydown" provision. Such Mortgage Loan is not a
graduated payment mortgage loan and does not have a shared
appreciation or other contingent interest feature.
(AA) The related Mortgagor has received all
disclosure materials required by applicable law with respect
to the making of such Mortgage Loan. The Seller has maintained
or caused to be maintained all such statements in the related
Mortgage File.
(BB) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property.
(CC) To the best of Seller's knowledge, the related
Mortgaged Property is lawfully occupied under applicable law,
and all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of such
Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of
occupancy, have been made or obtained from the appropriate
authorities.
(DD) The assignment of Mortgage with respect to a
Mortgage Loan (other than a Mortgage Loan registered on the
MERS(R) System) is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the
related Mortgaged Property is located.
(EE) Any future advances made to the related
Mortgagor prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The
lien of the Mortgage securing the consolidated principal
amount of such Mortgage Loan
47
is expressly insured as having first or second priority, by a
title insurance policy, an endorsement to the policy insuring
the mortgagee's consolidated interest or by other title
evidence acceptable to Xxxxxx Mae and Xxxxxxx Mac. The
consolidated principal amount does not exceed the original
principal amount of such Mortgage Loan.
(FF) With respect to each Mortgage Loan that bears
interest at an adjustable rate, on each related Interest
Adjustment Date, the related Mortgage Rate has been adjusted
to equal the respective Index plus the respective Gross Margin
(subject to standard rounding conventions), subject to the
Periodic Rate Cap, the Maximum Lifetime Mortgage Rate and the
Minimum Lifetime Mortgage Rate, if any, as set forth in the
related Mortgage Note.
(GG) The related Mortgaged Property consists of a
single parcel of real property with or without a detached
single family residence erected thereon, or an individual
condominium unit, or a 2-4 family dwelling, or an individual
unit in a planned unit development as defined by Xxxxxx Xxx or
a manufactured dwelling which conforms with Xxxxxx Mae and
Xxxxxxx Mac requirements regarding such dwellings, or a
townhouse, each structure of which is permanently affixed to
the related Mortgaged Property, and is legally classified as
real estate.
(HH) [Reserved].
(II) None of the Mortgage Loans contains a provision
allowing the related Mortgagor to convert the related Mortgage
Note from a fixed rate mortgage loan to an adjustable rate
mortgage loan. Except with respect to 0.63% of the Mortgage
Loans (by Cut-off Date Principal Balance), all of which are
Simple Interest Loans, the principal and interest due on each
Mortgage Loan is calculated pursuant to the standard
amortization method (30/360 day interest accrual).
(JJ) Each Mortgage Loan at the time of origination
was underwritten in general in accordance with guidelines not
inconsistent with the guidelines set forth in the Prospectus
Supplement and generally accepted prime or sub-prime credit
underwriting guidelines.
(KK) No error, omission, misrepresentation, fraud or
similar occurrence with respect to a Mortgage Loan has taken
place on the part of the Seller or the related Originator.
(LL) None of the Mortgage Loans provided for negative
amortization.
(c) Upon discovery by any of the parties hereto of a breach of
a representation or warranty set forth in Section 2.03(b)(vii) 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 Section 2.03(b)(vii), that within 90
days of the discovery of a breach of any representation or warranty set forth
therein that materially and
48
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 Trustee of a
Request for Release. The Seller shall promptly reimburse the Master Servicer and
the Trustee for any expenses reasonably incurred by the Master Servicer or the
Trustee in respect of enforcing the remedies for such breach. To enable the
Master 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 Master 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 in Section 2.03(b)(vii) that are made to the best
of the Seller's knowledge, if it is discovered by any of the Depositor, the
Master 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 acting 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, except with
respect to any Simple Interest Loans, distributions to Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan for the related
Due Period (and with respect to any Simple Interest Loans, payments of principal
actually received during such Due Period) and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Master 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 Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee. 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
2.03(b)(vii) with respect to such Mortgage Loan. Upon any such substitution and
the deposit to the Master Servicer Collection Account of the amount required to
be deposited therein in connection with such substitution as described in the
following paragraph, the Trustee, or the Custodian acting on its behalf, shall
release to the Seller the Mortgage File relating to such Deleted Mortgage Loan
and held for the benefit of the Certificateholders and shall execute and deliver
at the Seller's direction such instruments of
49
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 Master Servicer will determine
the amount (if any) by which the aggregate unpaid 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 on the related Mortgage Loans due in the month of
substitution, except the actual payment received with respect to any Simple
Interest Loans) 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 Master Servicer Collection Account by the Seller 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 in the Master Servicer Collection
Account pursuant to Section 4.02 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
acting on its behalf, 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, representation
or warranty, 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 with respect 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 remedy against the
Seller respecting such breach available to the Certificateholders, the Depositor
or the Trustee.
(d) The representations and warranties set forth in Section
2.03 hereof shall survive delivery of the respective Mortgage Files to the
Trustee, or the Custodian acting on its behalf, for the benefit of the
Certificateholders.
Section 2.04. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Master Servicer and 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 limited liability company 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.
50
(ii) The Depositor has the full limited liability company
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 limited liability company 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
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) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material 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
material 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.
(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 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 that, following the transfer of the Mortgage Loans to it by the
Seller, the Depositor had good title to the Mortgage Loans free and clear of all
liens, claims and encumbrances, 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 the immediately preceding paragraph shall survive delivery of the
Mortgage Files to the Trustee or the Custodian. Upon discovery by the Depositor
or the Trustee of a breach of such
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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 or REMIC II 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 or REMIC II 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, the Master
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within 5 Business Days of
discovery) give written notice thereof to the other parties. In connection
therewith, the Trustee shall require the Seller, at the Seller's option, to
either (i) substitute, if the conditions in Section 2.03(c) 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 contained in Section 2.03. The Trustee, or the
Custodian acting on its behalf, shall reconvey to the Seller the Mortgage Loan
to be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
Section 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has executed,
authenticated 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, to the end
that the interests of the Holders of the Certificates may be adequately and
effectively protected.
Section 2.07. Covenants of the Master Servicer.
The Master Servicer covenants to the Depositor and the Trustee as
follows:
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(a) it shall comply in the performance of its obligations
under this Agreement;
(b) no written information, certificate of an officer,
statement furnished in writing (provided that for purposes of the Master
Servicer's covenant hereunder, exclusive of the annual compliance certificates
and accountants' reports of the Master Servicer delivered by the Master Servicer
pursuant to Section 3.18) or written report prepared by the Master Servicer
pursuant to this Agreement and delivered to the Depositor, any affiliate of the
Depositor or the Trustee will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the information, certificate,
statement or report not misleading; and
(c) the Master Servicer shall accurately and fully provide
information regarding payment performance of the Mortgagors to the nationally
recognized credit repositories, to the extent such reporting remains customary
and prudent in the servicing of mortgage loans similar to the Mortgage Loans.
Nothing in this Section shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors, and the failure of the Master Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
Section 2.08. Lost Mortgage Notes Indemnity.
With respect to each Mortgage Loan for which the Seller has delivered a
lost note affidavit in lieu of an original Mortgage Note, the Seller does hereby
agree to defend, indemnify, and hold harmless the Trust Fund and the Trustee
from and against any and all losses or damages, together with all reasonable
costs, charges and expenses (whether or not a lawsuit is filed), incurred as a
result of (i) the inability to enforce the related Mortgage Note according to
its terms, (ii) any claim, demand, suit, cause of action or proceeding by a
third party arising out of the Master Servicer's or the Trustee's inability to
enforce the related Mortgage Note according to its terms due to the lack of an
original Mortgage Note, or (iii) the inability to receive any related Insurance
Proceeds, Liquidation Proceeds or other amounts due to the lack of an original
Mortgage Note. Upon demand from the Master Servicer or the Trustee, the Seller
shall deposit all amounts constituting lost principal with respect to such
Mortgage Loan into the Master Servicer Collection Account to be treated as a
Principal Prepayment, and reimburse the Master Servicer or the Trustee, as
applicable, for all costs and expenses incurred in connection with such lost
Mortgage Note.
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ARTICLE III.
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer to Service the Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer shall
service and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Master
Servicer shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.22 hereof, 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 Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds, Liquidation Proceeds and Subsequent Recoveries, and (iv) subject to
Section 3.13(a), to effectuate foreclosure or other conversion of the ownership
of the Mortgaged Property securing any Mortgage Loan; provided that the Master
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 and the Trustee under this Agreement.
The Master Servicer shall represent and protect the interest of the Trust Fund
in the same manner as it currently protects its own interest in mortgage loans
in its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan and shall not make or permit any modification, waiver or amendment of any
term of any Mortgage Loan which would cause any REMIC hereunder to fail to
qualify as a REMIC or result in the imposition of any tax under the REMIC
Provisions, but in any case not in any manner that is a lesser standard than
that provided in the first sentence of this Section 3.01. Without limiting the
generality of the foregoing, the Master 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 Master Servicer believes
it appropriate in its reasonable judgment, to execute and deliver, on behalf of
the Trust, 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 Master Servicer shall prepare and deliver
to the Depositor and/or the Trustee such documents requiring execution and
delivery by either or both of them as are necessary or appropriate to enable the
Master Servicer to service and administer the Mortgage Loans and carry out its
duties hereunder, in each case in accordance with Accepted Servicing Practices.
Upon receipt of such documents, the Depositor and/or the Trustee shall execute
such documents and deliver them to the Master Servicer.
In accordance with the standards of the preceding paragraph, the Master
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 3.19, and further as
provided in Section 4.03. All costs incurred by the Master Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance
54
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.
The Master Servicer shall deliver a list of Servicing Officers to the
Trustee by the Closing Date.
The Trustee shall execute and return to the Master Servicer, upon
written request from a Servicing Officer, any powers of attorney provided to it
by the Master Servicer empowering it or any Servicer to execute and deliver
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and
to appeal, prosecute or defend in any court action relating to the Mortgage
Loans or the related Mortgaged Property, in accordance with the provisions
hereof. If the Master Servicer or the Trustee has been advised that it is likely
that the laws of the state in which action is to be taken prohibit such action
if taken in the name of the Trustee or that the Trustee would be adversely
affected under the "doing business" or tax laws of such state if such action is
taken in its name, the Master Servicer shall join with the Trustee in the
appointment of a co-trustee pursuant to Section 9.11 hereof. In the performance
of its duties hereunder, the Master Servicer shall be an independent contractor
and shall not, except in those instances where it is taking action in the name
of the Trustee, be deemed to be the agent of the Trustee.
The Trustee shall execute and deliver to the Master Servicer any court
pleadings, requests for trustee's sale or other documents provided to it by the
Master Servicer and necessary or desirable to (i) the foreclosure or trustee's
sale with respect to a Mortgaged Property; (ii) any legal action brought to
obtain judgment against any Mortgagor on the related Mortgage Note or related
Mortgage; (iii) obtain a deficiency judgment against a Mortgagor; or (iv)
enforce any other rights or remedies provided by a Mortgage Note or related
Mortgage or otherwise available at law or equity.
Section 3.02. REMIC-Related Covenants.
For as long as each REMIC shall exist, the Master Servicer and the
Trustee shall act in accordance herewith to assure continuing treatment of such
REMIC as a REMIC, and shall comply with any directions of the Seller or the
Depositor to assure such continuing treatment. In particular, neither the Master
Servicer nor the Trustee shall, in carrying out their respective duties
hereunder, (a) sell or permit the sale of all or any portion of the Mortgage
Loans or of any investment of deposits in an Account unless such sale is as a
result of a repurchase of the Mortgage Loans pursuant to this Agreement or the
Trustee has received a REMIC Opinion, addressed to the Trustee and prepared at
the expense of the Trust Fund; and (b) other than with respect to a substitution
pursuant to Section 2.03 of this Agreement, accept any contribution to any REMIC
after the Startup Day without receipt of a REMIC Opinion addressed to the
Trustee.
Section 3.03. Collection of Mortgage Loan Payments.
(a) The Master Servicer shall make reasonable efforts in
accordance with Accepted Servicing Practices 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
55
the terms and provisions of any related Required Insurance Policy. Consistent
with the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage Note
for a period not greater than 125 days. In the event of any such arrangement,
the Master Servicer or the Trustee, if applicable, subject to and in accordance
with the terms of Articles V and VIII of this Agreement, shall make Advances on
the related Mortgage Loan (except with respect to principal on Simple Interest
Loans) 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 4.03 hereof. The Master 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 Master
Servicer delivers to the Trustee a certification, 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 REMIC hereunder,
the Master 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 7.5% and (B) amend any Mortgage Note to extend the
maturity thereof but not beyond the Latest Possible Maturity Date.
(b) Collections on Mortgage Loans shall be deposited in the
Master Servicer Collection Account as provided in Section 4.02.
Section 3.04. Successor Master Servicer and Subservicing Agreements.
In the event that, pursuant to Section 8.01 hereof, the Trustee or any
other Person shall become Successor Master Servicer, such Successor Master
Servicer may, at its option, succeed to any rights and obligations of the
predecessor Master Servicer under any Subservicing Agreement in accordance with
the terms thereof; provided that such Successor Master Servicer shall not incur
any liability or have any obligations in its capacity as servicer under a
Subservicing Agreement arising prior to the date of such succession unless it
expressly elects to succeed to the rights and obligations of the predecessor
Master Servicer thereunder; and the predecessor Master Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreement arising prior to the date of such succession.
Such predecessor Master Servicer shall, upon request of the Trustee,
but at the expense of such predecessor Master Servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Mortgage Loans then being serviced thereunder and an accounting of amounts
collected held by it, and otherwise use its best efforts to effect the orderly
and efficient transfer of the Subservicing Agreement to the assuming party.
Section 3.05. [Reserved].
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Section 3.06. Due-on-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.06(a), when
any property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Master 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 Master 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 Master 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 of such
due-on-sale clause is otherwise permitted hereunder, the Master Servicer is
authorized, subject to Section 3.06(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
related Mortgage Note and, unless prohibited by applicable state law, the
related Mortgagor remains liable thereon, provided that the related Mortgage
Loan shall continue to be covered (if so covered before the Master Servicer
enters into such agreement) by the applicable Required Insurance Policies. The
Master Servicer, subject to Section 3.06(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 Master Servicer shall not be deemed to be in default under this
Section 3.06(a) by reason of any transfer or assumption that the Master Servicer
reasonably believes it is restricted by law from preventing.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.06(a) hereof, in any
case in which a Mortgaged Property has been conveyed to a Person by the related
Mortgagor, and such Person is to enter into an assumption agreement or
modification agreement or supplement to the related Mortgage Note or the related
Mortgage that requires the signature of the Trustee, or if an instrument of
release signed by the Trustee is required releasing the related Mortgagor from
liability on the related Mortgage Loan, the Master 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 related Mortgaged Property is to be conveyed and such
modification agreement or supplement to the related Mortgage Note or related
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the related Mortgage Note or related Mortgage or otherwise to comply
with any applicable laws regarding assumptions or the transfer of the related
Mortgaged Property to such Person. In connection with any such assumption, no
material term of the related Mortgage Note (including, but not limited to, the
Mortgage Rate, the amount of the Scheduled Payment, the Maximum Lifetime
Mortgage Rate, the Minimum Lifetime Mortgage Rate, the Gross Margin, the
Periodic Rate Cap, the Interest Adjustment Date, and any other term affecting
the amount or timing of
57
payment on the Mortgage Loan) may be changed. In addition, the substitute
Mortgagor and the related Mortgaged Property must be acceptable to the Master
Servicer in accordance with its servicing standards as then in effect. The
Master Servicer shall notify the Trustee that any such substitution or
assumption agreement has been completed by forwarding to the Trustee 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 Master Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer as additional
servicing compensation.
Section 3.07. Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full has been
escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Master Servicer will
promptly furnish to the Trustee two copies of a certification substantially in
the form of Exhibit H hereto signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Master Servicer Collection
Account have been or will be so deposited or escrowed) and shall request that
the Trustee deliver to the Master Servicer the related Mortgage File. Upon
receipt of such certification and request, the Trustee shall promptly release
the related Mortgage File to the Master Servicer and the Trustee shall not have
any further responsibility with regard to such Mortgage File. Upon any such
payment in full, the Master Servicer is authorized to give, as agent for the
Trustee, as the mortgagee under the related Mortgage that secured the related
Mortgage Loan, an instrument of satisfaction (or assignment of mortgage without
recourse) regarding the related Mortgaged Property subject to such Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Master Servicer Collection Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Trustee shall, upon the request of the Master
Servicer, and delivery to the Trustee, of two copies of a request for release
signed by a Servicing Officer substantially in the form of Exhibit H (or in a
mutually agreeable electronic format which will, in lieu of a signature on its
face, originate from a Servicing Officer), release the related Mortgage File
held in its possession or control to the Master Servicer. Such trust receipt
shall obligate the Master Servicer to return the related Mortgage File to the
Trustee when the need therefor by the Master Servicer no longer exists unless
the related Mortgage Loan shall be liquidated, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified, the
related Mortgage File shall be released by the Trustee to the Master Servicer.
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Section 3.08. Documents, Records and Funds in Possession of the Master
Servicer To Be Held for Trustee.
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee, or to the Custodian on its behalf, as
required by this Agreement all documents and instruments in respect of a
Mortgage Loan coming into the possession of the Master Servicer from time to
time and shall account fully to the Trustee for any funds received by the Master
Servicer or that otherwise are collected by the Master Servicer as Liquidation
Proceeds, Insurance Proceeds or Subsequent Recoveries in respect of any Mortgage
Loan. All Mortgage Files and funds collected or held by, or under the control
of, the Master Servicer in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds,
Insurance Proceeds or Subsequent Recoveries, including but not limited to, any
funds on deposit in the Master Servicer Collection Account, shall be held by the
Master Servicer for and on behalf of the Trustee and the Certificateholders and
shall be and remain the sole and exclusive property of the Trustee, subject to
the applicable provisions of this Agreement. The Master Servicer also agrees
that it shall not create, incur or subject any Mortgage File or any funds that
are deposited in the Master Servicer Collection Account or Distribution Account
or in any Escrow Account (as defined in Section 3.19), 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 Master
Servicer shall be entitled to set off against and deduct from any such funds any
amounts that are properly due and payable to the Master Servicer under this
Agreement.
Section 3.09. Maintenance of Hazard Insurance.
(a) The Master Servicer shall maintain and keep, cause to be
maintained and kept, 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 such
Mortgaged Property is located with an insurer which is licensed to do business
in the state where such Mortgaged Property is located. Each such policy of
standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. The Master Servicer shall also cause
flood insurance to be maintained on property acquired upon foreclosure or deed
in lieu of foreclosure of any Mortgage Loan, to the extent described below.
Pursuant to Section 4.02 hereof, any amounts collected by the Master Servicer
under any such policies (other than the amounts to be applied to the restoration
or repair of the related Mortgaged Property or property thus acquired or amounts
released to the related Mortgagor in accordance with the Master Servicer's
normal servicing procedures, and other than amounts collected under any such
policies that represent reimbursement of the Master Servicer's costs and
expenses incurred in connection with presenting claims under the Insurance
Policies relating to such Mortgaged Property) shall be deposited in the Master
Servicer Collection Account. Any cost incurred by the Master Servicer in
maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the principal balance of the Mortgage Loan, notwithstanding
that the terms of the related Mortgage Loan so
59
permit. Such costs shall be recoverable by the Master Servicer out of late
payments by the related Mortgagor or out of Insurance Proceeds or Liquidation
Proceeds to the extent permitted by Section 4.03 hereof. The right of the Master
Servicer to reimbursement for such costs incurred will be prior to the right of
the Trustee to receive any related Insurance Proceeds or Liquidation Proceeds or
any other amounts in the Master Servicer Collection Account.
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 other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If a Mortgaged Property is located at the
time of origination of the related Mortgage Loan in a federally designated
special flood hazard area and such area is participating in the national flood
insurance program, the Master Servicer shall cause flood insurance to be
maintained with respect to such Mortgage Loan. Such flood insurance shall be in
an amount equal to the least of (i) the Stated Principal Balance of the related
Mortgage Loan (together with, in the case of the Mortgage Loan that is not a
first priority lien, the outstanding principal balance of all related liens that
are prior to the applicable lien of such Mortgage Loan), (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis, or (iii)
the maximum amount of such insurance available for the related Mortgaged
Property under the Flood Disaster Protection Act of 1973, as amended.
(b) In the event that the Master Servicer shall obtain and
maintain a blanket policy 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 3.09, it being understood and agreed
that such policy may contain a deductible clause on terms substantially
equivalent to those commercially available and maintained by comparable
servicers. If such policy contains a deductible clause, the Master 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
3.09, and there shall have been a loss that would have been covered by such
policy, deposit in the Master Servicer Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
Such deposit shall constitute a Servicing Advance. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Master
Servicer agrees to present, on behalf of itself, the Depositor and the Trustee
for the benefit of the Certificateholders, claims under any such blanket policy.
Section 3.10. Presentment of Claims and Collection of Proceeds.
The Master 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 Master Servicer in respect of such
Insurance Policies shall be promptly deposited in the Master Servicer Collection
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, or released to the related
Mortgagor in accordance with the Master Servicer's normal servicing procedures,
or that represent reimbursement of the Master Servicer's costs and
60
expenses incurred in connection with presenting claims under the Insurance
Policies relating to such Mortgaged Property, need not be so deposited (or
remitted).
Section 3.11. Maintenance of the Primary Mortgage Insurance Policies.
(a) The Master Servicer shall not take any action that would
result in noncoverage under any applicable Primary Mortgage Insurance Policy of
any loss which, but for the actions of the Master Servicer, would have been
covered thereunder. The Master Servicer shall use its best efforts to keep in
force and effect (to the extent that a Mortgage Loan requires the related
Mortgagor to maintain such insurance), each Primary Mortgage Insurance Policy
applicable to any Mortgage Loan. The Master Servicer shall not cancel or refuse
to renew any such Primary Mortgage Insurance Policy that is in effect at the
date of the initial issuance of a Mortgage Note and is required to be kept in
force hereunder. Notwithstanding the foregoing, the Master Servicer shall not be
required to keep in force any Primary Mortgage Insurance Policy beyond the
period required by the Xxxxxx Xxx Servicing Guide for residential mortgage
loans.
(b) The Master Servicer agrees to present, on behalf of the
Trustee and the Certificateholders, claims to the insurer under any Primary
Mortgage Insurance Policy and, in this regard, to take such reasonable action as
shall be necessary to permit recovery under any Primary Mortgage Insurance
Policy respecting defaulted Mortgage Loans. Pursuant to Section 4.02, any
amounts collected by the Master Servicer under any Primary Mortgage Insurance
Policies shall (subject to Section 3.09 and Section 3.10) be deposited in the
Master Servicer Collection Account, subject to withdrawal pursuant to Section
4.03 hereof. The Trustee shall provide the Master Servicer with any powers of
attorney and or other documentation as it may request in order enable it to
perform its obligations pursuant to this Section 3.11.
Section 3.12. Possession of Certain Insurance Policies and Documents.
Until all amounts distributable in respect of the Certificates have
been distributed in full and the Master Servicer otherwise has fulfilled its
obligations under this Agreement, the Trustee shall retain, or the Custodian as
agent of the Trustee shall retain, possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions of this Agreement and
the Custodial Agreement. The Master Servicer shall promptly deliver or cause to
be delivered to the Trustee upon the execution or receipt thereof such documents
or instruments that constitute portions of the Mortgage File that come into the
possession of the Master Servicer from time to time. The Master Servicer shall
retain possession and custody of the originals (to the extent available) of any
Primary Mortgage Insurance Policies, or certificate of insurance if applicable,
and any certificates of renewal as to the foregoing as may be issued from time
to time.
Section 3.13. Realization Upon Defaulted Mortgage Loans.
(a) The Master 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 Master
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
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requirements of the insurer under any Required Insurance Policy; provided that
the Master 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 related Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Master Servicer Collection Account pursuant to
Section 4.03 hereof). If the Master 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 Master Servicer will
give notice of any such charge-off to the Trustee. The Master 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 4.03
hereof. If the Master Servicer has knowledge that a Mortgaged Property that the
Master 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 Master Servicer, the Master Servicer will,
prior to acquiring such Mortgaged Property, consider such risks and only take
action in accordance with its established environmental review procedures.
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 Master Servicer shall ensure
that the title to such REO Property references this Agreement and the Trustee's
capacity hereunder and thereunder. Pursuant to its efforts to sell such REO
Property, the Master Servicer shall either itself or through an agent selected
by the Master Servicer protect and conserve such REO Property in the same manner
and to such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests of
the Certificateholders, rent the same, or any part thereof, as the Master
Servicer deems to be in the best interest of the Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Master 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 Master Servicer Collection Account no later than Distribution Account
Deposit Date. The Master 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 Master 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, in accordance with the REMIC
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Provisions, 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
Trustee shall have been supplied with an Opinion of Counsel (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 or REMIC II
as defined in section 860F of the Code or cause any of REMIC I or REMIC II 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 or REMIC II 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 Master
Servicer has agreed to indemnify and hold harmless the Trust Fund with respect
to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master 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 Master 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
this Agreement, to be payments on account of principal and interest on the
related Mortgage Notes and shall be deposited into the Master Servicer
Collection 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 Master Servicer as provided above, shall be deposited in
the Master Servicer Collection Account on the next succeeding Distribution
Account Deposit Date following receipt thereof for distribution on the related
Distribution Date, except that any Excess Liquidation Proceeds shall be retained
by the Master 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 Master Servicer for any related unreimbursed Servicing Advances
and Servicing Fees, pursuant to Section 4.03(a)(vi) or this Section 3.13;
second, to reimburse the Master Servicer for any unreimbursed Advances, pursuant
to Section 4.03(a)(i) and (ii) or this Section 3.13; 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
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related 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
related Mortgage Loan.
(b) On each Distribution Account Deposit Date, the Master
Servicer shall determine the respective aggregate amounts of Excess Liquidation
Proceeds and Realized Losses, if any, on the Mortgage Loans for the related
Prepayment Period.
(c) The Master Servicer has no intent to foreclose on any
Mortgage Loan more than 89 days delinquent as of the Closing Date based on the
delinquency characteristics as of the Closing Date; provided, that the foregoing
does not prevent the Master Servicer from initiating foreclosure proceedings on
any date thereafter if the facts and circumstances of such Mortgage Loans,
including delinquency characteristics in the Master Servicer's discretion, so
warrant such action.
Section 3.14. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall
be entitled to retain or withdraw from the Master Servicer Collection Account,
on each Distribution Date, out of each payment of interest on a Mortgage Loan
included in the Trust Fund, an amount equal to its Master Servicing Fee at the
applicable Master Servicing Fee Rate on the aggregate Stated Principal Balance
of the Mortgage Loans as of the first day of the calendar month immediately
preceding such Distribution Date.
Additional servicing compensation in the form of any assumption fees,
tax service fees, fees for statement of account payoff and late payment charges
collected from the related Mortgagors, and Excess Liquidation Proceeds shall be
retained by the Master Servicer and shall not be required to be deposited in the
Master Servicer Collection Account. In accordance with Sections 4.02(b) and
4.03, the Master Servicer shall be entitled to pay itself the Master Servicing
Fee prior to deposit in the Master Servicer Collection Account or to withdraw
such portion of the Master Servicing Fee from the Master Servicer Collection
Account. The Master Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement.
Pursuant to Article IV, all income and gain realized from any investment of
funds in the Master Servicer Collection Account shall be for the benefit of the
Master Servicer.
Section 3.15. [Reserved]
Section 3.16. Annual Officer's Certificate as to Compliance.
The Master Servicer shall deliver to the Depositor and the Trustee by
March 1, 2006, and by March 1 of each year thereafter, an Officer's Certificate
stating, as to the signer thereof, that (i) a review of the activities of the
Master Servicer during the preceding calendar year and of the performance of the
Master 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 Master 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 and (iii) to the best of such
officer's knowledge, each Subservicer has fulfilled all its obligations under
its Subservicing Agreement throughout
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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. Copies of such statement shall be provided by the Master
Servicer to any Certificateholder upon request.
Section 3.17. Annual Independent Accountant's Servicing Report.
The Master Servicer, at its expense, shall cause a nationally
recognized firm of independent certified public accountants to furnish a
statement to the Trustee, the Rating Agencies and the Seller by March 1, 2006,
and by March 1 of each year thereafter, in each case for the immediately
preceding calendar year, to the effect that, with respect to the most recently
ended calendar year, such firm has examined certain records and documents
relating to the Master Servicer's performance of its servicing obligations under
this Agreement and pooling and servicing and trust agreements in material
respects similar to this Agreement and to each other and that, on the basis of
such examination conducted substantially in compliance with the audit program
for mortgages serviced for Xxxxxxx Mac or the Uniform Single Attestation Program
for Mortgage Bankers, such firm is of the opinion that the Master Servicer's
activities have been conducted in compliance with this Agreement, or that such
examination has disclosed no material items of noncompliance except for (i) such
exceptions as such firm believes to be immaterial, (ii) such other exceptions as
are set forth in such statement and (iii) such exceptions that the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages Serviced by Xxxxxxx Mac requires it to report. Copies of such
statements shall be provided to any Certificateholder, upon request, by the
Master Servicer, or by the Trustee at the expense of the Master Servicer if the
Master Servicer shall fail to provide such copies. If any such report discloses
exceptions that are material, the Master Servicer shall advise the Trustee
whether such exceptions have been or are susceptible of cure, and will take
prompt action to do so.
Section 3.18. Reports Filed with Securities and Exchange Commission.
Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System ("XXXXX"), a Form 8-K with a copy of the
monthly statement to the Certificateholders for such Distribution Date as an
exhibit thereto. Prior to January 30 in each year, the Trustee shall, in
accordance with industry standards and only if instructed by the Depositor, file
a Form 15 Suspension Notice with respect to the Trust Fund, if applicable. On or
prior to (i) March 15, 2006 and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, prior to March 15 of each year thereafter, the
Master Servicer shall provide the Trustee with a Master Servicer Certification,
and the annual independent accountant's servicing report and annual statement of
compliance to be delivered by the Master Servicer pursuant to Sections 3.16 and
3.17. Prior to (i) March 31, 2006 and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, the 90th day of each calendar year thereafter, the
Trustee shall prepare and file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust. Such Form 10-K shall be executed by the
Master Servicer and shall include the Master Servicer Certification and other
documentation provided by the Master Servicer pursuant to the second preceding
sentence, in each case to the extent they have been timely delivered to the
Trustee; provided that, if such documents are not so timely delivered, the
Trustee shall promptly notify the Depositor and will use its best efforts to
file a timely Form 10-K. If applicable, the Trustee shall follow the
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instructions of the Depositor for filing an incomplete Form 10-K accompanied by
a Form 12b-25 no later than March 31, 2006 (or, if applicable the 90th day of
each calendar year thereafter), and upon receipt of the Master Servicer
Certification and such other documentation, the Trustee shall, in accordance
with the rules and regulations promulgated under the Exchange Act, file an
amended Form 10-K (accompanied by an additional Master Servicer Certification)
including such documents as exhibits. The Trustee shall have no liability with
respect to any failure to properly prepare or file such periodic reports
resulting from or relating to the Master Servicer's or Depositor's inability or
failure to obtain any information and not resulting from the Trustee's own
gross negligence, bad faith or willful misconduct. The Depositor hereby grants
to the Master Servicer and the Trustee a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until either the earlier of (i) receipt by the Master Servicer
and 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 and the Mortgage Loans as the Trustee reasonably deems appropriate to
prepare and file all necessary reports with the Securities and Exchange
Commission; provided that the Trustee shall notify the Depositor of any such
request not less than 10 Business Days prior to the applicable filing date. The
Trustee shall have no responsibility to file any items other than those
specified in this Section 3.18; 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, Xxxxxxx
& Co. Inc., Attn: Managing Director-Analysis and Control, Xxx Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxx 00000-0000. Fees and expenses incurred by the Trustee
in connection with the preparation and filing of the reports required under this
Section 3.18 shall not be reimbursable from the Trust Fund; provided that, for
the avoidance of doubt, any indemnity amounts otherwise payable under Section
9.05 shall not be affected hereby.
Section 3.19. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the Master
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 Master Servicer) for the payment of taxes, assessments, hazard
insurance premiums or comparable items for the account of the Mortgagors.
Nothing herein shall require the Master 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 Master Servicer out of related collections for any payments made pursuant to
Section 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and Section 3.09 hereof (with respect to hazard insurance), to refund
to any Mortgagors 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 the
related Mortgagor on balances in the Escrow Account, to pay earnings on the
Escrow Accounts (to the extent not required to be paid to the Mortgagors) to the
Master Servicer, or to clear and terminate the Escrow Account at
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the termination of this Agreement in accordance with Section 10.01 hereof. The
Escrow Accounts shall not be a part of the Trust Fund.
Section 3.20. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance policies and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the offices of the Master Servicer
designated by it.
Section 3.21. Optional Purchase of Defaulted Mortgage Loans.
Beginning on the first Business Day of the Fiscal Quarter immediately
following the date on which a Mortgage Loan has become at least 91 days
delinquent, EMC Mortgage Corporation, in its sole discretion, shall have the
right to elect (by written notice sent to the Trustee) to purchase for its own
account from the Trust Fund any such Mortgage Loan at a price equal to the
Purchase Price. The Purchase Price for any Mortgage Loan purchased hereunder
shall be deposited in the Master Servicer Collection Account, and the Trustee,
upon receipt of a Request for Release from EMC Mortgage Corporation, shall
release to EMC Mortgage Corporation, the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment prepared by EMC Mortgage
Corporation, in each case without recourse, representation or warranty as shall
be necessary to vest in EMC Mortgage Corporation any Mortgage Loan released
pursuant hereto and EMC Mortgage Corporation shall succeed to all the Trust's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. EMC Mortgage Corporation shall thereupon own such Mortgage
Loan, and all security and documents, free of any further obligation to the
Trustee or the Certificateholders with respect thereto. Notwithstanding the
foregoing, any such optional right of repurchase by EMC Mortgage Corporation
hereunder with respect to a delinquent Mortgage Loan shall, if unexercised,
terminate on the earlier of (i) the date on which such delinquency has been
cured or (ii) the last Business Day of such Fiscal Quarter immediately following
the date on which such Mortgage Loan became 91 days delinquent, provided
however, that such optional right of repurchase shall be reinstated if (a) in
the case of clause (i), the related Mortgage Loan shall thereafter again have
become 91 or more days delinquent and (b) in the case of clause (ii), such
delinquency shall have been subsequently cured and the related Mortgage Loan
shall thereafter again become 91 or more days delinquent in any subsequent
Fiscal Quarter. In either event, the purchase option shall again become
exercisable on the first day of the Fiscal Quarter immediately following the
date on which the related Mortgage Loan again becomes at least 91 days
delinquent.
Section 3.22. Subservicing.
(a) The Master Servicer may arrange for the subservicing of
any Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that such
subservicing arrangement and the terms of the related Subservicing Agreement
must provide for the servicing of such Mortgage Loans in a
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manner consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any Subservicing Agreement, any of the
provisions herein relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through the Master
Servicer or otherwise, the Master Servicer shall remain obligated and liable to
the Depositor, the Trust, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans, and neither the Trustee nor any other party
shall have any obligations, duties or liabilities with respect to such
Subservicer, including any obligation, duty or liability of the Trustee or any
other party to pay such Subservicer's fees and expenses. For purposes of
remittance to the Trustee pursuant to this Agreement, the Master Servicer shall
be deemed to have received a payment on a Mortgage Loan when a Subservicer has
received such payment. The Master Servicer shall be entitled to enter into an
agreement with a Subservicer to provide for the delivery of reports and for
indemnification of the Master Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
Every subservicing agreement entered into by the Master Servicer shall
contain a provision giving the Master Servicer the option to terminate such
agreement and at the Master Servicer's option, service the related Mortgage
Loans itself pursuant to this Agreement or arrange for any servicing
responsibilities to be performed pursuant to the applicable Subservicing
Agreement by a successor Subservicer. Any costs and expenses relating to such
termination and transfer of servicing shall be the sole expense of the Master
Servicer, without any right to reimbursement from the Master Servicer Collection
Account or the Distribution Account. In the event that the Trustee as successor
master servicer terminates a Subservicing Agreement, the Trustee is entitled to
be reimbursed for any costs and expenses it may incur relating to such
termination and transfer of servicing in accordance with Section 9.05 hereof.
All actions of each Subservicer performed pursuant to the related Subservicing
Agreement shall be performed as an agent of the Master Servicer with the same
force and effect as if performed directly by the Master Servicer.
(b) The Master Servicer shall be deemed to have received any
collections, recoveries or payments with respect to the Mortgage Loans that are
received by a Subservicer regardless of whether such payments are remitted by
the Subservicer to the Master Servicer.
Section 3.23. Books and Records.
The Master 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 Master Servicer's computer system to clearly
reflect the ownership of the Mortgage Loans by the Trust. In particular, the
Master Servicer shall maintain in its possession, available for inspection by
the Trustee, in accordance with Section 11.09 hereof, and shall deliver to the
Trustee upon demand, evidence of compliance with all federal, state and local
laws, rules and regulations relating to itself and the Mortgage Loans. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained
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by the Master 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 Master Servicer complies
with the servicing requirements of Section 3.01 hereof.
The Master Servicer shall maintain with respect to each Mortgage Loan
and shall make available for inspection by the Trustee, in accordance with
Section 11.09 hereof, the related servicing file during the time such Mortgage
Loan is subject to this Agreement and thereafter in accordance with applicable
law.
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ARTICLE IV.
ACCOUNTS
Section 4.01. [Reserved]
Section 4.02. Master Servicer Collection Account.
(a) The Master Servicer shall establish and maintain the
Master Servicer Collection Account in the name of the Master Servicer for the
benefit of the Trustee on behalf of the Certificateholders. The Master Servicer
Collection Account shall be an Eligible Account. The Master Servicer shall
deposit or cause to be deposited into the Master Servicer Collection Account on
a daily basis within one Business Day 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 Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans, other than Simple Interest Loans, on or before the 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 (other than, in the
case of a Simple Interest Loan, interest paid in excess of 30 days'
interest) on the Mortgage Loans net of the Master Servicing Fee and the
Trustee Fee;
(iii) any Advances and any payments of Compensating Interest;
(iv) all Liquidation Proceeds and Insurance Proceeds, other
than proceeds to be applied to the restoration or repair of the related
Mortgaged Property or released to the related Mortgagor in accordance
with the Master Servicer's normal servicing procedures, and Subsequent
Recoveries;
(v) any amount required to be deposited by the Master Servicer
pursuant to Section 4.02(c) in connection with any losses on Permitted
Investments;
(vi) the Purchase Price with respect to any Mortgage Loans
purchased by the Seller or the Master Servicer pursuant to Sections
2.02, 2.03 or 3.21;
(vii) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.09, Section 3.13 and Section 5.01; and
(viii) any other amounts received by or on behalf of the
Master Servicer or the Trustee and required to be deposited in the
Master Servicer Collection Account pursuant to this Agreement.
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(b) All amounts deposited to the Master Servicer Collection
Account shall be held by the Master Servicer in the name of the Trustee in trust
for the benefit of the Certificateholders in accordance with the terms and
provisions of this Agreement. The requirements for crediting the Master Servicer
Collection Account or the Distribution Account shall be exclusive, it being
understood and agreed that, without limiting the generality of the foregoing,
payments in the nature of (i) late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges, (ii) Excess Liquidation Proceeds and (iii) the items
enumerated in Subsections 4.03(a)(i), (ii), (iii), (iv), (vi), (vii), (ix) and
(xi) need not be credited by the Master Servicer to the Master Servicer
Collection Account. In the event that the Master Servicer shall deposit or cause
to be deposited to the Distribution Account any amount not required to be
credited thereto, the Trustee, upon receipt of a written request therefor signed
by a Servicing Officer of the Master Servicer, shall promptly transfer such
amount to the Master Servicer, any provision herein to the contrary
notwithstanding.
(c) The amount at any time credited to the Master Servicer
Collection Account may be invested, in the name of the Trustee, or its nominee,
for the benefit of the Certificateholders, in Permitted Investments as directed
by the Master Servicer. All Permitted Investments shall mature or be subject to
redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Account Deposit Date. Any and all investment earnings
from the Master Servicer Collection Account shall be paid to the Master
Servicer. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Master Servicer Collection Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.
(d) On or before each Distribution Account Deposit Date, the
Master Servicer shall deposit in the Distribution Account (or separately remit
to the Trustee for deposit in the Distribution Account) any Advances or payments
of Compensating Interest required to be made by the Master Servicer with respect
to the Mortgage Loans and such Distribution Date.
(e) On each Distribution Date, the Master Servicer will pay
itself the Master Servicing Fee relating to such Distribution Date, and will pay
to the Trustee the Trustee Fee relating to such Distribution Date, from payments
on account of interest on the Mortgage Loans that have not been deposited into
the Master Servicer Collection Account, as set forth in Section 4.02(a)(ii). To
the extent such funds have been deposited into the Master Servicer Collection
Account, the Master Servicer shall pay itself such Master Servicing Fee as set
forth in Section 4.03(a)(viii).
Section 4.03. Permitted Withdrawals and Transfers from the Master
Servicer Collection Account.
(a) The Master Servicer may from time to time make or cause to
be made withdrawals from the Master Servicer Collection Account for the
following purposes:
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(i) to reimburse the Trustee and the Master Servicer (in that
order) for any Advance, the right of the Trustee and the Master
Servicer to reimbursement pursuant to this subclause (i) being limited
to amounts received on a particular Mortgage Loan (including, for this
purpose, the Purchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late payments or recoveries of
the principal of or interest on such Mortgage Loan respecting which
such Advance or advance was made;
(ii) to reimburse the Master Servicer from Insurance Proceeds
or Liquidation Proceeds relating to a particular Mortgage Loan for
amounts expended by the Master Servicer in good faith in connection
with the restoration or repair of the related Mortgaged Property which
was damaged and not covered by any Insurance Policy, including any
hazard insurance, or in connection with the liquidation of such
Mortgage Loan;
(iii) to reimburse the Master Servicer from Insurance Proceeds
relating to a particular Mortgage Loan for insured expenses incurred
with respect to such Mortgage Loan and to reimburse the Master Servicer
from Liquidation Proceeds from a particular Mortgage Loan for
liquidation expenses incurred with respect to such Mortgage Loan;
provided that the Master Servicer shall not be entitled to
reimbursement for liquidation expenses with respect to a Mortgage Loan
to the extent that (i) any amounts with respect to such Mortgage Loan
were paid as Excess Liquidation Proceeds pursuant to clause (x) of this
Subsection (a) to the Master Servicer; and (ii) such liquidation
expenses were not included in the computation of such Excess
Liquidation Proceeds;
(iv) to pay the Master Servicer from Liquidation Proceeds or
Insurance Proceeds received in connection with the liquidation of any
Mortgage Loan, the amount which it would have been entitled to receive
under subclause (viii) of this Subsection 4.03(a) as servicing
compensation on account of each defaulted scheduled payment on such
Mortgage Loan if paid in a timely manner by the related Mortgagor;
(v) to pay the Master Servicer from the Purchase Price for any
Mortgage Loan, the amount which it would have been entitled to receive
under subclause (xi) of this Subsection 4.03(a) as servicing
compensation;
(vi) to reimburse the Master Servicer for unreimbursed
Servicing Advances, the right to reimbursement pursuant to this
subclause being limited to amounts received on the related Mortgage
Loan (including, for this purpose, the Purchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent late
recoveries of the payments for which such Servicing Advances were made;
(vii) to reimburse, first, the Trustee for any Advance and,
second, the Master Servicer for any unreimbursed Advance or any
Servicing Advance, in either case, if and to the extent that the
Advance or Servicing Advance has not been reimbursed pursuant to clause
(i) or (vi);
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(viii) to pay any Servicing Fee and, subject to Section
4.02(e), any amounts relating to Master Servicing Fees and Trustee Fees
that have not otherwise been paid hereunder;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections
7.03, 7.04 and 11.02, as applicable;
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds with respect to a
Liquidated Loan;
(xi) to reimburse or pay the Master Servicer any such amounts
as are due thereto and have not been retained by or paid to the Master
Servicer;
(xii) to reimburse the Trustee for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to any
provision of this Agreement;
(xiii) to remove amounts deposited in error; and
(xiv) to clear and terminate the Master Servicer Collection
Account pursuant to Section 10.01.
(b) The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
accounting for any reimbursement from the Master Servicer Collection Account
pursuant to subclauses (i) through (xi), inclusive; provided that prior to
making any withdrawal from the Master Servicer Collection Account with respect
to the reimbursement of a Nonrecoverable Advance, the Master 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 Master Servicer to be a Nonrecoverable Advance and identifying the related
Mortgage Loan(s), and their respective portions of such Nonrecoverable Advance.
(c) On an ongoing basis, Master Servicer shall, upon direction
of the Trustee, withdraw from the Master Servicer Collection Account any
expenses recoverable by the Trustee.
(d) No later than 1:00 p.m. Eastern time on the Distribution
Account Deposit Date, the Master Servicer shall transfer all Interest Funds,
Principal Funds and Prepayment Charges remaining on deposit in the Master
Servicer Collection Account to the Trustee, for deposit into the Distribution
Account. In the event that the Master Servicer fails on any Distribution Account
Deposit Date to remit to the Trustee any amount required to be so remitted to
the Trustee pursuant to this clause (d) on such date, the Master Servicer shall
pay to the Trustee, for the account of the Trustee, interest on such late
remittance at an annual rate equal to the then-current prime rate of U.S. money
center banks as published from time to time in The Wall Street Journal, adjusted
as of the date of each change, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be paid to the Trustee by the
Master Servicer on the date such late remittance is made and shall cover the
period commencing at 1:00 p.m. on such Distribution Account Deposit Date and
ending at the time such payment is made. The Master Servicer shall only be
required to pay the Trustee interest on such late
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remittance for the actual number of hours such amounts are not timely remitted
(e.g., 24 hours' interest, if such amounts are remitted at 1:00 p.m. on the day
after the related Distribution Account Deposit Date).
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 an Eligible Account.
(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 in a financial institution located in the State of the Corporate Trustee
Office or in the State of New York, and the Distribution Account and the funds
deposited therein shall not be subject to, and shall be protected from, all
claims, liens, and encumbrances of any creditors or depositors of the Trustee or
the Master Servicer (whether made directly, or indirectly through a liquidator
or receiver of the Trustee or the Master Servicer). The Trustee may invest funds
or deposit in such Permitted Investments as it may determine. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Date if the obligor
for such Permitted Investment is the Trustee or, if such obligor is any other
Person, the Business Day preceding such Distribution Date. All investment
earnings on amounts on deposit in the Distribution Account or benefit from funds
uninvested therein from time to time shall be for the account of the Trustee.
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 Trustee
shall deposit the amount of the loss in the Distribution Account. 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. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.
Section 4.05. Permitted Withdrawals and Transfers from the Distribution
Account.
The Trustee shall withdraw funds from the Distribution Account for
distribution to the Certificateholders in the manner specified in this
Agreement, and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to the last paragraph of Section
9.12. In particular, on each Distribution Date, the Trustee shall distribute
Interest Funds and Principal Funds to the Certificateholders in accordance with
Section 5.04(a) and the Prepayment Charges in accordance with Section 5.04(d).
In addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay itself the Trustee Fee and certain expenses and
indemnification amounts as provided in Section 9.05, for the related
Distribution Date;
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(ii) to pay itself for any expenses as provided in Sections
4.03(a)(i), (vii) and (xii), without duplication thereof;
(iii) to withdraw any amount deposited in the Distribution
Account and not required to be deposited therein pursuant to Section
4.03; and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 10.01 hereof.
Section 4.06. Yield Maintenance Account and Yield Maintenance
Agreement.
The Trustee is hereby directed to execute the Yield Maintenance
Agreement on behalf of the Trust Fund. Amounts payable by the Trust Fund on the
Closing Date pursuant to the Yield Maintenance Agreement shall be paid by the
Seller. 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.
The Trustee shall establish and maintain in the name of the Trustee,
for the benefit of the Class A, Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6 and Class M-7 Certificateholders, the Yield Maintenance
Account as a segregated trust account. The Yield Maintenance Account constitutes
an "outside reserve fund" within the meaning of Treasury Regulation ss.
1.860G-2(h) and is not an asset of the REMICs. The Class B-IO Certificateholders
shall be the owners of the Yield Maintenance Account, and for all federal tax
purposes, amounts transferred by the REMICs to the Yield Maintenance Account
shall be treated as amounts distributed by the REMICs to the Class B-IO
Certificateholders. The Trustee shall keep records that accurately reflect the
funds on deposit in the Yield Maintenance Account.
The Trustee will invest funds deposited in the Yield Maintenance
Account as directed by the Class B-IO Certificateholders in writing in Permitted
Investments with a maturity date (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee or an
Affiliate of the Trustee manages or advises such investment, or (ii) no later
than the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if the Trustee or an Affiliate of the Trustee
manages or advises such investment. If no written direction with respect to such
investment shall be received by the Trustee from the Class B-IO
Certificateholders, then funds in such Account shall remain uninvested. All
income and gain realized from investment of funds deposited in the Yield
Maintenance Account shall be for the sole and exclusive benefit of the Class
B-IO Certificateholders and shall be remitted by the Trustee to the Class B-IO
Certificateholders no later than the first Business Day following receipt of
such income and gain by the Trustee. The Class B-IO Certificateholders shall
deposit in the Yield Maintenance Account the amount of any net loss incurred in
respect of any such Permitted Investment immediately upon realization of such
loss without any right of reimbursement therefor.
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Any payments under the Yield Maintenance Agreement received by the
Trustee shall be deposited by the Trustee into the Yield Maintenance Account and
distributed by the Trustee on the related Distribution Date as follows:
(a) first, to the Class A Certificateholders, based upon the
amount by which the interest rate on such Class is limited, the lesser of (1)
the amount received under the Yield Maintenance Agreement, and (2) the Interest
Distribution Amount that such Class would have been entitled to receive on such
Distribution Date had the applicable Pass-Through Rate been calculated at
One-Month LIBOR plus the Class A Margin for the related Accrual Period, to the
extent not otherwise paid from Interest Funds;
(b) second, to the Class M-1 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clause (a) above, and (2) the Interest Distribution
Amount that the Class M-1 Certificates would have been entitled to receive on
such Distribution Date had the applicable Pass-Through Rate been calculated at
One-Month LIBOR plus the Class M-1 Margin for the related Accrual Period, to the
extent not otherwise paid from Interest Funds;
(c) third, to the Class M-2 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a) and (b) above and (2) the Interest
Distribution Amount that the Class M-2 Certificates would have been entitled to
receive on such Distribution Date had the applicable Pass-Through Rate been
calculated at One-Month LIBOR plus the Class M-2 Margin for the related Accrual
Period, to the extent not otherwise paid from Interest Funds;
(d) fourth, to the Class M-3 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a), (b) and (c) above and (2) the Interest
Distribution Amount that the Class M-3 Certificates would have been entitled to
receive on such Distribution Date had the applicable Pass-Through Rate been
calculated at One-Month LIBOR plus the Class M-3 Margin for the related Accrual
Period, to the extent not otherwise paid from Interest Funds;
(e) fifth, to the Class M-4 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a), (b), (c) and (d) above and (2) the Interest
Distribution Amount that the Class M-4 Certificates would have been entitled to
receive on such Distribution Date had the applicable Pass-Through Rate been
calculated at One-Month LIBOR plus the Class M-4 Margin for the related Accrual
Period, to the extent not otherwise paid from Interest Funds.
(f) sixth, to the Class M-5 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a), (b), (c), (d) and (e) above and (2) the
Interest Distribution Amount that the Class M-5 Certificates would have been
entitled to receive on such Distribution Date had the applicable Pass-Through
Rate been calculated at One-Month LIBOR plus the Class M-5 Margin for the
related Accrual Period, to the extent not otherwise paid from Interest Funds;
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(g) seventh, to the Class M-6 Certificateholders, the lesser
of (1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a), (b), (c), (d), (e) and (f) above and (2)
the Interest Distribution Amount that the Class M-6 Certificates would have been
entitled to receive on such Distribution Date had the applicable Pass-Through
Rate been calculated at One-Month LIBOR plus the Class M-6 Margin for the
related Accrual Period, to the extent not otherwise paid from Interest Funds;
and
(h) eighth, to the Class M-7 Certificateholders, the lesser of
(1) the amount received under the Yield Maintenance Agreement remaining after
application pursuant to clauses (a), (b), (c), (d), (e), (f) and (g) above and
(2) the Interest Distribution Amount that the Class M-7 Certificates would have
been entitled to receive on such Distribution Date had the applicable
Pass-Through Rate been calculated at One-Month LIBOR plus the Class M-7 Margin
for the related Accrual Period, to the extent not otherwise paid from Interest
Funds.
In the event that the amount received by the Trustee with respect to
the Yield Maintenance Agreement for any Distribution Date exceeds the amounts
required under subclause (2) of clauses (a) through (h) above on such
Distribution Date, such aggregate amount will constitute the Excess Yield
Maintenance Amount and will be distributed by the Trustee on such Distribution
Date in the manner set forth in Section 5.04(a)(iii) in accordance with the
Remittance Report for such Distribution Date.
Upon the earliest of (i) the reduction of the principal balances of the
Certificates to zero or (iii) the termination of this Agreement in accordance
with Section 10.01, any amount remaining on deposit in the Yield Maintenance
Account after distributions as set forth above shall be withdrawn by the Trustee
and paid to the Depositor or its designee.
Section 4.07. Basis Risk Reserve Fund.
No later than the Closing Date, the Trustee shall establish and
maintain with itself a separate, segregated trust account titled, "Basis Risk
Reserve Fund, JPMorgan Chase Bank, N.A., as trustee, in trust for registered
Holders of Bear Xxxxxxx Asset Backed Securities Trust 2005-1, Asset-Backed
Certificates, Series 2005-1." The Trustee shall, promptly upon receipt, deposit
in the Basis Risk Reserve Fund an amount equal to $5,000 to be remitted on the
Closing Date to the Trustee. On each Distribution Date, the Trustee will, to the
extent of any remaining Net Monthly Excess Cashflow and any remaining Excess
Yield Maintenance Amount following the distribution of any remaining Net Monthly
Excess Cashflow and any remaining Excess Yield Maintenance Amount on such
Distribution Date as set forth in Section 5.04(a)(iii) clauses first through
third, deposit any remaining Net Monthly Excess Cashflow and any remaining
Excess Yield Maintenance Amount in the Basis Risk Reserve Fund.
On each Distribution Date as to which there is a Basis Risk Carry
Forward Amount payable to the Holders of the Class A Certificates, the Trustee
has been directed by the Class B-IO Certificateholders to, and therefore will,
deposit into the Basis Risk Reserve Fund the amounts set forth in clause fifth
of Section 5.04(a)(iii), rather than distributing such amounts to the Class B-IO
Certificateholders. On any such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Holders of the Class A Certificates, and
will distribute such
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amounts to the Holders of such Class A Certificates as set forth in clause fifth
of Section 5.04(a)(iii).
On each Distribution Date as to which there is a Basis Risk Carry
Forward Amount payable to the Holders of the Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6 and Class M-7 Certificates, the Trustee has been
directed by the Class B-IO Certificateholders to, and therefore will, deposit
into the Basis Risk Reserve Fund the amounts set forth in clause sixth of
Section 5.04(a)(iii), rather than distributing such amounts to the Class B-IO
Certificateholders. On any such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Holders of the applicable Class M
Certificates, and will distribute such amounts to the Holders of such Class M
Certificates as set forth in clause sixth of Section 5.04(a)(iii).
For federal and state income tax purposes, the Class B-IO
Certificateholders will be deemed to be the owners of the Basis Risk Reserve
Fund and all amounts deposited into the Basis Risk Reserve Fund shall be treated
as amounts distributed by REMIC II to the Holders of the Class B-IO
Certificates, on a pro rata basis based on their respective entitlements to
interest. Upon the termination of the Trust Fund, or the earlier payment in full
of the principal and all unpaid Basis Risk Carry Forward Amounts of the Class A
Certificates and the Class M Certificates, and the Holders of the Class B-IO
Certificates are no longer entitled to interest, all amounts remaining on
deposit in the Basis Risk Reserve Fund will be released by the Trust and shall
be evenly distributed to the Class B-IO Certificateholders (or their respective
designees). The Basis Risk Reserve Fund will be part of the Trust but not part
of any REMIC, and any payments to the Holders of the Class A Certificates or the
Class M Certificates of Basis Risk Carry Forward Amounts will not be payments
with respect to a "regular interest" in a REMIC within the meaning of Code
Section 860(G)(a)(1). The Trustee shall keep records that accurately reflect the
funds on deposit in the Basis Risk Reserve Fund.
By accepting a Class B-IO Certificate, each Class B-IO
Certificateholder hereby agrees to direct the Trustee, and the Trustee hereby is
directed, to deposit into the Basis Risk Reserve Fund the amounts described
above on each Distribution Date as to which there is any Basis Risk Carry
Forward Amount, rather than distributing such amounts to the Class B-IO
Certificateholders. By accepting a Class B-IO Certificate, each Class B-IO
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.
The Trustee shall hold uninvested any amounts that may be on deposit in
the Basis Risk Reserve Fund from time to time.
For federal tax return and information reporting purposes, the rights
of the Holders of the Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6 and Class M-7 Certificates to receive such distributions shall be
assigned a value determined by the Depositor and reported by it to the Trustee.
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ARTICLE V.
DISTRIBUTIONS AND ADVANCES
Section 5.01. Advances.
Except with respect to any Simple Interest Loans or Balloon Loan
payments, for which no Advances of principal are required to be made, if the
Scheduled Payment on a Mortgage Loan that was due on a related Due Date and is
delinquent other than as a result of application of the Relief Act or similar
state laws exceeds the amount deposited in the Master Servicing Collection
Account for use as an Advance with respect to such Mortgage Loan, the Master
Servicer or the Trustee, as applicable, will make an Advance in an amount equal
to such deficiency (net of its Master Servicing Fee and the Servicing Fee with
respect to such Mortgage Loan with respect to Advances made by the Master
Servicer, and net of the Net Mortgage Rate with respect to such Mortgage Loan
with respect to any Advances made by the Trustee) and deposit such Advance in
the Master Servicer Collection Account or the Distribution Account, in the event
of an Advance by the Trustee. Each such Advance shall be remitted to the Master
Servicer Collection Account or the Distribution Account, in the event of an
Advance by the Trustee no later than 1:00 p.m. Eastern time on the Master
Servicer Advance Date in immediately available funds. The Master Servicer or the
Trustee, as applicable, shall be obligated to make any such Advance only to the
extent that such advance would not be a Nonrecoverable Advance. If the Master
Servicer shall have determined that it has made a Nonrecoverable Advance or that
a proposed Advance or a lesser portion of such Advance would constitute a
Nonrecoverable Advance, the Master Servicer or the Trustee, as applicable, shall
deliver (i) to the Trustee for the benefit of the Certificateholders funds
constituting the remaining portion of such Advance, if applicable, and (ii) to
the Depositor, each Rating Agency and the Trustee an Officer's Certificate
setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own funds,
the Master Servicer or the Trustee, as applicable, may (i) cause to be made an
appropriate entry in its records relating to the Master Servicer Collection
Account or the Distribution Account that any Amount Held for Future
Distributions has been used by the Master Servicer or the Trustee, as
applicable, in discharge of its obligation to make any such Advance and (ii)
transfer such funds from the Master Servicer Collection Account to the
Distribution Account. Any funds so applied and transferred shall be replaced by
the Master Servicer by deposit in the Master Servicer Collection Account no
later than the Distribution Account Deposit Date preceding the Distribution Date
on which such funds are required to be distributed pursuant to this Agreement.
The Master Servicer or the Trustee, as applicable, shall be entitled to be
reimbursed from the Master Servicer Collection Account or the Distribution
Account for all Advances of its own funds made pursuant to this Section as
provided in Section 4.03. The obligation to make Advances with respect to any
Mortgage Loan shall continue until such Mortgage Loan is paid in full or the
related Mortgaged Property or related REO Property has been liquidated or until
the purchase or repurchase thereof (or substitution therefor) from the Trust
Fund pursuant to any applicable provision of this Agreement, except as otherwise
provided in this Section 5.01.
Subject to and in accordance with the provisions of Article VIII
hereof, in the event of a failure by the Master Servicer to make an Advance
required pursuant to this Section 5.01, then
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the Trustee shall be obligated to make such Advance on such Distribution Date.
The Trustee shall be permitted to conclusively rely upon any determination made
by the Master Servicer that any portion of an Advance is a Nonrecoverable
Advance.
Section 5.02. Compensating Interest Payments.
The Master Servicer shall deposit into the Distribution Account, no
later than the Distribution Account Deposit Date immediately preceding each
Distribution Date, an amount equal to the aggregate amount of Compensating
Interest required to be paid by the Master Servicer for such Distribution Date;
provided that such amount shall not exceed the Master Servicing Fee relating to
such Distribution Date; and in case of such deposit, the Master Servicer shall
not be entitled to any recovery or reimbursement in respect of any such payment.
Section 5.03. REMIC Distributions.
On each Distribution Date the Trustee, shall allocate distributions to
the REMIC I Regular Interests and the 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 such Distribution Date remaining in the
Distribution Account after withdrawal pursuant to Sections 4.03 and 4.05 shall
be withdrawn by the Trustee from the Distribution Account, to the extent of
funds available therefor, and distributed as directed in accordance with the
Remittance Report for such Distribution Date, in the manner set forth in clauses
(i), (ii) and (iii) below:
(i) The Trustee shall apply Interest Funds for such
Distribution Date as follows:
first, to the Class A Certificates, the Interest Distribution Amount
for such Class for such Distribution Date;
second, from remaining Interest Funds, to the Class A Certificates, any
Interest Carry Forward Amount for such Class for such Distribution Date;
third, from remaining Interest Funds, to the Class M-1 Certificates,
the Class M-2 Certificates, the Class M-3 Certificates, the Class M-4
Certificates, the Class M-5 Certificates, the Class M-6 Certificates and the
Class M-7 Certificates, sequentially, in that order, the Interest Distribution
Amount for each such Class for such Distribution Date;
fourth, from remaining Interest Funds, to the Class M-1 Certificates,
the Class M-2 Certificates, the Class M-3 Certificates, the Class M-4
Certificates, the Class M-5 Certificates, the Class M-6 Certificates and the
Class M-7 Certificates, sequentially, in that order, any Interest Carry Forward
Amounts for each such Class for such Distribution Date;
fifth, from remaining Interest Funds, the amount of Excess Spread for
such Distribution Date as is necessary to have the Overcollateralized Amount for
such Distribution Date equal the
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Overcollateralization Target Amount for such Distribution Date, which amount
will be the Extra Principal Distribution Amount for such Distribution Date and
will be included as part of the Principal Distribution Amount for such
Distribution Date; and
sixth, from remaining Interest Funds, any Remaining Excess Spread for
such Distribution Date will be added to any Overcollateralization Release Amount
for such Distribution Date, will be included in Net Monthly Excess Cashflow for
such Distribution Date and will be applied on such Distribution Date as
described under clause (iii) below.
Notwithstanding the above, on the first Distribution Date, all Excess
Spread will be paid to the Holders of the Class B-IO Certificates.
On any Distribution Date, any shortfalls on Mortgage Loans resulting
from the application of the Relief Act or similar state laws, and any related
Prepayment Interest Shortfalls to the extent not covered by Compensating
Interest will be allocated, first, in reduction of amounts otherwise
distributable to the Class B-IO Certificates, and thereafter, in reduction of
the Interest Distribution Amount payable to the Certificates on such
Distribution Date, on a pro rata basis, based on the respective amounts of
interest accrued on such Certificates for such Distribution Date. The holders of
the Certificates shall not be entitled to reimbursement for any such interest
shortfalls.
(ii) The Trustee shall apply the Principal Distribution Amount
for such Distribution Date as follows:
(A) for each Distribution Date (i) prior to the
Stepdown Date or (ii) on which a Trigger Event is in effect:
first, to the Class A Certificates, until the Certificate Principal
Balance thereof is reduced to zero;
second, to the extent of remaining Principal Distribution Amount, to
the Class M-1 Certificates, until the Certificate Principal Balance thereof is
reduced to zero;
third, to the extent of remaining Principal Distribution Amount, to the
Class M-2 Certificates, until the Certificate Principal Balance thereof is
reduced to zero;
fourth, to the extent of remaining Principal Distribution Amount, to
the Class M-3 Certificates, until the Certificate Principal Balance thereof is
reduced to zero;
fifth, to the extent of remaining Principal Distribution Amount, to the
Class M-4 Certificates, until the Certificate Principal Balance thereof is
reduced to zero;
sixth, to the extent of remaining Principal Distribution Amount, to the
Class M-5 Certificates, until the Certificate Principal Balance thereof is
reduced to zero;
seventh, to the extent of remaining Principal Distribution Amount, to
the Class M-6 Certificates, until the Certificate Principal Balance thereof is
reduced to zero; and
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eighth, to the extent of remaining Principal Distribution Amount, to
the Class M-7 Certificates, until the Certificate Principal Balance thereof 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:
first, to the Class A Certificates, the Class A Principal Distribution
Amount for such Distribution Date, until the Certificate Principal Balance
thereof is reduced to zero;
second, to the Class M-1 Certificates, from any remaining Principal
Distribution Amount, the Class M-1 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero;
third, to the Class M-2 Certificates, from any remaining Principal
Distribution Amount, the Class M-2 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero;
fourth, to the Class M-3 Certificates, from any remaining Principal
Distribution Amount, the Class M-3 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero;
fifth, to the Class M-4 Certificates, from any remaining Principal
Distribution Amount, the Class M-4 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero;
sixth, to the Class M-5 Certificates, from any remaining Principal
Distribution Amount, the Class M-5 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero;
seventh, to the Class M-6 Certificates, from any remaining Principal
Distribution Amount, the Class M-6 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero; and
eighth, to the Class M-7 Certificates, from any remaining Principal
Distribution Amount, the Class M-7 Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance thereof is reduced to
zero.
(iii) On each Distribution Date, the Trustee will withdraw
from the Distribution Account the Net Monthly Excess Cashflow for such
Distribution Date and any Excess Yield Maintenance Amount for such
Distribution Date, and apply such amounts as follows:
first, to the Class A Certificates, to the extent not fully paid
pursuant to subclause second under clause (i) above, any remaining unpaid
Interest Carry Forward Amount for such Class for such Distribution Date;
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second, from any remaining Net Monthly Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class A Certificates, any
Allocated Realized Loss Amount for such Class for such Distribution Date;
third, from any remaining Net Monthly Excess Cashflow and any remaining
Excess Yield Maintenance Amount, to the Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5
Certificates, Class M-6 Certificates and Class M-7 Certificates, sequentially,
in that order, to the extent not fully paid pursuant to subclause fourth under
clause (i) above, any remaining unpaid Interest Carry Forward Amount for such
respective Class and such Distribution Date;
fourth, from any remaining Net Monthly Excess Cashflow and any
remaining Excess Yield Maintenance Amount, first to the Basis Risk Reserve Fund,
and then from the Basis Risk Reserve Fund to the extent of funds available on
such Distribution Date, the amounts required for distribution in accordance with
the next two succeeding priorities;
fifth, to the Class A Certificates, any unpaid Basis Risk Carry Forward
Amounts for such Class and such Distribution Date;
sixth, to the Class M-1 Certificates, Class M-2 Certificates, Class M-3
Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6
Certificates and Class M-7 Certificates, sequentially, in that order, any unpaid
Basis Risk Carry Forward Amounts for such respective Class and such Distribution
Date;
seventh, from any remaining Net Monthly Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class A Certificates, such
Certificates' allocated share of any Prepayment Interest Shortfalls to the
extent not covered by Compensating Interest and any shortfalls resulting from
the application of the Relief Act or similar state laws, in each case without
interest accrued thereon;
eighth, from any remaining Net Monthly Excess Cashflow and any
remaining Excess Yield Maintenance Amount, to the Class M-1 Certificates, Class
M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5
Certificates, Class M-6 Certificates and Class M-7 Certificates, sequentially,
in that order, such respective Certificates' allocated share of any Prepayment
Interest Shortfalls to the extent not covered by Compensating Interest and any
shortfalls resulting from the application of the Relief Act or similar state
laws, in each case without interest accrued thereon;
ninth, from any remaining Net Monthly Excess Cashflow and any remaining
Excess Yield Maintenance Amount, to the Class B-IO Certificates, the Class B-IO
Distribution Amount and the remaining Excess Yield Maintenance Amount; and
tenth, any remaining amounts, to the Residual Certificates based on the
related REMIC in which such amounts remain.
(b) 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
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such holder at a bank or other entity having appropriate facilities therefor, if
such Holder has so notified the Trustee at least five (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.
(c) On or before 5:00 p.m. Eastern time on the fifth Business
Day immediately preceding each Distribution Date, the Master Servicer shall
deliver to the Trustee with respect to all Mortgage Loans, a report in
electronic format (or by such other means as the Master Servicer and the Trustee
may agree from time to time) containing such data and information, as agreed to
by the Master Servicer and the Trustee such as to permit the Trustee to prepare
the Monthly Statement to Certificateholders and to direct the Trustee in writing
to make the required distributions for the related Distribution Date (the
"Remittance Report").
(d) On each Distribution Date, the Trustee will distribute to
the Class B-IO Certificateholders any Prepayment Charges on deposit in the
Distribution Account.
Section 5.04A. Allocation of Realized Losses and Subsequent Recoveries.
Any Realized Losses with respect to the Mortgage Loans shall be applied
on each Distribution Date after the distributions provided for in Section 5.04
in reduction of the Certificate Principal Balance of the Class or Classes of
Certificates as provided in the definition of Allocated Realized Loss Amount.
Any amounts distributed to a Class of Certificates (other than the
Class B-IO Certificates and the Residual Certificates) in respect of any Unpaid
Allocated Realized Loss Amount will not be applied to reduce the Certificate
Principal Balance of such Class.
If the Master Servicer receives a Subsequent Recovery in a Prepayment
Period, it will be distributed on the following Distribution Date in accordance
with the priorities described under Section 5.04(a)(ii)(A). Additionally, the
Certificate Principal Balance of each Class of Certificates (other than the
Class B-IO Certificates and the Residual Certificates) that had been reduced by
the allocation of a Realized Loss will be increased, in order of seniority, by
the amount of such Subsequent Recovery, but not in excess of the Unpaid
Allocated Realized Loss Amount for such Class immediately prior to that
Distribution Date. Holders of such Certificates will not be entitled to any
payment in respect of Interest Distribution Amounts on the amount of such
increases for an Interest Accrual Period preceding the Distribution Date on
which such increase occurs.
Section 5.04B. Allocation of Deferred Interest.
[Reserved]
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Section 5.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall
prepare and make available to the Yield Maintenance Provider, each Holder of
Certificates, the Rating Agencies, the Master Servicer and the Depositor a
statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class of Certificates (other than the Class B-IO Certificates and the
Residual Certificates) allocable to principal, separately identifying
(A) the aggregate amount of any Principal Prepayments included therein,
(B) the aggregate of all scheduled payments (except with respect to any
Simple Interest Loans) of principal included therein (and with respect
to any Simple Interest Loans, the amount of principal actually received
included therein), (C) the principal portion of all Liquidation
Proceeds and Insurance Proceeds included therein and the purchase price
in connection with the purchase of Mortgage Loans and cash deposits in
connection with substitutions of Mortgage Loans, (D) the amount of any
Subsequent Recoveries included therein and (E) the Extra Principal
Distribution Amount (if any) included therein;
(ii) the amount of such distribution to Holders of each Class
of Certificates allocable to interest, and, if applicable, the portion
thereof allocable to amounts provided pursuant to the Yield Maintenance
Agreement;
(iii) any Interest Carry Forward Amounts and any Basis Risk
Carry Forward Amounts for each Class of Certificates (other than the
Residual Certificates);
(iv) the Certificate Principal Balance of each Class of
Certificates (other than the Class B-IO Certificates and the Residual
Certificates) before and after giving effect (i) to all distributions
allocable to principal on such Distribution Date, (ii) if applicable,
the allocation of any Allocated Realized Loss Amounts for such
Distribution Date, and, (iii) if applicable, the allocation of
Subsequent Recoveries to increase the Certificate Principal Balance for
such Distribution Date, and the aggregate Certificate Principal
Balances of such Certificates after all such distributions and
allocations;
(v) the cumulative amount of Allocated Realized Loss Amounts
to date and the Unpaid Allocated Realized Loss Amounts for each Class
of Certificates (other than the Class B-IO Certificates and the
Residual Certificates) on such Distribution Date after giving effect to
the distribution of principal on such Certificates (including as a
result of Subsequent Recoveries on the Mortgage Loans) and the
allocation of Allocated Realized Loss Amounts to such Certificates on
such Distribution Date;
(vi) the Pass-Through Rate for each Class of Certificates for
such Distribution Date, and whether such Pass-Through Rate was limited
by an Interest Rate Cap;
(vii) the amount of any Net Monthly Excess Cashflow Amount and
any Excess Yield Maintenance Amount with respect to such Distribution
Date;
(viii) the aggregate of the Stated Principal Balances of all
of the Mortgage Loans on the related Due Date;
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(ix) the amount of the Master Servicing Fees and Trustee Fees
paid to or (as applicable) retained by the Master Servicer and the
Trustee, respectively, with respect to such Distribution Date;
(x) the amount of Advances and Compensating Interest Payments
included in the distribution on such Distribution Date;
(xi) the number and aggregate Stated Principal Balance of
Mortgage Loans (A) Delinquent (exclusive of Mortgage Loans in
foreclosure and bankruptcy) (1) 31 to 60 days, (2) 61 to 90 days and
(3) 91 or more days, (B) in foreclosure and delinquent (1) 31 to 60
days, (2) 61 to 90 days and (3) 91 or more days and (C) in bankruptcy
and delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, in each case as of the close of business on the last day of the
calendar month preceding such Distribution Date;
(xii) 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 end of the related Prepayment Period;
(xiii) whether a Trigger Event exists on such Distribution
Date;
(xiv) the number and principal balance of Mortgage Loans
purchased or substituted for during the immediately preceding
Prepayment Period or Due Period, as applicable, and cumulatively since
the Cut-off Date;
(xv) the total number and principal balance of any REO
Properties as of the end of the related Prepayment Period;
(xvi) the aggregate amount of Realized Losses with respect to
the Mortgage Loans (i) during the related Prepayment Period and
cumulatively through the end of the preceding month and (ii) since the
Closing Date as a percentage of the aggregate Stated Principal Balance
of the Mortgage Loans on the Closing Date;
(xvii) 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 that are 61 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 as of the last day of Related Due Period;
and
(xviii) the amount of any Subsequent Recovery on the Mortgage
Loans recovered by the Master Servicer during the related Due Period
and the amount by which the Certificate Principal Balance of each Class
of Certificates (other than the Class B-IO Certificates and the
Residual Certificates) was increased as a result thereof, as provided
by the Master Servicer to the Trustee.
The Trustee will 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
86
initially be located at "xxx.xxxxxxx.xxx". Assistance in using the Trustee's
website can be obtained by calling the Trustee's customer service desk at (301)
815-6600. 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
Trustee's 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 Master Servicer and
the Yield Maintenance Provider. 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 to the Master Servicer
and upon request to each Person who at any time during the calendar year was a
Certificateholder, a statement containing the information necessary to enable
Certificateholders to prepare their tax returns, 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;
87
(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.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 9.12.
Section 5.06. REMIC Designations and Allocations.
(a) The Trustee shall elect that each of REMIC I and REMIC II
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 Master Servicer
Collection Account, the Distribution Account, any REO Property, and any proceeds
of the foregoing. The REMIC I Regular Interests shall constitute the assets of
REMIC II.
(b) [Reserved.]
(c) REMIC I will be evidenced by (x) the Class I-a, Class
I-m1, Class I-m2, Class I-m3, Class I-m4, Class I-m5, Class I-m6 and Class I-m7
(the "REMIC I Regular Interests"), which are hereby designated as the "regular
interests" in REMIC I and will be uncertificated and non-transferable and (y)
the Class R-I Certificate, which is hereby designated as the single "residual
interest" in REMIC I (the REMIC I Regular Interests, together with the Class R-I
Certificate, the "REMIC I Certificates"). The REMIC I Regular Interests shall be
recorded on the records of REMIC I as being issued to and held by the Trustee on
behalf of REMIC I. Principal shall be payable to, and shortfalls, losses and
prepayments are allocable to, the REMIC I Regular Interests as such amounts are
payable and allocable to the Certificates with the corresponding designations.
The REMIC I Certificates will have the following designations, initial
principal balances, pass-through rates and allocations of interest:
Pass- Allocation
REMIC I Initial Principal Through of
Certificates Balance Rate Interest
--------------- ---------------------- -------------- ------------
I-a $313,746,000 (1) (2),(3)
I-m1 $37,689,000 (1) (2),(3)
I-m2 $18,549,000 (1) (2),(3)
I-m3 $4,341,000 (1) (2),(3)
I-m4 $3,946,000 (1) (2),(3)
I-m5 $2,960,000 (1) (2),(3)
I-m6 $4,538,000 (1) (2),(3)
I-m7 $8,880,000 (1) (2),(3)
R-I N/A 0%(4) ---
88
_______________
(1) The pass-through rate on this REMIC I Regular Interest shall at any
time of determination equal the weighted average of the Net Rates of
the Mortgage Loans.
(2) Except as provided in note (3) below, interest with respect to this
REMIC I Regular Interest will be allocated among the Class A, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class
M-7 Certificates in the same proportion as interest is payable with
respect to those Certificates.
(3) Any interest with respect to this REMIC I Regular Interest, in excess
of the weighted average coupon of the REMIC I Regular Interests, where
each of Class I-a, Class I-m1, Class I-m2, Class I-m3, Class I-m4,
Class I-m5, Class I-m6 and Class I-m7 REMIC I Regular Interests is
first subject to a cap and floor equal to the Pass-Through Rates of the
Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class
M-6 and Class M-7 Certificates, respectively, will be allocated to the
Class B-IO Certificates. The Class B-IO Certificates shall be
subordinated to the extent provided in Section 5.04.
(4) On each Distribution Date, amounts, if any, remaining in REMIC I after
payments of interest and principal, as designated above, will be
distributed to the Class R-I Certificate.
(d) Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6 and Class M-7 and Class B-IO Certificates (exclusive of any
rights such Certificates may have to receive any payments of Basis Risk Carry
Forward Amounts and amounts from the Yield Maintenance Account) and the Class
B-IO Certificates (exclusive of any rights or obligations associated with these
Certificates in connection with the treatment of the Holders of such
Certificates as the owners, for federal income tax purposes, of the Yield
Maintenance Account and the payments of Basis Risk Carry Forward Amounts, as
described in Section 5.06(f) below), are hereby designated as "regular
interests" with respect to REMIC II (the "REMIC II Regular Interests"). The
terms of the REMIC I Regular Interests are set out in Section 6.01.
(e) [Reserved].
(f) Payments of Basis Risk Carry Forward Amounts and amounts
paid under the Yield Maintenance Agreement shall be deemed to be made to the
holder of the Class B-IO Certificate, who will be the owner of such amounts for
federal income tax purposes. The Class B-IO Certificateholder will be deemed to
have paid over such amounts, pursuant to a notional principal contract, to the
Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 or
Class M-7 Certificates, as appropriate, in the manner and extent to which such
Certificates are entitled to receive such amounts under this Agreement.
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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-11. 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:
Original
Integral Certificate
Multiples Principal
Minimum in Excess of Balance/or Notional Principal Pass-Through
Class Denomination Minimum Balance Rate
------------------ ----------------- ----------------- --------------------------------- --------------------
A $25,000 $1,000 $313,746,000 Adjustable (1)
M-1 $25,000 $1,000 $37,689,000 Adjustable (2)
M-2 $25,000 $1,000 $18,549,000 Adjustable (3)
M-3 $25,000 $1,000 $4,341,000 Adjustable (4)
M-4 $25,000 $1,000 $3,946,000 Adjustable (5)
M-5 $25,000 $1,000 $2,960,000 Adjustable (6)
M-6 $25,000 $1,000 $4,538,000 Adjustable (7)
M-7 $25,000 $1,000 $8,880,000 Adjustable (8)
B-IO $10,000,000 $1,000,000 Notional(9) X/X
X-X X/X X/X X/X X/X
R-II X/X X/X X/X X/X
___________________
(1) For the first Distribution Date, 2.940% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class A Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(2) For the first Distribution Date, 3.290% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-1 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(3) For the first Distribution Date, 3.990% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-2 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(4) For the first Distribution Date, 4.190% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-3 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(5) For the first Distribution Date, 4.790% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-4 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
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(6) For the first Distribution Date, 5.590% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-5 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(7) For the first Distribution Date, 6.090% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-6 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(8) For the first Distribution Date, 6.090% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the
related Accrual Period plus the Class M-7 Margin for such Distribution
Date and (ii) the Interest Rate Cap for such Distribution Date.
(9) Initially $394,649,130 and thereafter the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due
Period. The Class B-IO Certificates will be entitled to receive certain
distributions as provided for in Section 5.04. Other than for federal
income tax purposes, the Class B-IO Distribution Amount may be deemed
to be interest on the notional principal balance of the Class B-IO
Certificates.
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 authentication of
the Trustee by manual signature, and such authentication upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Depositor, or any affiliate thereof.
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,
91
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 Class B-IO 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 in
substantially the forms set forth in Exhibit E (the "Transferor Certificate")
and (x) deliver a letter in substantially the form of either Exhibit F (the
"Investment Letter") or Exhibit G (the "Rule 144A Letter") 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 Master
Servicer or the Trustee. The Depositor shall provide to any Holder of a Class
B-IO 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) of the Securities Act for Transfer of any such
Certificate without registration thereof under the Securities Act pursuant to
the registration exemption provided by Rule 144A of the Securities Act. The
Trustee and the Master 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 Class B-IO Certificate desiring to effect such Transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor and the Master
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 the
Trustee and the Master Servicer shall have received either (i) a representation
from the transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee 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 ("Plan"), or a trustee of such Plan, or a Person,
directly or indirectly, acting on behalf of any such Plan, or (ii) in the case
of any such ERISA Restricted Certificate presented for registration in the name
of a Plan, or a trustee of any Plan or any other
92
person, directly or indirectly, acting on behalf of any such Plan, a
representation satisfactory to the Trustee to the effect that neither the
purchase or holding of such ERISA Restricted Certificate nor the servicing,
management and operation of the Trust Fund will result in any prohibited
transactions under ERISA or Section 4975 of the Code which will not be covered
under Prohibited Transactions Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX
91-38, XXXX 00-00, XXXX 96-23 or some other applicable exemption and will not
subject the Trustee, the Master Servicer or the Depositor to any fiduciary
duties under ERISA in addition to those expressly undertaken in this Agreement,
which in the case of a Book-Entry Certificate shall be deemed to have been
represented by the Transferee. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA Restricted Certificate to or on
behalf of any Plan without satisfying the above conditions shall be void and of
no effect. Neither the Trustee nor the Master 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 Master 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 Master Servicer shall be under any
liability to any Person for any registration of transfer of any ERISA Restricted
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 a Plan or a Person, directly or
indirectly, acting on behalf of any Plan at the time it became a Holder or at
such subsequent time as it became a Plan or Person acting on behalf of 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 a
Plan or Person acting on behalf of a Plan.
(c) 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, which ownership interest shall always be
represented by a physical certificate and not a Book-Entry 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.
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(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(c), 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(c) or for making
any payments due on such Certificate to the Holder thereof or for
taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. 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 Master 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(c) 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 Master Servicer, to the effect that the elimination of such
restrictions will not cause the REMIC I and/or REMIC II, 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 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.
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(d) 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 Master 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 Master Servicer and 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 Master 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 Master 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 B-IO Certificates), upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry
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Certificates, to be delivered to the Depository or its agent 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 (other than the Class B-IO Certificates and the
Residual 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.
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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 Trustee or the Depositor is unable to locate a qualified
successor, or (b) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, 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
authenticate 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. Upon the issuance of such Definitive Certificates, all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
Section 6.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices where Certificates may be surrendered for registration of
transfer or exchange. The Trustee initially designates its Corporate Trust
Office in Minneapolis, Minnesota, 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.
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ARTICLE VII.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 7.01. Respective Liabilities of the Depositor, the Master
Servicer and the Seller.
The Depositor, the Master Servicer and the Seller shall each be liable
in accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
Section 7.02. Merger or Consolidation of the Depositor, the Master
Servicer or the Seller.
The Depositor, the Master Servicer and the Seller will each keep in
full effect its existence, rights and franchises as a limited liability company
and a corporation, respectively, under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign limited liability company and a
foreign corporation, respectively, in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
their respective duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or the Seller
may be merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor, the Master Servicer or the Seller shall be
a party, or any person succeeding to the business of the Depositor, the Master
Servicer or the Seller shall be the successor of the Depositor, the Master
Servicer or the Seller, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided that the successor or
surviving Person to the Master Servicer shall be qualified to sell mortgage
loans to, and to service mortgage loans on behalf of, Xxxxxx Xxx or Xxxxxxx Mac
and further provided that such merger, consolidation or succession does not
adversely affect the then-current ratings of any Class of Certificates.
Section 7.03. Indemnification of the Trustee, the Master Servicer and
Others.
(a) The Master Servicer agrees to indemnify the Indemnified
Persons (other than the Master Servicer) for, and to hold them harmless against,
any loss, liability or expense (except as otherwise provided herein with respect
to expenses) (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 this Agreement, the Certificates or any powers of attorney
furnished by the Trustee to the Master Servicer hereunder (i) related to the
Master Servicer's failure to perform its duties in compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or (ii) incurred by reason of the
Master Servicer's willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of the Master Servicer's reckless
disregard of its 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), an Indemnified Person shall have given the Master Servicer
written notice thereof promptly after a Responsible Officer of such Indemnified
Person
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shall have with respect to such claim or legal action actual knowledge thereof.
The Indemnified Person's failure to give such notice shall not affect the
Indemnified Person's right to indemnification hereunder. This indemnity shall
survive the resignation or removal of the Trustee or the Master Servicer and the
termination of this Agreement.
(b) The Trust will indemnify any Indemnified Person for any
loss, liability or expense of any Indemnified Person not otherwise indemnified
by the Master Servicer that is referred to in Subsection (a) above.
(c) The Trustee agrees to indemnify the Indemnified Persons
(other than the Trustee) for, and to hold them harmless against, any loss,
liability or expense (except as otherwise provided herein with respect to
expenses) (including reasonable legal fees and disbursements of counsel)
incurred on their part (i) in connection with, arising out of, or relating to
the Trustee's failure to file a Form 10-K in accordance with Section 3.18 (to
the extent such failure constitutes a breach of the Trustee's obligations under
Section 3.18 and is not due to a failure by the Master Servicer or the Depositor
to furnish to the Trustee, within the timeframe required by Section 3.18, the
information required to be furnished by them pursuant to Section 3.18) or (ii)
by reason of the Trustee's willful misfeasance, bad faith or gross negligence in
the performance of its obligations pursuant to Section 3.18 or the Trustee's
reckless disregard of its obligations pursuant to Section 3.18 (including,
without limitation, in each case, in respect of any powers of attorney furnished
to the Trustee), provided, in each case, that with respect to any such claim or
legal action (or pending or threatened claim or legal action), an Indemnified
Person shall have given the Trustee written notice thereof promptly after such
Indemnified Person shall have with respect to such claim or legal action
knowledge thereof. The Indemnified Person's failure to give such notice shall
not affect the Indemnified Person's right to indemnification hereunder. This
indemnity shall survive the resignation or removal of the Trustee or the Master
Servicer and the termination of this Agreement.
Section 7.04. Limitation on Liability of the Depositor, the Seller, the
Master Servicer and Others.
None of the Depositor, the Seller, the Custodian or the Master Servicer
or any of the directors, officers, employees or agents of the Depositor, the
Seller, the Custodian or the Master Servicer (each, a "Protected Party") shall
be under any liability to any Indemnified Person, the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided that this provision shall not protect any such Protected Party against
any breach of representations or warranties made by it herein or protect any
such Protected Party from any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties hereunder
or, in the case of the Master Servicer, its liability pursuant to Section
7.03(a). The Protected Parties may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Protected Parties shall be indemnified by the
Trust Fund and held harmless against any loss,
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liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates other than any loss,
liability or expense related to a specific Mortgage Loan or Mortgage Loans,
except any loss, liability or expense that shall be otherwise reimbursable
pursuant to this Agreement, and other than any loss, liability or expense
incurred by reason of such Protected Party's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder or, in the case of
the Master Servicer, its liability pursuant to Section 7.03(a). None of the
Seller, the Master Servicer or the Depositor shall be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and that in its opinion may involve it in any
expense or liability; provided that such Person may in its discretion undertake
any such action that it may deem necessary or desirable in respect of 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 such Person shall be entitled to be
reimbursed therefor out of the Master Servicer Collection Account as provided by
Section 4.03 and out of the Distribution Account as provided in Section 4.05
hereof.
Section 7.05. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon (x) determination that its duties hereunder are
no longer permissible under applicable law or (y) compliance with the following
requirements: (i) the Master Servicer has proposed a successor to the Trustee
and the Trustee has consented thereto (such consent not to be withheld
unreasonably); (ii) the successor is qualified to sell mortgage loans, and to
service mortgage loans on behalf of Xxxxxx Xxx or Xxxxxxx Mac; and (iii) each
Rating Agency shall have delivered to the Trustee written confirmation that the
appointment of such successor will not result in the qualification, reduction or
withdrawal of the then-current ratings assigned by such Rating Agency to any of
the Certificates. Any such determination permitting the resignation of the
Master Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. No resignation by the Master Servicer shall become
effective until the Trustee or a successor servicer to such appointment shall
have assumed the Master Servicer's responsibilities, duties, liabilities and
obligations hereunder.
Section 7.06. Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies on all officers, employees or other persons acting in
any capacity with regard to the Mortgage Loans and who handle funds, money,
documents and papers relating to the Mortgage Loans. The fidelity bond and
errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Master Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such fidelity bond shall also protect and insure
the Master Servicer against losses in connection with the failure to maintain
any insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan which is not serviced in accordance with the
requirements of Section 3.01. No provision of this Section 7.06 requiring the
fidelity bond and errors and omissions insurance shall diminish or relieve the
Master Servicer from its duties and obligations as set forth in this Agreement.
The minimum coverage under any such bond and insurance policy shall be at least
equal to the coverage acceptable to Xxxxxx Mae or Xxxxxxx Mac for
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persons performing servicing for loans purchased by Xxxxxx Mae or Xxxxxxx Mac.
The Master Servicer shall notify the Trustee within five business days of
receipt of notice that such fidelity bond or insurance policy will be, or has
been, materially modified or terminated. The Trustee for the benefit of the
Certificateholders must be named as loss payee on the fidelity bond and as
additional insured on the errors and omissions policy.
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ARTICLE VIII.
DEFAULT; TERMINATION OF MASTER 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 Master Servicer to deposit in the
Master Servicer Collection Account the amounts required pursuant to
this Agreement or by the Master Servicer to remit to the Trustee any
payment, including any Advance, required to be made pursuant to this
Agreement, which failure shall continue unremedied by 10:00 a.m., New
York City time on the applicable Distribution Date; or
(ii) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in this Agreement or any breach
of a representation or warranty by the Master Servicer which failure or
breach shall continue unremedied for a period of 60 days (or, in the
case of a breach of its obligation to provide a Master Servicer
Certification pursuant to Section 3.18, 30 days) after the date on
which Applicable Written Notice of such failure shall have been given
to the Master Servicer and the Trustee, as the case may be; or
(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 Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master 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 Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of, 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.
If an Event of Default 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 Master Servicer (with a copy to each Rating Agency),
terminate all of the rights and obligations of the Master 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
Master Servicer of such written
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notice, all authority and power of the Master Servicer hereunder, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee, as successor Master Servicer or, if the Trustee is unable or unwilling
to act as such successor Master Servicer, any successor appointed pursuant to
Section 8.02 (a "Successor Master Servicer"). Such Successor Master Servicer
shall thereupon make any Advance described in Section 5.01 hereof and payments
of Compensating Interest pursuant to Section 5.02 hereof, 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 Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of any Mortgage Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any obligation of the Master Servicer to pay amounts owed pursuant
to Article IX.
The Master Servicer agrees to cooperate with the Trustee in effecting
the termination of the Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the applicable Successor Master
Servicer of all cash amounts which shall at the time be credited to the Master
Servicer Collection Account, or thereafter be received with respect to the
applicable Mortgage Loans. The Trustee shall promptly notify the Rating Agencies
of the occurrence of an Event of Default with respect to the Master Servicer
actually known to a Responsible Officer of the Trustee.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master 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 Master Servicer's rights and obligations as Master
Servicer hereunder, as applicable, and received after such notice, that portion
thereof to which the Master Servicer would have been entitled pursuant to
Sections 4.03 and 4.05, and to receive any other amounts payable to the Master
Servicer hereunder the entitlement to which arose prior to the termination of
its activities hereunder.
Section 8.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 hereof the Trustee shall automatically
become the successor to the Master 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 Master Servicer by the terms and provisions
hereof and applicable law including, if applicable, the obligation to make
Advances pursuant to Section 5.01 hereof, and payments of Compensating Interest
pursuant to Section 5.02 hereof, except as otherwise provided herein. Effective
on the date of such notice of termination, as compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage Loans
that the Master 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
losses pursuant to Section 3.09 or Section 4.02(c) or as a result of any acts or
omissions of the Master Servicer, (ii) obligated to make Advances if it is
prohibited from doing so under applicable law, (iii) obligated to effectuate any
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02 or Section 2.03 hereof, (iv) responsible for expenses of the Master
Servicer pursuant to Section 2.03
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or (v) deemed to have made any representations and warranties hereunder,
including pursuant to Section 2.03. 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 Section 5.01 hereof, 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 Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any Successor Master Servicer
shall (i) be an institution that is a Xxxxxx Mae and Xxxxxxx Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000
and (ii) be willing to act as Master Servicer of the Mortgage Loans, 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 Master Servicer (other than any liabilities of the Master
Servicer hereof incurred prior to termination of the Master 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,
withdrawn or reduced as a result of such assignment and delegation. If the
Trustee assumes the duties and responsibilities of the Master Servicer in
accordance with this Section 8.02, the Trustee shall not resign as Master
Servicer until a Successor Master Servicer has been appointed and has accepted
such appointment. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, 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 shall be in excess of that permitted the Master 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 Master Servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master 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 and the Successor Master Servicer
in connection with the termination of the Master Servicer, appointment of a
Successor Master 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 Master Servicer to service the related Mortgage Loans
properly and effectively, to the extent not paid by the terminated Master
Servicer, shall be payable to the Trustee and the Successor Master Servicer
pursuant to Section 9.05.
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Section 8.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to
the Master 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 with respect to the Master Servicer, 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.
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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
Master Servicer; provided, further, that the Trustee shall not be responsible
for the accuracy or verification of any calculation provided to it pursuant to
this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 5.04 and 10.01 herein based
solely on the applicable Remittance Report.
(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 with respect to the Trustee, 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 its 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 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
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Certificates evidencing not less than 25% of the aggregate Voting
Rights of the Certificates, 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 notice, the Trustee may conclusively
assume there is no such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of the Trustee
unless it is determined by a court of competent jurisdiction 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 Master Servicer, the Seller, the Depositor,
the Custodian or the Trustee shall be responsible for the acts or
omissions of the others, 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 Master Servicer hereunder.
(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.
(f) If the Master Servicer fails to make an Advance as
required under Section 5.01, then subject to and in accordance with Articles V
and VIII of this Agreement the Trustee shall make such Advance from its own
funds for distribution on the applicable Distribution Date.
Section 9.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.01:
(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 Master Servicer, any certificates of auditors or any
other certificate, statement, instrument, opinion, report,
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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 or accountants, and
any advice of such counsel or accountants 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) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may have
occurred with respect to the Trustee, 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 agent to perform its custodial functions with
respect to the Mortgage Files or any paying agent to perform any paying
agent functions under this Agreement without the express written
consent of the Master Servicer, which consent will not be unreasonably
withheld or delayed. The Trustee shall be not liable or responsible for
the misconduct or negligence of any of the Trustee's
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agents or attorneys or a custodian or paying agent appointed hereunder
by the Trustee with due care and, when required, with the consent of
the Master Servicer;
(vii) Should the Trustee deem the nature of any action
required on its part, other than a payment or transfer under Sections
4.02(d), 4.03(d), 4.04(d) and 4.05 hereof, 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 Section 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.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature and authentication 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 representations as to
the validity or sufficiency of the Certificates (other than the signature and
authentication of the Trustee on the Certificates) or with respect to any
Mortgage Loan (except as expressly provided in Section 2.02 hereof) or the Yield
Maintenance Agreement; provided, however, that the foregoing shall not relieve
the Trustee of the obligation to review the Mortgage Files pursuant to Sections
2.02 and 2.05. The Trustee's signature and authentication (or authentication by
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 the provisions of Section 2.06, the Trustee shall
not be responsible for the legality or validity of this Agreement or any
document or instrument relating to this Agreement, the validity of the execution
of this Agreement or of any supplement hereto or instrument of further
assurance, or the validity, priority, perfection or sufficiency of the security
for the Certificates issued hereunder or intended to be issued hereunder. 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 have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.
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Section 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 shall be entitled to the Trustee Fee as compensation for
all services rendered by it in the execution of the trusts created and in the
exercise and performance of any of the powers and duties hereunder of the
Trustee. In addition, the Trustee shall be indemnified and held harmless by the
Trust Fund (and accordingly will be entitled to recover from the Master Servicer
Collection Account pursuant to Section 4.03(c) or the Distribution Account) for
all liabilities, losses, costs, reasonable out-of-pocket expenses, disbursements
and advances (including under Section 9.01(f)) and the expenses of the Trustee
in connection with the performance of its duties and obligations and the
exercise of its rights under this Agreement, the Certificates, the Yield
Maintenance Agreement, the Custodial Agreement, the Mortgage Loans, any Event of
Default, any breach of this Agreement or any claim or legal action (including
any pending or threatened claim or legal action) incurred or made by the Trustee
in the administration of the trusts hereunder (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
liability, loss, cost, expense, disbursement or advance as may arise from its
negligence, bad faith or intentional misconduct. If such funds are insufficient
therefor, any such insufficiency shall be recoverable from the Depositor. 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. The
indemnification set forth herein shall survive the resignation or removal of the
Trustee and the termination of this Agreement.
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
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "A1" or higher by S&P with respect to any outstanding short-term
unsecured, unsubordinated debt, deposit or similar obligation, and "BBB" or
higher by S&P and Fitch 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. The Trustee shall not
be an Affiliate of the Master 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 entity 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.
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Section 9.07. Insurance.
The Trustee, at its expense, shall at all times maintain and keep in
full force and effect: (i) fidelity insurance, (ii) theft of documents insurance
and (iii) forgery insurance (which may be collectively satisfied by a "Financial
Institution Bond" and/or a "Bankers' Blanket Bond"). All such insurance shall be
in amounts, with standard coverage and subject to deductibles, as are customary
for insurance typically maintained by banks or their affiliates which act as
custodians for investor-owned mortgage pools. A certificate of an officer of the
Trustee as to the Trustee's compliance with this Section 9.07 shall be furnished
to any Certificateholder upon reasonable written request; provided, that such
insurance may be in the form of self-insurance so long as the Trustee has a
long-term debt rating of "A" or higher by each Rating Agency.
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 Master 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 duplicate, one copy of which instrument shall be
delivered to 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 Master
Servicer 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 Master 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 Master 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. In the event that the fee payable to a successor Trustee
exceeds the Trustee Fee, any such excess shall be an obligation of the Trust.
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.
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Section 9.09. Successor Trustee.
Any successor trustee appointed as provided in Section 9.08 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Master 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 9.06 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 entity 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 Master 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 Master
Servicer and the Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request 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
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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 Master 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 as Trustee
hereunder or as a Successor Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust 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
Master 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. Tax Matters.
It is intended that each of REMIC I and REMIC II shall constitute, and
that the affairs of the Trust Fund shall be conducted so that each REMIC formed
hereunder qualifies as, a "real
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estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants and
agrees that it shall act as agent (and the Trustee is hereby appointed to act as
agent) on behalf of the Trust Fund. The Trustee, as agent on behalf of the Trust
Fund, shall do or refrain from doing, as applicable, the following: (a) the
Trustee shall prepare and file, or cause to be prepared and filed, in a timely
manner, U.S. Real Estate Mortgage Investment Conduit Income Tax Returns (Form
1066 or any successor form adopted by the Internal Revenue Service) and prepare
and file or cause to be prepared and filed with the Internal Revenue Service and
applicable state or local tax authorities, income tax or information returns for
each taxable year with respect to each such REMIC containing such information
and at the times and in the manner as may be required by the Code or state or
local tax laws, regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) the Trustee shall apply for an
employer identification number with the Internal Revenue Service via a Form SS-4
or other comparable method for each REMIC that is or becomes a taxable entity,
and within thirty days of the Closing Date, furnish or cause to be furnished to
the Internal Revenue Service, on Forms 8811 or as otherwise may be required by
the Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code
for the Trust Fund; (c) the Trustee shall make or cause to be made elections, on
behalf of each REMIC formed hereunder to be treated as a REMIC on the federal
tax return of such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) the Trustee shall prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) the Trustee shall provide
information necessary for the computation of tax imposed on the transfer of a
Residual Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax) or to the IRS, and the Trustee shall forward that information to
the requesting party in accordance with Treasury Regulation ss. 1.860E-2(a)(5);
(f) 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; (g) 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; (h) the Trustee shall pay, from the sources
specified in the last paragraph of 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); (i) the Trustee shall sign or cause to be signed federal,
state or local income tax or information returns or any other document prepared
by the Trust pursuant to this Section
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9.12 requiring a signature thereon by the Trustee; (j) 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 (k) as and when necessary and
appropriate, the Trustee shall represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority at the expense of the Trust Fund, 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 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
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, 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,
which indemnification shall survive the resignation or removal of the Trustee or
the Master Servicer and the termination of this Agreement.
In the event that any tax is imposed on "prohibited transactions" of
any of REMIC I or REMIC II 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 or REMIC II 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 the Trust Fund, 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 the Class B-IO Certificateholders (pro rata
based on the amounts to be distributed), and second with amounts otherwise to be
distributed to all other Certificateholders in the following order of priority:
first, to the Class M-7 Certificates, second, to the Class M-6 Certificates,
third to the Class M-5 Certificates, fourth, to the Class M-4 Certificates,
fifth, to the Class M-3 Certificates, sixth, to the Class M-2 Certificates,
seventh, to the Class M-1 Certificates and eighth, to the Class A Certificates.
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
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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 include in its Remittance Report instructions as to distributions
to such parties, taking into account the priorities described in the second
preceding sentence. The Trustee agrees to promptly notify in writing the party
liable for any such tax of the amount thereof and the due date for the payment
thereof.
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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 Master Servicer, the Seller and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the earlier of (a) the purchase
by EMC of all of the Mortgage Loans (and REO Properties) remaining in the Trust
Fund at the 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 (net of the Master Servicing
Fee, if the Master Servicer is EMC, owed to the Master Servicer with respect to
each such Mortgage Loan), (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
Master Servicer and the Trustee, (iv) unreimbursed out-of pocket costs of the
Master Servicer, including unreimbursed servicing advances and the principal
portion of any unreimbursed Advances, made on the Mortgage Loans prior to the
exercise of such repurchase right, (v) any unreimbursed costs and expenses of
the Trustee payable pursuant to Section 9.05 and (vi) any unreimbursed costs and
expenses of the Custodian payable pursuant to the Custodial Agreement 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 Xxxxxx X. Xxxxxxx, the late Ambassador of the United States
to the Court of St. James's, 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 (a) above shall be conditioned upon the Stated Principal Balance of
all of the Mortgage Loans and REO Properties in the Trust Fund, at the time of
any such repurchase, aggregating ten percent 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 Master 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 Master Servicer Collection Account, the
Master 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 EMC elects
to terminate the Trust Fund pursuant to Section 10.01, on or before the
Distribution Date occurring in the month preceding the month in which notice is
to be mailed to the Certificateholders, EMC shall notify
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the Depositor and the Trustee of the date that EMC intends to terminate the
Trust Fund and EMC shall provide the Depositor and the Trustee with the
applicable repurchase price of the Mortgage Loans and REO Properties serviced
and administered by the Master Servicer. EMC shall remit the Mortgage Loan
Purchase Price to the Trustee on the Business Day immediately preceding the
Distribution Date on which such Optional Termination by EMC will be effected.
Provided that timely notice has been received, the Trustee shall give
notice to the Certificateholders 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. To the
extent reasonably practical, such notice shall be given by letter mailed to the
Certificateholders not earlier than the 1st day and no later than the 15th day
of the month of such final distribution and 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 the
Certificateholders.
In the event such notice is given, the Master Servicer shall cause all
funds in the Master Servicer Collection 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 acting on its behalf, shall promptly release to EMC or
its designee the Mortgage Files for the Mortgage Loans, and any documents
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, based on the
applicable Remittance Report for such Distribution Date, 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.
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Section 10.03. Additional Termination Requirements.
(a) Upon exercise by EMC 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 has been supplied with an
Opinion of Counsel, at the expense of EMC, 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) EMC 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 each of REMIC I and REMIC II's Tax Return
pursuant to Treasury Regulation Section 1.860F-1. EMC 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 EMC;
(2) During such 90-day liquidation period, and at or prior to the time
of the making of the final payment on the Certificates, EMC, acting as agent of
the Trustee, shall sell all of the assets of REMIC I and REMIC II 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 and REMIC II shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize EMC to specify the 90-day liquidation period for REMIC
I and REMIC II, 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 EMC,
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 EMC.
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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 which may be defective or
inconsistent with any other provision herein, to conform the terms hereof to the
disclosure in the Prospectus Supplement or the accompanying prospectus 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, 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.
This Agreement may also be amended from time to time by the parties
hereto, without the consent of any of the Certificateholders, to change the
manner in which the Master Servicer Collection Account is maintained, provided
that any such amendment shall not adversely affect the then-current rating of
either Rating Agency on any Class of 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 helpful to maintain the qualification of
each of REMIC I and REMIC II as a REMIC under the Code or to avoid or minimize
the risk of the imposition of any tax on any of REMIC I or REMIC II pursuant to
the Code that would be a claim against any of REMIC I or REMIC II 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 amendment but in any case shall
not be an expense of the Trustee, to the effect that such action is necessary or
helpful 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 and 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 or REMIC II's REMIC elections to fail to
qualify or (iii) reduce the aforesaid percentages of outstanding principal
balances of Certificates of each Class the Holders of which are required to
consent to
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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 or REMIC II or
the Certificateholders or cause REMIC I or REMIC II's REMIC elections to fail to
qualify 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, addressed to and satisfactory to the Trustee,
that such amendment is permitted or 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 Master 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
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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 5-1402 OF THE GENERAL OBLIGATIONS LAW, UPON WHICH THE PARTIES HERETO
EXPRESSLY RELY).
Section 11.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the Seller
to the Depositor, and 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 this Agreement is held or deemed to
create a security interest in such assets, then (i) this Agreement shall be
deemed to be a security agreement within the meaning of the Uniform Commercial
Code of the State of New York, (ii) each conveyance provided for in this
Agreement shall be deemed to be an assignment and a grant by the Seller or the
Depositor, as applicable, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired, and (iii) the possession by the Trustee or the
Custodian of the Mortgage Notes and such other items of property as may be
perfected by possession pursuant to Section 9-313 (or comparable provision) of
the applicable Uniform Commercial Code shall be deemed to be "possession by the
secured party" for purposes of effecting the security interest pursuant to such
section of the applicable Uniform Commercial Code and other applicable law. Any
assignment of the Seller and the Depositor shall also be deemed to be an
assignment of any security interest created hereby.
Each of the Seller and 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 this
Agreement.
Section 11.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
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 Master Servicer or
the Trustee and the appointment of any successor;
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(iv) The repurchase or substitution of Mortgage Loans pursuant
to Sections 2.02, 2.03, 3.21 and 10.01; and
(v) The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each
Rating Agency a copy of each report to Certificateholders described in Section
5.05, if requested by such Rating Agency.
(c) In addition, the Master Servicer shall promptly furnish to
each Rating Agency a copy of the following:
(i) Each annual statement as to compliance described in
Section 3.16; and
(ii) Each annual independent public accountants' servicing
report described in Section 3.17.
(d) 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 Xxxxxxx Asset Backed Securities I LLC, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel, or such other
address as may be hereafter furnished to the other parties hereto by the
Depositor in writing; (ii) in the case of the Seller or the Master Servicer, EMC
Mortgage Corporation, 000 Xxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000, Attention:
Xxxxxx Xxxxx or such other address as may be hereafter furnished to the other
parties hereto by the Master Servicer in writing; (iii) in the case of the
Trustee, at the 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) Standard & Poor's, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Mortgage Surveillance Group and (y) Fitch Ratings,
Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx Xxxxxxxxx.
Any notice delivered to the Seller, the Depositor, the Master Servicer or the
Trustee under this Agreement shall be effective only upon receipt. Any notice
required or permitted to be mailed to a Certificateholder, unless otherwise
provided herein, shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register; any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, 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.
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Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 7.02, this Agreement may not be assigned by the
Master 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 and 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.
(a) The Master Servicer agrees that, on reasonable prior
notice, it will permit any representative of the Depositor or the Trustee during
the Master Servicer's normal business hours, to examine all the books of
account, records, reports and other papers of the Master Servicer relating to
the Mortgage Loans, including evidence of compliance with all federal, state and
local laws, rules and regulations relating to itself and the Mortgage Loans, to
make copies and extracts therefrom, to cause such books to be audited by
independent certified public
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accountants selected by the Depositor or 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 Master
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 or the Trustee of any right under this Section 11.09
shall be borne by the party requesting such inspection, subject to any right to
reimbursement of such party hereunder (in the case of the Trustee, pursuant to
Section 4.03(a)(xii) hereof); all other such expenses shall be borne by the
Master Servicer.
(b) The Trustee shall provide access to the records and
documentation in its possession regarding the related Mortgage Loans and REO
Property and the servicing thereof to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at its
office; provided, however, that, unless otherwise required by law, the Trustee
shall not be required to provide access to such records and documentation if the
provision thereof would violate the legal right to privacy of any Mortgagor. The
Trustee shall allow representatives of the above entities to photocopy any of
the records and documentation and shall provide equipment for that purpose at a
charge that covers its actual costs.
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.
* * *
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IN WITNESS WHEREOF, the Depositor, the Master 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 XXXXXXX ASSET BACKED SECURITIES I LLC,
as Depositor
By: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
EMC MORTGAGE CORPORATION,
as Seller and Master Servicer
By: /s/ Xxxxx Xxxx
----------------------------------------
Name: Xxxxx Xxxx
Title: Senior Vice President
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this 16th day of February 2005, before me, a notary public in and
for said State, appeared Xxxxxx X. Xxxxxxxxx, Xx., personally known to me on the
basis of satisfactory evidence to be an authorized representative of Bear
Xxxxxxx Asset Backed Securities I LLC, the limited liability company 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.
/s/ Xxxxxx Xxxxx
--------------------------------------
Notary Public
[Notarial Seal]
STATE OF MARYLAND )
) ss.:
COUNTY OF XXXXXX )
On this 16th day of February 2005, before me, a notary public in and
for said State, appeared Xxxxxx Xxxxxx, personally known to me on the basis of
satisfactory evidence to be an authorized representative of Xxxxx 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 national banking association,
and acknowledged to me that such national banking association executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Xxxxx X. Xxxxxx
----------------------------------------
Notary Public
[Notarial Seal]
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this 16th day of February 2005, before me, a notary public in and
for said State, appeared Xxxxx Xxxx, personally known to me on the basis of
satisfactory evidence to be an authorized representative of EMC Mortgage
Corporation, the corporation that executed the within instrument, and also known
to me to be the person who executed it on behalf of 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.
/s/ Xxxxxxx Xxxxxx
----------------------------------------
Notary Public
[Notarial Seal]
Mortgage Loan Schedule
[DELIVERED TO THE TRUSTEE]
B-1
EXHIBIT C-1
[FORM OF INITIAL CERTIFICATION]
INITIAL CERTIFICATION
February 16, 2005
EMC Mortgage Corporation
000 Xxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Re: Pooling and Servicing Agreement, dated as of January 1, 2005,
by and among Bear Xxxxxxx Asset Backed Securities I LLC, as
Depositor, EMC Mortgage Corporation, as Seller and Master
Servicer and Xxxxx Fargo Bank, National Association, as
Trustee, relating to Bear Xxxxxxx Asset Backed Securities
Trust 2005-1, Asset-Backed Certificates, Series 2005-1
Ladies and Gentlemen:
In accordance with Section 2.02 of the captioned Pooling and Servicing
Agreement, the undersigned, as custodian, hereby certifies that it has received
a Mortgage File (which contains an original Mortgage Note or lost note
affidavit, unless it has received a separate blanket lost note affidavit
covering such Mortgage Loans) to the extent required in Section 2.01 of the
Pooling and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Pooling and Servicing Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as custodian
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
C-1-1
Schedule A
C-1-2
EXHIBIT C-2
[FORM OF INTERIM CERTIFICATION]
___________________, _____
EMC Mortgage Corporation
000 Xxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Re: Pooling and Servicing Agreement, dated as of January 1, 2005,
by and among Bear Xxxxxxx Asset Backed Securities I LLC, as
Depositor, EMC Mortgage Corporation, as Seller and Master
Servicer and Xxxxx Fargo Bank, National Association, as
Trustee, relating to Bear Xxxxxxx Asset Backed Securities
Trust 2005-1, Asset-Backed Certificates, Series 2005-1
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the above-captioned Pooling and Servicing
Agreement, the undersigned, as custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, and it has reviewed the Mortgage File and the Mortgage Loan Schedule
and has determined that: all required documents have been executed and received
and that such documents relate, determined on the basis of the related Mortgagor
name, original principal balance and loan number to the related Mortgage Loans
identified on the Mortgage Loan Schedule, as supplemented, with any exceptions
listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Pooling and Servicing Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as custodian
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
C-2-1
Schedule A
C-2-2
EXHIBIT C-3
[FORM OF FINAL CERTIFICATION]
__________________, _____
EMC Mortgage Corporation
000 Xxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Re: Pooling and Servicing Agreement, dated as of January 1, 2005,
by and among Bear Xxxxxxx Asset Backed Securities I LLC, as
Depositor, EMC Mortgage Corporation, as Seller and Master
Servicer and Xxxxx Fargo Bank, National Association, as
Trustee, relating to Bear Xxxxxxx Asset Backed Securities
Trust 2005-1, Asset-Backed Certificates, Series 2005-1
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the above-captioned Pooling and Servicing
Agreement, the undersigned, as custodian, hereby certifies that subject to any
exception listed on Schedule A attached hereto (A) it has received a Mortgage
File with respect to each Mortgage Loan listed in the Mortgage Loan Schedule
containing with respect to each such Mortgage Loan:
(i) the original Mortgage Note, including any riders
thereto, endorsed without recourse in the following form: (X)
"Pay to the order of Xxxxx Fargo Bank, National Association,
as Trustee for certificateholders of Bear Xxxxxxx Asset Backed
Securities Trust 2005-1, Asset-Backed Certificates, Series
2005-1, without recourse", or (Y) in the case of a loan
registered on the MERS(R) System, in blank, and in each case
with all intervening endorsements, to the extent available,
and showing an unbroken chain of endorsements from the related
Originator to the Seller, or, if the original Mortgage Note is
unavailable to the Depositor, a photocopy thereof, if
available, together with a lost note affidavit,
(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 in Section 2.01 of
the Pooling and Servicing Agreement applies, shall be in
recordable form),
(iii) unless the Mortgage Loan is registered on the
MERS(R) System, 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 related Mortgaged Property is
located) to the Trustee of the Mortgage, in recordable form,
with respect to each Mortgage Loan in the name of "Xxxxx Fargo
Bank, National Association, as Trustee for certificateholders
of Bear Xxxxxxx Asset Backed
C-3-1
Securities Trust 2005-1, Asset-Backed Certificates, Series
2005-1", in recordable form or in blank,
(iv) an original or a copy of all intervening
assignments of the related Mortgage, if any, to the extent
available to the Seller, with evidence of recording thereon,
(v) the original lender's policy of title insurance
or a duplicate of the original lender's policy of title
insurance or, in the event such original title policy has not
been received from the related insurer, such original or a
duplicate of the original lender's policy of title insurance
shall be delivered within one year of the Closing Date, 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
and (B) has determined that all required documents have been executed and
received and that such documents related to the Mortgage Loans identified on the
Mortgage Loan Schedule, such determination having been made on the basis of the
Mortgagor name, original principal balance and loan number.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Pooling and Servicing Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as custodian
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
C-3-2
Schedule A
C-3-3
EXHIBIT D
TRANSFER AFFIDAVIT
STATE OF. )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a [Class R-I] [Class R-II] Certificate
(the "Certificate") issued pursuant to the Pooling and Servicing Agreement,
dated as of January 1, 2005 (the "Agreement"), by and among Bear Xxxxxxx Asset
Backed Securities I LLC, as depositor, EMC Mortgage Corporation as seller and
master servicer, and Xxxxx Fargo Bank, National Association, as trustee.
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 6.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the
D-1
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 6.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit E to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the Class
[R-I] [R-II] Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Class [R-I] [R-II] Certificate may
be "noneconomic residual interests" within the meaning of Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax. In addition, as the holder of
a noneconomic residual interest, the Transferee may incur tax liabilities in
excess of any cash flows generated by the interest and the Transferee hereby
represents that it intends to pay taxes associated with holding the residual
interest as they become due.
11. Transferee is not a foreign permanent establishment or fixed base
(within the meaning of an applicable income tax treaty) of a U.S. taxpayer.
12. The Transferee will not transfer the Class [R-I] [R-II]
Certificate, directly or indirectly, to a foreign permanent establishment or
fixed base (within the meaning of an applicable income tax treaty) of the
Transferee or another U.S. taxpayer.
13. The Transferee will not cause income from the Class [R-I] [R-II]
Certificate to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or another U.S. taxpayer.
14. The Transferee has provided financial statements or other financial
information requested by the Transferor in connection with the transfer of the
Class [R-I] [R-II] Certificate to permit the Transferor to assess the financial
capability of the Transferee to pay such taxes.
* * *
D-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By:
-----------------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
---------------------------
[Assistant] Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ____________ of the Transferee, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ____ day of _______, 20__.
______________________________
----------------------------------------
NOTARY PUBLIC
My Commission expires the ___ day
of _______________, 20__.
D-3
EXHIBIT 1 TO EXHIBIT D
Certain Definitions
"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.
"Permitted Transferee": Any person other than (i) the United States,
any State or political subdivision thereof, 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
Class [R-I][R-II] 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, 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, or an estate whose income from
sources without the United States is includable 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 trust, and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the Transfer of
an Ownership Interest in a Class [R-I] [R-II] Certificate to such Person may
cause the Trust Fund to fail to qualify as a REMIC at any time that certain
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 the Federal Home Loan Mortgage Corporation, a majority of its
board of directors is not selected by such government unit.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, bank, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
D-4
EXHIBIT 2 TO EXHIBIT D
Section 6.02(c) of the Agreement
(c) 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 which shall always be as a physical certificate
and not as a Book-Entry 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(c), 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(c) or for making
any payments due on such Certificate to the Holder thereof or for
taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. 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
D-5
shall be paid and delivered by the Trustee to the last preceding
Permitted Transferee of such Certificate.
(v) The Master 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(c) 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 Master Servicer to the effect that the elimination of such
restrictions will not cause the REMIC I and/or REMIC II, 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 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.
D-6
EXHIBIT E
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS B-IO CERTIFICATES
Date:___________
Bear Xxxxxxx Asset Backed Securities I LLC,
as Depositor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx Fargo Bank, National Association
as Trustee
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: BSABS 2005-1
Re: Bear Xxxxxxx Asset Backed Securities Trust 2005-1,
Asset-Backed Certificates, Series 2005-1
Ladies and Gentlemen:
In connection with our disposition of the Class B-IO Certificates, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of January 1,
2005, among Bear Xxxxxxx Asset Backed Securities I LLC, as Depositor, EMC
Mortgage Corporation, as Seller and Master Servicer, and Xxxxx Fargo Bank,
National Association, as Trustee.
Very truly yours,
----------------------------------------------
Name of Transferor
By:
------------------------------------------
Name:
Title:
E-1
EXHIBIT F
FORM OF INVESTMENT LETTER [NON-RULE 144A] FOR
CLASS B-IO CERTIFICATES
Date: ____________
Bear Xxxxxxx Asset Backed Securities I LLC,
as Depositor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx Fargo Bank, National Association
as Trustee
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: BSABS 2005-1
Re: Bear Xxxxxxx Asset Backed Securities Trust 2005-1,
Asset-Backed Certificates, Series 2005-1
Ladies and Gentlemen:
In connection with our acquisition of the Class B-IO Certificates in
the Denomination of ______________ (the "Certificates"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an "accredited investor,"
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (d)
either (i) we are not an employee benefit plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended, nor a plan subject to
Section 4975 of the Internal Revenue Code of 1986 (each of the foregoing, a
"Plan"), nor are we acting on behalf of any Plan or (ii) the purchase or holding
of such ERISA Restricted Certificate will not result in any prohibited
transactions under ERISA or Section 4975 of the Code and will not subject the
Trustee or the Master Servicer to any obligation in addition to those expressly
undertaken in the Agreement referred to below, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of the Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action that
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration
F-1
requirements, and if requested, we will at our expense provide an opinion of
counsel satisfactory to the addressees of this certificate that such sale,
transfer or other disposition may be made pursuant to an exemption from the Act,
(2) the purchaser or transferee of the Certificate has executed and delivered to
you a certificate to substantially the same effect as this certificate, and (3)
the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement dated as of January 1,
2005 (the "Agreement"), among Bear Xxxxxxx Asset Backed Securities I LLC, as
Depositor, EMC Mortgage Corporation, as Seller and Master Servicer, and Xxxxx
Fargo Bank, National Association, as Trustee. All capitalized terms used herein
but not defined herein shall have the meanings assigned to them in the
Agreement.
Very truly yours,
----------------------------------------------
Name of Transferor
By:
------------------------------------------
Name:
Title:
F-2
EXHIBIT G
FORM OF RULE 144A LETTER FOR
CLASS B-IO CERTIFICATES
Date:______________________
Bear Xxxxxxx Asset Backed Securities I LLC,
as Depositor
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx Fargo Bank, National Association
as Trustee
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: BSABS 2005-1
Re: Bear Xxxxxxx Asset Backed Securities Trust 2005-1,
Asset-Backed Certificates, Series 2005-1
Ladies and Gentlemen:
In connection with our proposed purchase of the Class B-IO Certificates
(the "Certificates") we certify that (a) we understand that the Certificates are
not being registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such laws,
(b) we have such knowledge and experience in financial and business matters that
we are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) either (i) we are not an employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended, nor a plan subject to Section 4975 of the Internal Revenue
Code of 1986 (each of the foregoing, a "Plan"), nor are we acting on behalf of
any Plan or (ii) the purchase or holding of such ERISA Restricted Certificate
will not result in any prohibited transactions under ERISA or Section 4975 of
the Code and will not subject the Trustee or the Master Servicer to any
obligation in addition to those expressly undertaken in the Agreement referred
to below, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act,
G-1
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, and (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that the Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of January 1,
2005, among Bear Xxxxxxx Asset Backed Securities I LLC, as Depositor, EMC
Mortgage Corporation, as Seller and Master Servicer, and Xxxxx Fargo Bank,
National Association, as Trustee.
----------------------------------------------
Name of Buyer
By:
------------------------------------------
Name:
Title:
G-2
ANNEX 1 TO EXHIBIT G
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $__________(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
________________________
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless: Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities; or Buyer is
an entity in which all the owners are qualified institutional buyers.
G-3
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. The Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank
or trust company and whose participants are exclusively State
or Local Plans or ERISA Plans as defined above, and no
participant of the Buyer is an individual retirement account
or an H.R.10 (Xxxxx) plan.
___ Equity Owners. Buyer is an entity in which all of the equity
owners are qualified institutional buyers.
3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of
G-4
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
----------------------------------------------
Name of Buyer
By:
------------------------------------------
Name:
Title:
Date:
------------------------------------------
G-5
ANNEX 2 TO EXHIBIT G
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $____________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) bank deposit notes and certificates of deposit,
(iii) loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
G-6
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
----------------------------------------------
Name of Buyer or Adviser
By:
------------------------------------------
Name:
Title:
IF AN ADVISER:
----------------------------------------------
Name of Buyer
Date:
-----------------------------------------
G-7
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
To: Xxxxx Fargo Bank, National Association
as Trustee
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: BSABS 2005-1
Re: Pooling and Servicing Agreement, dated as of January 1, 2005
(the "Agreement"), among Bear Xxxxxxx Asset Backed Securities
I LLC, as Depositor, EMC Mortgage Corporation, as Seller and
Master Servicer, and Xxxxx Fargo Bank, National Association,
as Trustee.
In connection with the administration of the Mortgage Loans held by you
as Trustee pursuant to the above-captioned Agreement, we request the release,
and hereby acknowledge receipt, of the Mortgage File for the Mortgage Loan
described below, for the reason indicated
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
____ 1. Mortgage Paid in Full (and all amounts received or to be
received in connection with such payment have been or will be
remitted to the Master Servicer for deposit in the Master
Servicer Collection Account)
____ 2. Foreclosure
____ 3. Substitution
____ 4. Other Liquidation (Repurchases, etc.)
____ 5. Nonliquidation Reason:________________________________
Address to which Trustee should _____________________________
Deliver the Mortgage File ___________________________________
___________________________________
By:
------------------------------------------
(authorized signer)
Issuer:____________________________________
Address:___________________________________
___________________________________
H-1
Date:______________________________
Trustee
Xxxxx Fargo Bank, National Association
Please acknowledge the execution of the above request by your signature and date
below:
------------------------------------ ----------------------------------
Signature Date
Documents returned to Trustee
------------------------------------ ----------------------------------
Trustee Date
H-2
EXHIBIT I
DTC LETTER OF REPRESENTATIONS
[See document at Tab No. ____]
I-1
EXHIBIT J
SCHEDULE OF MORTGAGE LOANS WITH LOST NOTES
[DELIVERED TO THE TRUSTEE]
J-1
