SEPTEMBER 23, 2005
BEAR XXXXXXX ASSET BACKED SECURITIES I LLC,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Master Servicer
LASALLE BANK NATIONAL ASSOCIATION,
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2005
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BEAR XXXXXXX ASSET BACKED SECURITIES TRUST 2005-3
ASSET-BACKED CERTIFICATES, SERIES 2005-3
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...................................................................35
Section 2.02. Acceptance by Trustee of the Mortgage Loans................................................38
Section 2.03. Representations, Warranties and Covenants of the Master Servicer and the Seller............40
Section 2.04. Representations and Warranties of the Depositor............................................51
Section 2.05. Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases............53
Section 2.06. Authentication and Delivery of Certificates................................................53
Section 2.07. Covenants of the Master Servicer...........................................................54
Section 2.08. Lost Mortgage Notes Indemnity..............................................................54
Article III
Administration and Master Servicing of Mortgage Loans
Section 3.01. The Master Servicer to Service the Mortgage Loans..........................................55
Section 3.02. REMIC-Related Covenants....................................................................56
Section 3.03. Collection of Mortgage Loan Payments.......................................................57
Section 3.04. Successor Master Servicer and Subservicing Agreements......................................57
Section 3.05. [Reserved].................................................................................58
Section 3.06. Due-on-Sale Clauses; Assumption Agreements.................................................58
Section 3.07. Release of Mortgage Files..................................................................59
Section 3.08. Documents, Records and Funds in Possession of the Master Servicer To Be Held for Trustee...60
Section 3.09. Maintenance of Hazard Insurance............................................................60
Section 3.10. Presentment of Claims and Collection of Proceeds...........................................61
Section 3.11. Maintenance of the Primary Mortgage Insurance Policies.....................................62
Section 3.12. Possession of Certain Insurance Policies and Documents.....................................62
Section 3.13. Realization Upon Defaulted Mortgage Loans..................................................63
Section 3.14. Servicing Compensation.....................................................................65
Section 3.15. [Reserved].................................................................................66
Section 3.16. Annual Officer's Certificate as to Compliance..............................................66
Section 3.17. Annual Independent Accountant's Servicing Report...........................................66
Section 3.18. Reports Filed with Securities and Exchange Commission......................................66
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Section 3.19. Collection of Taxes, Assessments and Similar Items; Escrow Accounts........................68
Section 3.20. Access to Certain Documentation and Information Regarding the Mortgage Loans...............68
Section 3.21. Optional Purchase of Defaulted Mortgage Loans..............................................68
Section 3.22. Subservicing...............................................................................69
Section 3.23. Books and Records..........................................................................70
Article IV
ACCOUNTS
Section 4.01. [Reserved].................................................................................71
Section 4.02. Master Servicer Collection Account.........................................................71
Section 4.03. Permitted Withdrawals and Transfers from the Master Servicer Collection Account............72
Section 4.04. Distribution Account.......................................................................75
Section 4.05. Permitted Withdrawals and Transfers from the Distribution Account..........................75
Section 4.06. Yield Maintenance Account and Yield Maintenance Agreement..................................76
Section 4.07. Basis Risk Reserve Fund....................................................................78
Section 4.08. Final Maturity Reserve Account.............................................................79
Article V
DISTRIBUTIONS AND ADVANCES
Section 5.01. Advances...................................................................................82
Section 5.02. Compensating Interest Payments.............................................................83
Section 5.03. REMIC Distributions........................................................................83
Section 5.04. Distributions..............................................................................83
Section 5.05. Allocation of Realized Losses and Subsequent Recoveries....................................87
Section 5.06. [Reserved].................................................................................88
Section 5.07. Monthly Statements to Certificateholders...................................................88
Section 5.08. REMIC Designations and Allocations.........................................................91
Article VI
THE CERTIFICATES
Section 6.01. The Certificates...........................................................................94
Section 6.02. Certificate Register; Registration of Transfer and Exchange of Certificates................96
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates..........................................99
Section 6.04. Persons Deemed Owners......................................................................99
Section 6.05. Access to List of Certificateholders' Names and Addresses.................................100
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Section 6.06. Book-Entry Certificates...................................................................100
Section 6.07. Notices to Depository.....................................................................101
Section 6.08. Definitive Certificates...................................................................101
Section 6.09. Maintenance of Office or Agency...........................................................102
Article VII
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 7.01. Respective Liabilities of the Depositor, the Master Servicer and the Seller...............103
Section 7.02. Merger or Consolidation of the Depositor, the Master Servicer or the Seller...............103
Section 7.03. Indemnification of the Trustee, the Master Servicer and Others............................103
Section 7.04. Limitation on Liability of the Depositor, the Seller, the Master Servicer and Others......104
Section 7.05. Limitation on Resignation of the Master Servicer..........................................105
Section 7.06. Errors and Omissions Insurance; Fidelity Bonds............................................105
Article VIII
DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01. Events of Default.........................................................................107
Section 8.02. Trustee to Act; Appointment of Successor..................................................108
Section 8.03. Notification to Certificateholders........................................................110
Article IX
CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee.........................................................................111
Section 9.02. Certain Matters Affecting the Trustee.....................................................112
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.....................................114
Section 9.04. Trustee May Own Certificates..............................................................115
Section 9.05. Trustee's Fees and Expenses...............................................................115
Section 9.06. Eligibility Requirements for Trustee......................................................115
Section 9.07. Insurance.................................................................................116
Section 9.08. Resignation and Removal of Trustee........................................................116
Section 9.09. Successor Trustee.........................................................................117
Section 9.10. Merger or Consolidation of Trustee........................................................117
Section 9.11. Appointment of Co-Trustee or Separate Trustee.............................................117
Section 9.12. Tax Matters...............................................................................119
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Article X
TERMINATION
Section 10.01. Termination upon Liquidation or Repurchase of all Mortgage Loans..........................122
Section 10.02. Final Distribution on the Certificates....................................................122
Section 10.03. Additional Termination Requirements.......................................................124
Article XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.................................................................................125
Section 11.02. Recordation of Agreement; Counterparts....................................................126
Section 11.03. Governing Law.............................................................................126
Section 11.04. Intention of Parties......................................................................127
Section 11.05. Notices...................................................................................127
Section 11.06. Severability of Provisions................................................................128
Section 11.07. Assignment................................................................................129
Section 11.08. Limitation on Rights of Certificateholders................................................129
Section 11.09. Inspection and Audit Rights...............................................................129
Section 11.10. Certificates Nonassessable and Fully Paid.................................................130
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Exhibits
Exhibit A-1.......Form of Class A-1 Certificates
Exhibit A-2.......Form of Class A-2 Certificates
Exhibit A-3.......Form of Class A-3 Certificates
Exhibit A-4.......Form of Class M-1 Certificates
Exhibit A-5.......Form of Class M-2 Certificates
Exhibit A-6.......Form of Class M-3 Certificates
Exhibit A-7.......Form of Class M-4 Certificates
Exhibit A-8.......Form of Class M-5 Certificates
Exhibit A-9.......Form of Class M-6 Certificates
Exhibit A-10......Form of Class M-7 Certificates
Exhibit A-11......Form of Class B-IO Certificates
Exhibit A-12......Form of Class R-I Certificates
Exhibit A-13......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
Exhibit K.........Form of Power of Attorney
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POOLING AND SERVICING AGREEMENT, dated as of August 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 LASALLE 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 2005-3." The Certificates issued hereunder
may be referred to as "Asset-Backed Certificates Series 2005-3" (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(a) . 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.
Affiliate: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
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Allocated Realized Loss Amount: With respect to any Distribution Date
and each Class of Subordinated 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 Subordinated 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 and the Class M-1 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 on such Distribution Date (after giving
effect to all distributions of principal (including as a result of Subsequent
Recoveries on the Mortgage Loans) on the Certificates 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. Realized Losses will not be
allocated to reduce the Certificate Principal Balances of the Class A
Certificates.
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
for such Distribution Date that such Class of Certificates would have been
entitled to receive on such Distribution Date had the applicable Pass-Through
Rate for such Class of Certificates been calculated based upon One-Month LIBOR
with respect to such
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Distribution Date plus the applicable Certificate Margin, over (ii) the sum of
interest for such Class of Certificates calculated at the Interest Rate Cap for
such Distribution Date and any Yield Maintenance Payments received on such
Distribution Date under the Yield Maintenance Agreement and relating to such
Class of Certificates.
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 of Certificates is based upon the
Interest Rate Cap, then the applicable Basis Risk Shortfall, and (ii) the Basis
Risk Shortfall for such Class of Certificates 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).
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 Illinois 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-13.
Certificate Margin: Reference to any of the Class A-1 Margin, Class A-2
Margin, Class A-3 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 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) with respect to the Subordinated
Certificates, any Allocated Realized Loss Amounts allocated to such Certificate
on previous Distribution Dates pursuant to Section 5.05, and increased by any
Subsequent Recoveries allocated to such Subordinated Certificate on previous
Distribution Dates pursuant to Section 5.05. References herein to the
Certificate Principal Balance of a Class of Certificates (other than
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the Class B-IO Certificates and the Residual Certificates) shall mean the
Certificate Principal Balances of all Certificates in such Class of
Certificates.
Certificate Register: The register maintained pursuant to Section 6.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
Class: All Certificates bearing the same Class designation as set forth
in Section 6.01 hereof.
Class A Certificates: The Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates.
Class A Principal Distribution Amount: For any Distribution Date, an
amount equal to the excess, if any, of (i) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution Date,
over (ii) the lesser of (a) 60.00% 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 Due Period and prepayments
received 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 Due
Period and prepayments received during the related Prepayment Period) minus the
Overcollateralization Floor.
Class A-1 Certificate: Any Certificate designated as a "Class A-1
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-1 Certificates as set forth herein.
Class A-1 Margin: For any Distribution Date, (i) on or prior to the
Optional Termination Date, 0.450% per annum, and (ii) thereafter, 0.900% per
annum.
Class A-1 Pass-Through Rate: For the first Distribution Date, 4.15438%
per annum, and on any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class A-1 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class A-2 Certificates as set forth herein.
Class A-2 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 0.270% per annum and (ii) thereafter, 0.540% per
annum.
Class A-2 Pass-Through Rate: For the first Distribution Date, 3.97438%
per annum, and on any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class A-2 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
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Class A-3 Certificate: Any Certificate designated as a "Class A-3
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 A-3 Certificates as set forth herein.
Class A-3 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 0.680% per annum and (ii) thereafter, 1.360% per
annum.
Class A-3 Pass-Through Rate: For the first Distribution Date, 4.38438%
per annum, and on any Distribution Date thereafter, the lesser of (i) One-Month
LIBOR for the related Accrual Period plus the Class A-3 Margin for such
Distribution Date and (ii) the Interest Rate Cap for such Distribution Date.
Class B-IO Certificate: Any Certificate designated as a "Class B-IO
Certificate" on the face thereof, in the form of Exhibit A-11 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
5.08(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-4 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, 0.750% per annum and (ii) thereafter, 1.125% per
annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 4.45438%
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.
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) 76.30% 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 Due Period and
prepayments received 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 Due
Period and prepayments received 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-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein.
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Class M-2 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 1.750% per annum and (ii) thereafter, 2.625% per
annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 5.45438%
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) 85.50% 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 Due Period and prepayments received
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 Due Period and
prepayments received 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-6 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, 2.000% per annum and (ii) thereafter, 3.000% per
annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 5.70438%
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 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) 87.60% 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 Due Period and prepayments received 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 Due Period and prepayments received
during the related Prepayment Period) minus the Overcollateralization Floor.
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Class M-4 Certificate: Any Certificate designated as a "Class M-4
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-4 Certificates as set forth herein.
Class M-4 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 2.500% per annum and (ii) thereafter, 3.750% per
annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 6.20438%
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) 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 Due Period and prepayments received 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 Due Period and prepayments received
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-8 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, 3.250% per annum and (ii) thereafter, 4.875% per
annum.
Class M-5 Pass-Through Rate: For the first Distribution Date, 6.95438%
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
8
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) 91.60% 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 Due
Period and prepayments received 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 Due Period and prepayments received 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-9 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, 3.250% per annum and (ii) thereafter, 4.875% per
annum.
Class M-6 Pass-Through Rate: For the first Distribution Date, 6.95438%
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) 93.40% 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 Due
Period and prepayments received 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 Due Period and prepayments received 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-10 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-7 Certificates as set forth herein.
9
Class M-7 Margin: For any Distribution Date (i) on or prior to the
Optional Termination Date, 3.250% per annum and (ii) thereafter, 4.875% per
annum.
Class M-7 Pass-Through Rate: For the first Distribution Date, 6.95438%
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) 96.70% 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 Due
Period and prepayments received 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 Due Period and prepayments received 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.
Closing Date: September 9, 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
10
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 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Global
Securities and Trust Services--Bear Xxxxxxx Asset Backed Securities Trust
2005-3, 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: LaSalle Bank National Association, or any successor
custodian appointed pursuant to the provisions hereof and of the Custodial
Agreement.
Cut-off Date: August 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 $320,659,792.
Deferred Interest: With respect to any negatively amortizing Mortgage
Loan, the excess of the amount of interest due on such negatively amortizing
Mortgage Loan over the interest portion of the scheduled payment due thereon,
which is permitted under the terms of the related Mortgage Note to be added to
the principal of the Mortgage Note.
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 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 39.00% of the Senior Enhancement Percentage for
such Distribution Date.
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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 Trust and the initial Depository, dated
September 8, 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 "LaSalle Bank National
Association, in trust for registered holders of Bear Xxxxxxx Asset Backed
Securities Trust 2005-3, Asset-Backed Certificates, Series 2005-3, 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. Central time on the Business Day immediately preceding such
Distribution Date.
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 September 2005.
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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
Loan, the last day of the immediately preceding calendar month, if its Scheduled
Payment is due during such calendar month.
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 Loan, the calendar month immediately preceding the month in which such
Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, 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
rating, 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.
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
13
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 Amount on the Class A 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 Yield Maintenance Payments received under the
Yield Maintenance Agreement for such Distribution Date, over (b) the Interest
Distribution Amount that the Class A-1, Class X-0, Xxxxx X-0, 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 Rates on such Classes of Certificates been calculated at One-Month
LIBOR on such Distribution Date plus the applicable Certificate Margin, to the
extent that such Interest Distribution Amount was not otherwise paid from
Interest Funds on such Distribution Date to such Classes 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 Mae: Xxxxxx Xxx (also known as Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Maturity Reserve Account: The account established and maintained
by the Trustee pursuant to Section 4.08.
Final Maturity Reserve Amount: For each Distribution Date on and after
the Distribution Date in December 2026, an amount equal to the lesser of (x) the
Class B-IO Distribution Amount and the remaining Excess Yield Maintenance Amount
following distributions under clause fourth of Section 5.04(a)(iii), and (y) the
lesser of (i) the sum of the aggregate Certificate Principal Balance of the
Certificates (other than the Class B-IO and Residual Certificates) after giving
effect to principal distributions on such Distribution Date, and (ii) the
aggregate principal balance, at the end of the related Due Period, of each
outstanding Mortgage Loan having a final maturity occurring subsequent to
September 1, 2035. For each Distribution Date prior to the Distribution Date in
December 2026, zero.
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.
14
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.
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, the sum of (i) the excess of (a) the
Interest Distribution Amount for such Class of Certificates with respect to
prior Distribution Dates over (b) the amount actually distributed to such Class
of Certificates 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.
15
Interest Determination Date: With respect to each Certificate (other
than the Residual Certificates), for the first Accrual Period, September 7,
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
related Interest Rate Cap) for the applicable Accrual Period on the Certificate
Principal Balance of such Class of Certificates 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 (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 shall not
accrue on the Class B-IO Certificates or on the Residual Certificates.
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 related servicing
fee, if applicable, 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) all Insurance Proceeds and
Liquidation Proceeds (other than Excess Liquidation Proceeds) with respect to
the Mortgage Loans collected during the related Due Period (to the extent such
Insurance Proceeds and Liquidation Proceeds relate to interest on the Mortgage
Loans plus the interest portion of all Subsequent Recoveries with respect to the
Mortgage Loans received during the related Due Period, (e) the interest portion
of prepayments on the Mortgage Loans collected during the related Prepayment
Period, (f) 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 (g) 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, to the extent that such amounts have not been retained by or
otherwise 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 "Latest Possible Maturity Date" for
the Certificates is the Distribution Date occurring in September 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
16
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 of the foregoing Latest Possible Maturity
Dates.
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 respect to an REO
Property, less the sum of related unreimbursed Advances, Master 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. Central 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 superseded 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
17
name of the Trustee for the benefit of the Certificateholders and designated
"LaSalle Bank National Association, in trust for registered holders of Bear
Xxxxxxx Asset Backed Securities Trust 2005-3, Asset-Backed Certificates, Series
2005-3, 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 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 5.07.
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
18
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 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;
(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;
19
(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;
(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 and Principal
Distribution Amounts for the Certificates for such Distribution Date and the
Interest Carry Forward Amounts for the Class A Certificates for such
Distribution Date.
20
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 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-1 Certificates, Class A-2
Certificates, Class A-3 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 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 3.520% 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.
21
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, and the Appraised Value of all
REO Properties, at the time of repurchase 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.
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 the first
Distribution Date, $0. With respect to any subsequent 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 (including as a
result of Subsequent Recoveries on the Mortgage Loans), other than distributions
of any Extra Principal Distribution Amount, on such Distribution Date).
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 the first
Distribution Date, $0. With respect to any subsequent 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.
22
Overcollateralization Target Amount: With respect to the first
Distribution Date, $0. With respect to the Mortgage Loans and any subsequent
Distribution Date (i) prior to the Stepdown Date, an amount equal to 1.650% 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 3.300% 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 the first Distribution Date,
$0. With respect to any subsequent 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 (after reduction for Realized Losses incurred during
the related Due Period and prepayments received during the related Prepayment
Period), over (ii) the sum of the Certificate Principal Balance of the Offered
Certificates and the Class M-7 Certificates on such Distribution Date (after
taking into account the payment of principal (including as a result of
Subsequent Recoveries on the Mortgage Loans), other than any Extra Principal
Distribution Amount, on such Certificates on such Distribution Date).
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to 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. The Class B-IO Certificates and the Residual Certificates do
not accrue interest and do not have a Pass-Through Rate.
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;
23
(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;
(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
24
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 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
25
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.
Prepayment Charge: Any prepayment premium 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 September 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
26
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 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
with respect to the related Distribution Date, (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
(other than Excess Liquidation Proceeds) and Insurance Proceeds on the Mortgage
Loans collected during the related Due Period (to the extent such Liquidation
Proceeds and Insurance Proceeds relate to principal on the Mortgage Loans plus
the principal portion of all Subsequent Recoveries on the Mortgage Loans
received during the related Due 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 to principal or not allocable to
either principal or interest on the Mortgage Loans that are used to reimburse
the Trustee and the Master Servicer for amounts due to such Persons hereunder,
to the extent that such amounts 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 September 7,
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
27
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
from the date through which interest was last paid on such Mortgage Loan by the
related Mortgagor to 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 Master 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.
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 from the Cut-off Date through such last day of the related
Due Period (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,
3.25%;
(ii) 48 months through 59 months following the Closing Date,
4.50%;
(iii) 60 months through 71 months following the Closing Date,
5.25%; and
(iv) 72 months following the Closing Date, and each month
thereafter, 5.75%.
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,
28
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.
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 5.08(a).
REMIC I Certificates: The REMIC I Regular Interests and the Class R-I
Certificate.
REMIC I Regular Interests: As defined in Section 5.08(b).
REMIC II: The segregated pool of assets described in Section 5.08(a).
REMIC II Certificates: The REMIC II Regular Interests and the Class
R-II Certificate.
REMIC II Regular Interests: As defined in Section 5.08(c).
29
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 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.
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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.
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 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.
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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 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 or prior to 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 Due Period, plus (y) with respect to each negatively
amortizing Mortgage Loan, any Deferred Interest added to the principal of such
Mortgage Loan through the last day of the related Due Period. The Stated
Principal Balance of a Liquidated Loan equals zero.
Stepdown Date: The later to occur of (a) the Distribution Date
occurring in September 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 (after reduction for Realized Losses incurred during the
related Due Period and Principal Prepayments received during the related
Prepayment Period) is greater than or equal to 39.00%.
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 Certificates, Class M-5
Certificates, Class M-6 Certificates 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
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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, the Yield Maintenance
Account, the Basis Risk Reserve Fund and the Final Maturity Reserve Account; and
(vi) all proceeds of the foregoing, including proceeds of conversion, voluntary
or involuntary, of any of the foregoing into cash or other liquid property.
Trustee: LaSalle 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 Subordinated Certificates, the excess of (i) the Allocated
Realized Loss Amount with respect to such Class of Subordinated Certificates
over (ii) the sum of all Subsequent Recoveries allocated to such Class of
Subordinated Certificates, in each case, on all previous Distribution Dates. Any
amounts distributed to a Class of Subordinated Certificates in respect of any
Unpaid Allocated Realized Loss Amount on such Class of Certificates 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),
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(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-1 Certificateholders, Class A-2
Certificateholders, Class A-3 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 "LaSalle Bank National Association, in trust
for registered holders of Bear Xxxxxxx Asset Backed Securities Trust 2005-3,
Asset-Backed Certificates, Series 2005-3, 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. FXNEC 7373, dated
September 2005, between the Yield Maintenance Provider and the Trust and the
1992 ISDA Master Agreement (Multicurrency - Cross Border) form (the "ISDA Form
Master Agreement") deemed entered into pursuant to such confirmation.
Yield Maintenance Payment: As defined in the Prospectus Supplement.
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(a) . 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 LaSalle Bank National Association, as Trustee for certificateholders
of Bear Xxxxxxx Asset Backed Securities Trust 2005-3, Asset-Backed
Certificates, Series 2005-3, 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 "LaSalle Bank National Association, as Trustee for
certificateholders of Bear Xxxxxxx Asset Backed Securities Trust
2005-3, Asset-Backed Certificates, Series 2005-3", 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; (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
36
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 recharacterizes 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. 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 Custodian 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 (other
than any Mortgage Loan for which a lost note affidavit has been delivered), 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 such documents promptly upon receipt, but in no event later
than 360 days after the Closing Date.
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(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 LaSalle 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 LaSalle Bank
National Association, as the Custodian pursuant to the Custodial
Agreement;
(ii) LaSalle Bank National Association, as the Trustee shall
have no responsibility with respect to the custody or review of
Mortgage Files held by LaSalle Bank National Association, as the
Custodian pursuant to the Custodial Agreement;
(iii) LaSalle Bank National Association, as the Trustee shall
have no liability for the failure of LaSalle Bank National Association,
as the Custodian to perform the obligations of the Custodian under the
Custodial Agreement; and
39
(iv) LaSalle Bank National Association, as the Custodian shall
be liable for the failure of LaSalle Bank National Association, as the
Custodian to perform the obligations of the Custodian under the
Custodial Agreement, to the extent provided in 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 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
40
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.
41
(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.
42
(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
43
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 10.42% 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
10.42% 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,
44
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
45
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
46
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
47
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(c) 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
48
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 1.48% 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) Except with respect to 0.61% of the Mortgage
Loans (by Cut-off Date Principal Balance), 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
49
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 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
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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 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(a) .
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
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to conduct its business as now conducted by it and to enter into and
perform its obligations under this Agreement.
(ii) The Depositor has the full 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.
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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 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.
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Section 2.07 Covenants of the Master Servicer.
The Master Servicer covenants to the Depositor and the Trustee as
follows:
(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
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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 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, in
substantially the form attached hereto as Exhibit K, 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.
Notwithstanding anything to the contrary, the Master Servicer shall not without
the Trustee's written consent: (i) initiate any action, suit or proceeding
solely under the Trustee's name without indicating the Master Servicer's
representative capacity or (ii) take any action with the intent to cause, and
which actually does cause, the Trustee to be registered to do business in any
state. 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 or otherwise permitted 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
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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 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.
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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].
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
58
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 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
59
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.
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
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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 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
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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 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.
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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 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
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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 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 Master 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
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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 Master 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 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 Prepayment
Charges, 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.
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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 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, file a Form 15 Suspension Notice with
respect to
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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 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.
Nothing shall be construed from the foregoing to require the Trustee or
any officer, director or Affiliate thereof to sign any Form 10-K or any
certification contained therein. Furthermore, the inability of the Trustee to
file a Form 10-K as a result of the lack of required information as set forth
herein or required signatures on such Form 10-K or any certification
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contained therein shall not be regarded as a breach by the Trustee of any
obligation under this Agreement.
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 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.
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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 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
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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 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 Account Deposit 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 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. Central time on the Distribution
Account Deposit Date, the Master Servicer shall transfer all Interest Funds and
Principal Funds 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 on the
Distribution Account Deposit Date and ending on the date such payment is made.
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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). 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;
(ii) to pay itself for any expenses as provided in Sections
4.03(a)(i), (vii) and (xii), without duplication thereof;
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(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-1, Class X-0, Xxxxx X-0, 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.
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:
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(a) first, to the Class A Certificateholders, pro rata, based
upon the amount by which the interest rate on each such Class is limited, the
lesser of (1) the amount received under the Yield Maintenance Agreement, and (2)
the Interest Distribution Amount that each 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 applicable Certificate 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;
(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
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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 (ii) 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, LaSalle Bank National Association, as trustee, in trust for
registered Holders of Bear Xxxxxxx Asset Backed Securities Trust 2005-3,
Asset-Backed Certificates, Series 2005-3." 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 second, 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 and the
Subordinated 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 fourth 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 the Subordinated Certificates, and
will distribute such amounts to the Holders of such Class A Certificates as set
forth in clause fourth 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
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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-1, Class X-0, Xxxxx X-0, 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.
Section 4.08 Final Maturity Reserve Account.
On or prior to the Distribution Date in December 2026, the Trustee
shall establish and maintain in the name of the Trustee, for the benefit of the
Class A-1, Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6 and Class M-7 Certificateholders, the Final Maturity
Reserve Account as a segregated trust account. On each Distribution Date on and
after the Distribution Date in December 2026, the Trustee will deposit in the
Final Maturity Reserve Account the Final Maturity Reserve Amount for each such
Distribution Date as set forth under Section 5.04(a)(iii).
The Final Maturity Reserve Account constitutes an "outside reserve
fund" within the meaning of Treasury Regulation ss. 1.860G-2(h), and amounts on
deposit in the Final Maturity Reserve Account will constitute an asset of the
Trust but will not be an asset of any REMIC. The Class B-IO Certificateholders
shall be the owners of the Final Maturity Reserve Account, and for all federal
tax purposes, amounts transferred by the REMICs to the Final Maturity Reserve
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 Final Maturity Reserve Account.
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The Trustee will invest funds deposited in the Final Maturity Reserve
Account as directed by the Class B-IO Certificateholders, so long as the Holder
of the Class B-IO Certificates is an affiliate of the Master Servicer (and the
Trustee shall be entitled to receive and rely upon a certificate from the Master
Servicer regarding the identity of any of its Affiliates), in writing in
Permitted Investments with a maturity date 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. If no written
direction with respect to such investment shall be received by the Trustee from
the Class B-IO Certificateholders or if the Holder of the Class B-IO
Certificates is no longer an affiliate of the Master Servicer, then funds in
such Account shall remain uninvested. All income and gain realized from
investment of funds deposited in the Final Maturity Reserve 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
immediately succeeding Distribution Date. The Class B-IO Certificateholders
shall deposit in the Final Maturity Reserve 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.
On the earlier of the Distribution Date in September 2035 and the
termination of the Trust, the Trustee shall distribute the funds on deposit in
the Final Maturity Reserve Account to the Class A-1, Class X-0, Xxxxx X-0, Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7
Certificateholders in the following priority:
(a) first, to the Class A Certificateholders, in proportion to
their respective Certificate Principal Balance, after giving effect to principal
distributions on such Distribution Date, until the Certificate Principal Balance
of each such Class has been reduced to zero;
(b) second, to the Class M-1 Certificateholders, from
remaining amounts in the Final Maturity Reserve Account after application
pursuant to clause (a) above, until the Certificate Principal Balance thereof
has been reduced to zero;
(c) third, to the Class M-2 Certificateholders, from remaining
amounts in the Final Maturity Reserve Account after application pursuant to
clauses (a) and (b) above, until the Certificate Principal Balance thereof has
been reduced to zero;
(d) fourth, to the Class M-3 Certificateholders, from
remaining amounts in the Final Maturity Reserve Account after application
pursuant to clauses (a), (b) and (c) above, until the Certificate Principal
Balance thereof has been reduced to zero;
(e) fifth, to the Class M-4 Certificateholders, from remaining
amounts in the Final Maturity Reserve Account after application pursuant to
clauses (a), (b), (c) and (d) above, until the Certificate Principal Balance
thereof has been reduced to zero;
(f) sixth, to the Class M-5 Certificateholders, from remaining
amounts in the Final Maturity Reserve Account after application pursuant to
clauses (a), (b), (c), (d) and (e) above, until the Certificate Principal
Balance thereof has been reduced to zero;
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(g) seventh, to the Class M-6 Certificateholders, from
remaining amounts in the Final Maturity Reserve Account after application
pursuant to clauses (a), (b), (c), (d), (e) and (f) above, until the Certificate
Principal Balance thereof has been reduced to zero;
(h) eighth, to the Class M-7 Certificateholders, from
remaining amounts in the Final Maturity Reserve Account after application
pursuant to clauses (a), (b), (c), (d), (e), (f) and (g) above, until the
Certificate Principal Balance thereof has been reduced to zero;
(i) ninth, from remaining amounts in the Final Maturity
Reserve Account after application pursuant to clauses (a), (b), (c), (d), (e),
(f), (g) and (h) above, to the Holders of the Offered Certificates and the Class
M-7 Certificateholders, any current Interest Distribution Amounts (for each such
Class and Distribution Date) and any Interest Carry Forward Amounts for each
such class, to the extent unpaid, in accordance with the priorities set forth in
Section 5.04(a)(i);
(j) tenth, from remaining amounts in the Final Maturity
Reserve Account after application pursuant to clauses (a), (b), (c), (d), (e),
(f), (g), (h) and (i) above, to the Holders of the Offered Certificates and the
Class M-7 Certificateholders, any Basis Risk Shortfall Carry Forward Amounts for
each such class, to the extent unpaid, in accordance with the priorities set
forth in Section 5.04(iii); and
(k) eleventh, to the Class B-IO Certificates, from remaining
amounts in the Final Maturity Reserve Account after application pursuant to
clauses (a), (b), (c), (d), (e), (f), (g), (h) and (i) above.
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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 the Trustee, and also net of the Trustee Fee 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 5.08 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-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates, pro rata, the Interest Distribution Amount for each
such Class and Distribution Date;
second, from remaining Interest Funds, to the Class A-1 Certificates,
the Class A-2 Certificates and the Class A-3 Certificates, pro rata, any
Interest Carry Forward Amount for each such Class of Certificates and
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 of Certificates and Distribution Date;
fourth, from remaining Interest Funds, the amount of Excess Spread for
such Distribution Date (other than the Distribution Date in September 2005) as
is necessary to have the Overcollateralized Amount for such Distribution Date
equal the Overcollateralization Target Amount for such Distribution Date, which
amount will be the Extra Principal Distribution Amount for such Distribution
Date (other than the Distribution Date in September 2005) and will
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be included as part of the Principal Distribution Amount for such Distribution
Date (other than the Distribution Date in September 2005); and
fifth, 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.
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, concurrently (based upon the
Certificate Principal Balances of the Class A-1 Certificates on the one-hand,
and the Class A-2 and Class A-3 Certificates on the other), as follows:
(A) to the Class A-1 Certificates, until the
Certificate Principal Balance of such Class is reduced to
zero; and
(B) to the Class A-2 Certificates and Class A-3
Certificates, sequentially, in that order, in each case until
the Certificate Principal Balance of each such Class 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;
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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
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, concurrently (based upon the Certificate Principal Balances of the Class
A-1 Certificates on the one-hand, and the Class A-2 and Class A-3 Certificates
on the other), as follows:
(A) to the Class A-1 Certificates, until the
Certificate Principal Balance of such Class has been reduced
to zero; and
(B) to the Class A-2 Certificates and the Class A-3
Certificates, sequentially, in that order, in each case until
the Certificate Principal Balance of each such Class 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
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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-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates, pro rata, any unpaid Interest Carry Forward Amounts
for each such Class of Certificates and Distribution Date;
second, from any remaining Net Monthly Excess Cashflow and any
remaining Excess Yield Maintenance Amounts, 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 Interest Carry Forward Amounts for each such Class of
Certificates and Distribution Date;
third, from any remaining Net Monthly Excess Cashflow and any remaining
Excess Yield Maintenance Amounts, to the Basis Risk Reserve Fund, the amounts
required for distribution in accordance with the next succeeding priority;
fourth, from amounts on deposit in the Basis Risk Reserve Fund, to the
Class A-1 Certificates, Class A-2 Certificates and Class A-3 Certificates, pro
rata, and thereafter 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 of
Certificates and Distribution Date;
fifth, from any remaining Net Monthly Excess Cashflow and any remaining
Excess Yield Maintenance Amounts as follows:
(A) on any Distribution Date prior to the
Distribution Date in December 2026,
(i) to the Class B-IO Certificates, the Class B-IO
Distribution Amount and the remaining Excess Yield Maintenance
Amount; and
(ii) any remaining amounts to the Residual
Certificates based on the related REMIC in which such amounts
remain; and
(B) on any Distribution Date on and after the
Distribution Date in December 2026,
(i) to the Final Maturity Reserve Account, the Final
Maturity Reserve Amount;
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(ii) from any remaining Net Monthly Excess Cashflow
and any remaining Excess Yield Maintenance Amounts, to the
Class B-IO Certificates, the Class B-IO Distribution Amount
and the remaining Excess Yield Maintenance Amount; and
(iii) 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 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 (upon which
the Trustee may rely), 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").
Section 5.05. 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
Subordinated Certificates as provided in the definition of Allocated Realized
Loss Amount.
Any amounts distributed to a Class of Subordinated 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.
If the Master Servicer receives a Subsequent Recovery in a Prepayment
Period, it will be distributed to the Subordinated Certificates 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
Subordinated Certificates that has been reduced by the allocation of a Realized
Loss to such Class of Certificates will be increased, in order of their payment
priority, by the amount of such Subsequent Recovery, commencing with the Class
M-1 Certificates, but not in excess of the Unpaid Allocated Realized Loss Amount
for such Class of Certificates immediately prior to that Distribution Date.
Holders of such Class of Subordinated Certificates will not be entitled to any
payment in respect of interest on the amount of such increases to the
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related Certificate Principal Balance for an Interest Accrual Period preceding
the Distribution Date on which such increase occurs.
Section 5.06. [Reserved]
Section 5.07. 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 on such
Distribution Date 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 on such Distribution Date
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 with respect to such Distribution Date for each
Class of Certificates (other than the Residual Certificates), if any;
(iv) the aggregate Certificate Principal Balance of the Class
A Certificates and the Subordinated Certificates before and after
giving effect (i) to all distributions allocable to principal on the
Certificates on such Distribution Date, (ii) if applicable, the
allocation of any Allocated Realized Loss Amounts to the Subordinated
Certificates for such Distribution Date, and, (iii) if applicable, the
allocation of Subsequent Recoveries to increase the Certificate
Principal Balance of the Subordinated Certificates for such
Distribution Date;
(v) the cumulative amount of Allocated Realized Loss Amounts
allocated to the Subordinated Certificates from the Closing Date to and
including such Distribution Date, and the Unpaid Allocated Realized
Loss Amounts for each Class of Subordinated 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) on such Distribution Date and the allocation of
Allocated Realized Loss Amounts to such Certificates on such
Distribution Date;
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(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 for the related Due Date (after reduction for
Realized Losses incurred during the related Due Period and prepayments
during the related Prepayment Period);
(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 for the related Due Date (after reduction for
Realized Losses incurred during the related Due Period and prepayments
during the related Prepayment Period);
(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 Due 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 Due Period;
(xvi) the aggregate amount of Realized Losses with respect to
the Mortgage Loans (i) during the related Prepayment Period and
cumulatively from the Cut-off Date 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 Cut-off Date;
(xvii) the three month rolling average (relative to the
related Distribution Date) 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
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aggregate Stated Principal Balance of all of the Mortgage Loans as of
the last day of the related Due Period;
(xvii) the aggregate amount of Realized Losses on the Mortgage
Loans from the Closing Date through the last day of the related Due
Period, as a percentage of the aggregate Stated Principal Balance of
the Mortgage Loans on the Closing Date;
(xix) 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 Subordinated Certificates was increased as a result thereof, as
provided by the Master Servicer to the Trustee; and
(xx) the amount of any Final Maturity Reserve Amount deposited
in the final Maturity Reserve Account, and, on the earlier of the
Distribution Date in September 2035 and the termination of the Trust,
the amount distributed from the Final Maturity Reserve Account.
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, initially located at xxx.xxxxxxxx.xxx. The Trustee's internet website,
and assistance in using the Trustee's website can be obtained by calling the
Trustee's customer service desk at (000) 000-0000. 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 5.07 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:
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(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created hereunder and to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of a
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 9.12.
Section 5.08. 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
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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-a1 $ 165,419,000 (1) (2),(3)
I-a2 $ 72,300,000 (1) (2),(3)
I-a3 $ 24,100,000 (1) (2),(3)
I-m1 $ 26,134,000 (1) (2),(3)
I-m2 $ 14,750,000 (1) (2),(3)
I-m3 $ 3,367,000 (1) (2),(3)
I-m4 $ 3,046,000 (1) (2),(3)
I-m5 $ 3,367,000 (1) (2),(3)
I-m6 $ 2,886,000 (1) (2),(3)
I-m7 $ 5,290,000 (1) (2),(3)
R-I N/A 0%(4) ---
------------------
(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-1, Class X-0, Xxxxx
X-0, 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-1, Class X-0, Xxxxx
X-0, 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.
(a) Class A-1, Class X-0, Xxxxx X-0, 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
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amounts from the Yield Maintenance Account and Final Maturity Reserve 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, the Final Maturity Reserve Account, the Basis
Risk Reserve Fund and the payments of Basis Risk Carry Forward Amounts, as
described in Section 5.08(c) below), are hereby designated as "regular
interests" with respect to REMIC II (the "REMIC II Regular Interests"). The
terms of the Certificates are set out in Section 6.01.
(b) [Reserved].
(c) Payments of Basis Risk Carry Forward Amounts and amounts
paid under the Yield Maintenance Agreement and from the Final Maturity Reserve
Account 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-1, Class X-0, Xxxxx X-0, 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-1 $25,000 $1,000 $165,419,000 Adjustable (1)
A-2 $25,000 $1,000 $72,300,000 Adjustable (2)
A-3 $25,000 $1,000 $24,100,000 Adjustable (3)
M-1 $25,000 $1,000 $26,134,000 Adjustable (4)
M-2 $25,000 $1,000 $14,750,000 Adjustable (5)
M-3 $25,000 $1,000 $3,367,000 Adjustable (6)
M-4 $25,000 $1,000 $3,046,000 Adjustable (7)
M-5 $25,000 $1,000 $3,367,000 Adjustable (8)
M-6 $25,000 $1,000 $2,886,000 Adjustable (9)
M-7 $25,000 $1,000 $5,290,000 Adjustable (10)
B-IO $10,000,000 $1,000,000 Notional(11) X/X
X-X X/X X/X X/X X/X
R-II N/A N/A N/A N/A
--------------------------
(1) For the first Distribution Date, 4.15438% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the related
Accrual Period plus the Class A-1 Margin for such Distribution Date and (ii) the
Interest Rate Cap for such Distribution Date.
(2) For the first Distribution Date, 3.97438% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the related
Accrual Period plus the Class A-2 Margin for such Distribution Date and (ii) the
Interest Rate Cap for such Distribution Date.
(3) For the first Distribution Date, 4.38438% per annum, and on any
Distribution Date thereafter, the lesser of (i) One-Month LIBOR for the related
Accrual Period plus the Class A-3 Margin for such Distribution Date and (ii) the
Interest Rate Cap for such Distribution Date.
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(4) For the first Distribution Date, 4.45438% 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.
(5) For the first Distribution Date, 5.45438% 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.
(6) For the first Distribution Date, 5.70438% 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.
(7) For the first Distribution Date, 6.20438% 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.
(8) For the first Distribution Date, 6.95438% 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.
(9) For the first Distribution Date, 6.95438% 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.
(10) For the first Distribution Date, 6.95438% 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.
(11) Initially $320,659,792 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.
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The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
Section 6.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 6.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates that the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of Transfer or exchange shall be accompanied by a written instrument of Transfer
in form satisfactory to the Trustee duly executed by the holder thereof or his
attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) No Transfer of a 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
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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 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.
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(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.
(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.
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(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) 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
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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 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;
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(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.
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.
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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 Chicago, Illinois, 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
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Servicer written notice thereof promptly after a Responsible Officer of such
Indemnified Person 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, 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
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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
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policy shall be at least equal to the coverage acceptable to Xxxxxx Mae or
Xxxxxxx Mac for 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
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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 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
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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 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;
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(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the directions of the Holders of Certificates
evidencing not less than 25% of the aggregate Voting Rights of the
Certificates, 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:
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(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, 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
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
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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 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
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any time or to otherwise perfect or maintain the perfection of any security
interest or lien granted to it hereunder or to record this Agreement.
Section 9.04. Trustee May Own Certificates.
The Trustee in its individual capacity or in any capacity other than as
Trustee hereunder may become the owner or pledgee of any Certificates with the
same rights it would have if it were not the Trustee, and may otherwise deal
with the parties hereto.
Section 9.05. Trustee's Fees and Expenses.
The Trustee 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 "A-1" 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. Except to the extent
the Trustee is serving as successor master servicer, 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
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(combined capital and surplus) as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.08.
Section 9.07. Insurance.
The Trustee, at its 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. Any fees reasonably incurred by the Trustee in connection
with such removal shall be paid by the
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Trust. 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.
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,
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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 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,
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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 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
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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 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,
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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,
eighth, to the Class A-3 Certificates, ninth, to the Class A-2 Certificates and
tenth, to the Class A-1 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 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
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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 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 SECTIONS 5-1401 AND 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
5.07, 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.
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Section 11.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 7.02, this Agreement may not be assigned by the
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
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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 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:
----------------------------------------
Name:
Title:
EMC MORTGAGE CORPORATION,
as Seller and Master Servicer
By:
----------------------------------------
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------------
Name:
Title:
000
XXXXX XX XXX XXXX )
)ss.:
COUNTY OF NEW YORK )
On this 9th day of September 2005, before me, a notary public in and
for said State, appeared _______________, personally known to me on the basis of
satisfactory evidence to be an authorized representative of Bear 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.
------------------------------------------
Notary Public
[Notarial Seal]
STATE OF ILLINOIS )
)ss.:
COUNTY OF ________ )
On this 9th day of September 2005, before me, a notary public in and
for said State, appeared _______________, personally known to me on the basis of
satisfactory evidence to be an authorized representative of LaSalle 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.
------------------------------------------
Notary Public
[Notarial Seal]
STATE OF TEXAS )
)ss.:
COUNTY OF XXXXXX )
On this 9th day of September 2005, before me, a notary public in and
for said State, appeared _____________, personally known to me on the basis of
satisfactory evidence to be an authorized representative of EMC Mortgage
Corporation, 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.
------------------------------------------
Notary Public
[Notarial Seal]
